Trapped in America's Safety Net: One Family's Struggleby Andrea Louise Campbell
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When Andrea Louise Campbell’s sister-in-law, Marcella Wagner, was run off the freeway by a hit-and-run driver, she was seven-and-a-half months pregnant. She survived—and, miraculously, the baby was born healthy. But that’s where the good news ends. Marcella was left paralyzed from the chest down. This accident was much more than just a physical and emotional tragedy. Like so many Americans—50 million, or one-sixth of the country’s population—neither Marcella nor her husband, Dave, who works for a small business, had health insurance. On the day of the accident, she was on her way to class for the nursing program through which she hoped to secure one of the few remaining jobs in the area with the promise of employer-provided insurance. Instead, the accident plunged the young family into the tangled web of means-tested social assistance.
As a social policy scholar, Campbell thought she knew a lot about means-tested assistance programs. What she quickly learned was that missing from most government manuals and scholarly analyses was an understanding of how these programs actually affect the lives of the people who depend on them. Using Marcella and Dave’s situation as a case in point, she reveals their many shortcomings in Trapped in America’s Safety Net. Because American safety net programs are designed for the poor, Marcella and Dave first had to spend down their assets and drop their income to near-poverty level before qualifying for help. What’s more, to remain eligible, they will have to stay under these strictures for the rest of their lives, meaning they are barred from doing many of the things middle-class families are encouraged to do: Save for retirement. Develop an emergency fund. Take advantage of tax-free college savings. And, while Marcella and Dave’s story is tragic, the financial precariousness they endured even before the accident is all too common in America, where the prevalence of low-income work and unequal access to education have generated vast—and growing—economic inequality. The implementation of Obamacare has cut the number of uninsured and underinsured and reduced some of the disparities in coverage, but it continues to leave too many people open to tremendous risk.
Behind the statistics and beyond the ideological battles are human beings whose lives are stunted by policies that purport to help them. In showing how and why this happens, Trapped in America’s Safety Net offers a way to change it.
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Trapped in America's Safety Net
One Family's Struggle
By Andrea Louise Campbell, Benjamin I. Page, Susan Herbst, Lawrence R. Jacobs, Adam J. Berinsky
The University of Chicago PressCopyright © 2014 The University of Chicago
All rights reserved.
TRYING TO MAKE IT IN AMERICA
In a beautiful ceremony at the foot of Mount Shasta in Northern California, Dave and Marcella were married in June 2010, just twenty months before the accident. Standing in front of one hundred friends and relatives in our stepmother's backyard, the couple recited vows they had written themselves. Everyone present was thrilled that they had found each other. Dave, a young-at-heart forty-one on their wedding day, had been looking for the right one for a long time. In Marcella, then thirty, he found a smart, beautiful young woman with a keen sense of humor, a demon at games of all types who shared his love of camping and who willingly joined in his avid backpacking and mountain-biking pursuits as well. Both were committed to young people. Marcella had been a counselor for several years at a church camp, and Dave had been taking a couple of unpaid vacation weeks for years to work as a counselor and later codirector of a YMCA summer camp near Mount Lassen. During the wedding reception, over barbecue and a friend's special Wedding Edition home brew, many guests commented on what great parents the couple would make.
Dave and Marcella also had ambitious plans for the future. In particular, they sought a more solid footing in the middle class. Dave very much enjoyed his job, but it didn't offer health insurance or other benefits. The couple planned for Marcella to attend nursing school, capitalizing on the nationwide shortage of nurses and entering one of the few careers promising solid fringe benefits in the economically distressed part of California in which they live. With two incomes, and with the type of employer-provided benefits that signify middle-class financial security, they could pursue a future together—including a family—with confidence.
What Dave and Marcella were keenly aware of—indeed, were arranging their lives around—is that the American welfare state has distinctive tiers, some more attractive, protective, and advantaged than others. Most people most of the time work to make a living, providing themselves and their families with food, housing, clothing, transportation, and other necessities. But life also poses risks to the ability to work: illness, injury, disability, unemployment, and old age. Social insurance programs protect qualifying workers against these risks, providing income and health insurance through workers' compensation, Social Security Disability Insurance, Unemployment Insurance, Social Security retirement benefits, and Medicare. Some workers are additionally protected by the private welfare system of employer-provided benefits, which can include health insurance, short-term disability insurance, paid sick days, retirement savings plans, and so on. But many employers do not offer such benefits. And nonworkers are mostly shut out of both of these systems. When they become sick or disabled or old, they must rely on social assistance programs that generally offer much more meager benefits than either social insurance or the private welfare system. Means-tested social assistance programs are the last resort: people must be poor to qualify for them, and stay poor to continue to receive them.
Dave and Marcella had a plan to move more firmly into the world of social insurance and, better yet, into the privileged world of the private welfare system. Instead, the accident relegated them to the lowest tier of the American welfare state, the social assistance tier, with real questions about whether and how they can escape it. While their story has some especially tragic elements, the financial precariousness and insecurity they endured even before the accident are all too common in the United States.
THE STRUGGLE TO MEET LIFE'S RISKS
I am surrounded by a lot of impressive people at MIT, where I teach, but my brother Dave is one of the smartest people I know. He is a mechanical genius who can make or fix just about anything. He also knows his way around computers, having programmed a number of automated systems at work and created a competitor timing system for the mountainbike racing circuit in Northern California and beyond. Dave never got a college degree, but he's been able to support himself in a series of steady, if modestly paying jobs. For many years, he's been the manager of a metal fabrication business that engineers and builds parts for houseboats and airplanes.
The company has always been small, and the number of employees has waxed and waned with the state of the economy and the demand for its products. Dave managed to survive the periodic layoffs the company suffered, largely because he could do it all—from front-office payroll, scheduling, and invoicing (he wrote computer programs to automate all these tasks), to bidding, designing, and drafting, to laser cutting and welding on the shop floor. His salary of $39,000 wasn't bad for a single person—just under the US median personal income.
The job came with some considerable perks. Using the laser cutter at work, Dave made a spectacular stainless steel cupcake stand for the wedding, copied from a magazine photograph Marcella had found. But the job didn't come with fringe benefits. No retirement plan, no paid vacation—and no health insurance. Moreover, stretching that income across two, and soon to be three, people would be tight. Dave's salary was well below the US median household income of $50,054, coming to only about twice the 2012 federal poverty level for a family of three. It was also below the annual income needed to provide a "secure yet modest living standard" in the Redding, California, area where the couple lives: $60,482 for a family of three, according to the Economic Policy Institute's Family Budget Calculator.
Finding a better-paying job with benefits isn't so easy in Dave and Marcella's geographic area. Shasta County's unemployment rate in 2012 was 14.5 percent—4 points above the California rate, and more than 6 points above the national rate. Jobs with good benefits are rarer still. Just over half of Americans—55 percent—get their health insurance through their employer, while 30 percent are covered by a public program such as Medicare or Medicaid; 16 percent are uninsured. In Shasta County, only 46 percent of its residents have employer-provided health insurance, while 35 percent are covered by a public program. The poverty rate is also high: nearly 18 percent for the county in 2010, compared with 15.8 percent for California and 15.3 percent nationwide.
Despite these odds, Dave and Marcella had mapped a strategy for improving their lot in life: Marcella would get a nursing degree. As one of the few growing careers in their area, just as it is nationwide, nursing promised both a second salary that would place them much more firmly in the middle class and a set of employee benefits that included health insurance, which was the most desirable in their eyes. Marcella already had an undergraduate degree in political science, since she had planned on law school. With her change in career direction, she took her nursing prerequisites at the local community college in preparation for applying to the nursing program there when she finished. Attending part-time, Marcella completed the prereqs in two years. She did so with her characteristic dedication and intelligence, acing every class—even the notoriously difficult anatomy course, which tripped up many other students.
However, there was a hitch in the couple's plans: despite a looming shortage of nurses in the United States—the Bureau of Labor Statistics projects that nursing will be the top occupation for job growth through 2020—there have been far too few slots in nursing programs to meet the demand. Over 75,000 qualified applicants were turned away from nursing programs in 2011 because of budget constraints and shortages of faculty, classroom space, and clinical sites. The local situation paralleled the national one: the community college's nursing program had a two-and-a-half-year waiting list, which an applicant could join only after completing the prereqs. Already over thirty years old and eager to start her new career, Marcella didn't want to wait that long.
She looked to the next alternative, enrolling in the nursing program at California State University, Chico. It would provide a bachelor of science degree in nursing, superior to the associate's degree from the community college. There were downsides to going to Chico, though. The program would cost far more than the community college's, so Marcella would have to take out loans on top of the ones she already had from her first bachelor's degree. On class days, her commute would be a 140-mile round-trip. However, for the promise the degree held, she was willing to make these sacrifices.
But there was yet another hitch. Because of the fiscal crisis in California and the ensuing budget cuts to the state university system, that system imposed a rule to reduce demand: no one who had a BA in another subject would be admitted to its undergraduate programs.
Marcella found the situation deeply disappointing, not to mention nonsensical. Despite a nationwide shortage of nurses, a dedicated young person was being barred from one program and forced to endure a long wait to enter another. In the meantime, Marcella studied to become a phlebotomist; at least that was one way she could start her health care career. Then, just as she was searching for phlebotomy positions, the state university system deemed nursing an impacted field and thus reversed its policy: it lifted the moratorium on admitting those with college degrees. With her outstanding academic record, Marcella was admitted to the nursing program at the Chico campus.
While all this was going on, she searched for health insurance for herself, Dave, and the family they wanted to start soon. Before going back to school, Marcella had health coverage through her job at a bank. Now she and Dave had to shop around in the individual health insurance market. The options weren't great. Marcella received quotes of $1,200 per month—more than the couple's mortgage, more than they could afford—and many of those plans didn't include maternity coverage. Then the search became pressing: when Chico lifted the nursing program moratorium, Marcella needed insurance in order to enroll. The university offered a student health insurance plan, but coverage was limited and the plan required high coinsurance—the patient had to pay 20 percent of all medical bills, and 50 percent for medical care received outside the designated provider network. And then the search grew more pressing still: Marcella became pregnant, a little earlier than planned.
Fortunately, Marcella heard about Access for Infants and Mothers, an insurance program offered by the State of California. AIM provides coverage for middle-income pregnant women who have no health insurance from another source such as an employer, but whose income is too high to qualify for Medicaid/Medi-Cal. In California, Medi-Cal covers the health expenses of pregnant women up to 200 percent of the federal poverty level; those between 200 and 300 percent can qualify for AIM. The cost of the program is 1.5 percent of adjusted annual household income (an affordable total of $585 for Dave and Marcella).
State funding limits AIM enrollment; once the program hits its annual funding cap, even eligible women can't get coverage. Luckily, Marcella was able to enroll, which came as quite a relief. AIM would cover her prenatal visits, delivery, and up to sixty days of postpartum care. Thereafter she would enroll in the Chico State student health plan; she and Dave hoped she'd need only minimal medical care so that the 20 percent coinsurance wouldn't become burdensome. Indeed, before the accident she had already printed out and filled in the application form. The baby would be covered under Healthy Families, California's version of CHIP. Dave and Marcella thought they were prepared. Dave still didn't have coverage, but Marcella and the baby did. The combination of AIM, Healthy Families, and the student plan was serendipitous, and fragmented, but at least it made starting a family possible, despite the couple's lack of access to employer-provided health insurance.
Like many Americans, Dave and Marcella didn't live extravagantly. No fancy vacations—mostly camping. No fancy cars—just a 1990 Honda for Marcella and several fixers for Dave, whose hobby was working on old cars. No fancy house—just a twelve-hundred-square-foot ranch style built in 1961; Dave hoped to renovate its original kitchen and bathrooms someday. Things were manageable, but tight. The couple didn't think of themselves as being in a precarious situation, but their modest wages, limited access to needed education and training programs, and lack of employer-provided benefits and comprehensive health insurance left them vulnerable. And, as with many Americans living with insecurity, a simple misstep, let alone a tragedy, would spell financial disaster.
Part of the insecurity problem in the United States is the prevalence of low-wage work. Officially, one in seven Americans lives in poverty. However, less well known—but perhaps even more consequential—is the fact that the United States also has a large proportion of working poor households. Fully one-third of Americans have "low incomes," meaning incomes below 200 percent of the poverty line; Dave and Marcella are in that group. This working poor population has a difficult time making ends meet. It's also much larger than in other rich nations. Although the per capita gross domestic product (GDP) in the United States is nearly the highest in the world, averaging the economy across all individuals masks the distribution of income, which is highly skewed toward the top end and more skewed than in other advanced economies. A measure that allows for cross-national comparisons—the proportion of full-time workers earning less than 65 percent of the median wage—reveals that one-fourth of Americans earn these low wages, double the proportion in France and Germany and five times the proportion in Sweden and Finland. The United States has a greater percentage of people living in poverty and making low wages than almost all other rich nations.
The situation has worsened. Certainly the Great Recession that began in 2007 took its toll: most of the jobs lost between 2008 and 2010 were middle-wage jobs, while most of the jobs added between 2010 and 2012 were lower-wage jobs. But even before that historic downturn, workers were failing to benefit from increases in economic growth. Worker productivity increased 80 percent between 1973 and 2011, but median hourly compensation grew by only one-eighth that amount in inflation-adjusted terms. Between 2000 and 2011 alone, productivity grew by 23 percent, but workers' wages were flat. Nor have households been spared. With the decline in men's wages that began during the 1970s, women have been flocking to the workplace, shoring up household incomes. But while GDP grew 18 percent from 2000 to 2011, median income for working-age households fell by 12 percent. The reason? Most economic growth during this period accrued not to ordinary workers but to the top 1 percent of earners, who absorbed 65 percent of the nation's income growth between 2002 and 2007. Nor have workers fared well since the Great Recession. In 2012, wages and salaries comprised the smallest share of the GDP since 1929, when such records began, while corporate profits constituted the largest historical share. Lots of Americans like Dave and Marcella work hard but are compensated very modestly. They don't get to share in the economic wealth they helped create.
Unequal Access to Education and Training
One of the best ways for people to increase their income is to get more education or training. Men with bachelor's degrees earn 50 percent more than men with high school degrees. Those with postbaccalaureate degrees earn even more, and the size of this "education wage premium" has increased over time. However, the ability of many Americans, particularly lower-income Americans, to pursue such opportunities has decreased, and the gap in educational attainment across different income groups has grown. In 1970, 40 percent of Americans from families in the top income quartile had a four-year college degree by the age of twenty-four. By 2011, this proportion had grown to 71 percent. In contrast, just 6 percent of those from the bottom income quartile held college degrees in 1970, increasing to only 10 percent by 2011. Sources of federal aid such as Pell Grants have not kept pace with the cost of higher education. As Marcella discovered, budget cuts at many public institutions have put a cap on education and training opportunities—even in areas with looming shortfalls, such as nursing. Government workforce development programs—job training—are scattered across many departments and agencies. The largest program is the Workforce Investment Act under the Labor Department, which spends about $3 billion per year. This may sound like a lot of money, but the Urban Institute estimates that federal funding helps only 5 percent of those who want job training. Private businesses perform far more job training than the government does, but there are worries about underinvestment there as well.
Excerpted from Trapped in America's Safety Net by Andrea Louise Campbell, Benjamin I. Page, Susan Herbst, Lawrence R. Jacobs, Adam J. Berinsky. Copyright © 2014 The University of Chicago. Excerpted by permission of The University of Chicago Press.
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Meet the Author
Andrea Louise Campbell is professor of political science at the Massachusetts Institute of Technology. She is the author of How Policies Make Citizens and coauthor of The Delegated Welfare State.
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