Obama and the Democrats keep saying that they are champions of the middle class, so let's look at the facts....
7 setbacks for the middle class - Jan. 24 2014
1. Workers are taking home their smallest slice of U.S. income on record: At around $15.8 trillion a year, the United States produces more in annual economic output than ever before, but it's not the worker that's benefiting. Instead, corporate profits now account for their largest slice of that pie on record, whereas the slice for workers has been steadily declining.
2. Inequality has widened: The recovery has been good to families earning more than $394,000 a year, but the other 99% of Americans have barely felt it.
Whereas income for the richest 1% had grown 31% from 2009 to 2012, income for the rest of Americans has barely budged in recent years, growing just 0.4% over the same time period.
That means the richest 1% of American families have captured 95% of the income gains in the recovery, according to economists at the forefront of income inequality research, Thomas Piketty and Emmanuel Saez.
3. The job market still faces a gaping hole: From the job market's peak in early 2008 to its bottom in 2010, the U.S. economy lost 8.7 million jobs -- about half of which were in construction and manufacturing.
To this day, the United States still hasn't gained back all those jobs. The economy needs about 1.2 million jobs to get back to the 2008 level, and once population growth is added to the mix, the hole looks more like an abyss.
To fill that abyss, the economy still needs about 7.9 million jobs to get back to pre-recession conditions when unemployment was under 5%, according to Heidi Shierholz, economist with the liberal Economic Policy Institute. Even with strong hiring, it could take at least five years to get there.
Part of the problem stems from workers dropping out of the labor force. If these "missing workers" were looking for work, Shierholz estimates the unemployment rate would be closer to 10% today, rather than its current 6.7%.
4. The poverty rate remains high: About 46.5 million Americans are living in poverty -- equivalent to 15% of the entire U.S. population. The poverty rate has barely budged during Obama's presidency, marking the first time it has remained at or above 15% for three consecutive years since 1965.
5. Record number of Americans are on food stamps: Amid the recession, the food stamp rolls surged, and as of 2013, 48 million Americans were receiving the benefits -- the highest number since the program began in 1969.
The average recipient gets $133 a month from the program, but some of those benefits are now on the chopping block in Congress.
Share your story: Were you helped, or left behind by the recovery?
6. The manufacturing revival was a mirage: In his 2012 State of the Union address, the president spoke highly of manufacturers that were bringing jobs back to America. Specifically, he highlighted padlock-manufacturer Master Lock for returning 100 jobs to its Milwaukee factory.
Here's what he forgot to mention though: even after bringing a few jobs back to America, manufacturers like Master Lock are operating with a U.S. workforce that's a small fraction of the size it was two decades ago.
With automation playing a larger role, and many jobs remaining in cheaper overseas markets (like China and Mexico in Master Lock's case), the story of a manufacturing revival is "overwhelmingly imaginary," said Alan Tonelson, research fellow with the U.S. Business and Industry Council.
Overall, manufacturers have added only 568,000 jobs since 2010, about a quarter of those cut in the prior two years.
7. Global trade isn't helping much: Remember when the president unveiled an ambitious goal to double U.S. exports over a five-year period, starting in 2010? With one year left to go, he's far from getting there.
U.S. exports to the rest of the world totaled $1.1 trillion in 2009, adjusted for inflation, and reached $1.4 trillion in 2012. They would need to have a gangbusters year, growing another 57%, to reach Obama's goal by the end of 2014.
"By any reasonable standards, this goal has flopped miserably," Tonelson said.
Plus, more exports mean little for economic growth unless they happen to grow faster than imports. After Obama signed a free trade agreement with South Korea in 2011, exports grew, but imports from the country -- like cell phones, cars and auto parts -- grew even faster.
"The president talks about trade and lifting exports, but ignores imports. That's like reporting the results of a football game by giving the score of just one of the teams. You don't know who won," said Lawrence Mishel, president of the Economic Policy Institute.
EPI estimates the agreement resulted in the loss of 40,000 American jobs, as opposed to the 70,000 jobs the Obama administration said it would support.
Poll: Many Americans feel economy isn't improving
Now, let's add rising healthcare premiums, and the fact that many middle-income Americans are forgoing medical care under Obamacare due to high deductibles...
Dilemma over deductibles Costs crippling middle class
Physician Praveen Arla is witnessing a reversal of health care fortunes: Poor, long-uninsured patients are getting Medicaid through Obamacare and finally coming to his office for care. But middle-class workers are increasingly staying away.
"It's flip-flopped," says Arla, who helps his father run a family practice in Hillview, Ky. Patients with job-based plans, he says, will say: " 'My deductible is so high. I'm trying to come to the doctor as little as possible. … What is the minimum I can get done?' They're really worried about cost."
It's a deep and common concern across the USA, where employer plans cover 60% of working-age Americans, or about 150 million people. Coverage long considered the gold standard of health insurance now often requires workers to pay so much out-of-pocket that many feel they must skip doctor visits, put off medical procedures, avoid filling prescriptions and ration pills — much as the uninsured have done.
.oembed-asset-photo-image { width: 100%; }
A recent Commonwealth Fund survey found that four in 10 working-age adults skipped some kind of care because of the cost, and other surveys have found much the same. The portion of workers with annual deductibles — what consumers must pay before insurance kicks in — rose from 55% eight years ago to 80% today, according to research by the Kaiser Family Foundation. And a Mercer study showed that 2014 saw the largest one-year increase in enrollment in "high-deductible plans" — from 18% to 23% of all covered employees.
Meanwhile the size of the average deductible more than doubled in eight years, from $584 to $1,217 for individual coverage. Add to this co-pays, co-insurance and the price of drugs or procedures not covered by plans — and it's all too much for many Americans.
Holly Wilson of Denver, a communications company fraud investigator who has congestive heart failure and high blood pressure, recently went without her blood pressure pills for three months because she couldn't afford them, given her $2,500 deductible. Her blood pressure shot so high, her doctor told her she risked a stroke.
And LaRita Jacobs of Seminole, Fla., who gets insurance through her husband's job and has an annual family income of $70,000, says $7,500 a year in out-of-pocket costs kept her from dealing with an arthritis-related neck problem until it got so bad she couldn't lift a fork. She's now putting off shoulder surgery.
"How did we get to this crazy life?" asks Jacobs, 54. "We're struggling to pay our bills like we were struggling when we first got started."
Why is this happening? Many patients and doctors blame corporate greed — a view insurers and business leaders reject. Some employers in turn blame the Affordable Care Act, saying it has forced them to pare down generous plans so they don't have to pay a "Cadillac tax" on high-cost coverage in 2018. But health care researchers point to a convergence of trends building for years: the steep rise in deductibles even as premiums stabilize, corporate belt-tightening since the economic downturn and stagnant middle-class wages.
"It's a case of companies trying to offer workers health insurance and still generate profit," said Eric Wright, a professor of sociology and public health at Georgia State University. "But whenever costs go up for the consumers across the board … it promotes a delay in care."
Others disagree, saying that when people pay for their care, they shop more intelligently. Chris Riedl, Aetna's head of product strategy for its national accounts, says her company's research does not indicate that insured patients are showing up sick in emergency rooms with long-neglected illnesses — which to her means, "intuitively, they're not avoiding care."
But many doctors contend it's only a matter of time before the middle class begins crowding ERs. They say putting off care can be dangerous, exponentially more costly and, if it continues and spreads, can threaten the health of the nation.
• Nearly 30% of privately insured, working-age Americans with deductibles of at least 5% of their income had a medical problem but didn't go to the doctor, the Commonwealth Fund found. Around the same percentage skipped doctor-recommended medical tests, treatments or follow-ups.
• Nearly half of middle-class workers skipped health care services or fell into financial hardship because of health expenses, according to a survey by the Associated Press and NORC Center for Public Affairs Research.
• Use of hospital care among insured workers has been dropping since 2010, and use of outpatient care, such as doctor visits, dropped slightly for the first time from 2012 to 2013, according to insurance claim data analyzed by the Health Care Cost Institute.
• Medical professionals across the USA see the reality behind the research. The Arlas' patient load used to be 45% commercially insured and 25% Medicaid; those percentages are now reversed. Stan Brock, founder of Remote Area Medical, which runs free clinics around the nation, says the group's volunteer workers found that around 7% of patients who came to one of the clinics had job-provided insurance — and some waited for days just to keep a prime spot in line.
Patients often do a sort of medical and financial triage when they get sick. Jacobs, a former college professor, says every time a doctor suggests a new test, procedure or medication for her severe arthritis, she asks herself: " 'Is it critical?' You're always playing the odds. ... And I'm constantly asking my doctor: Can I stop taking this medication?"
When her shoulder started hurting a couple of years ago, she had an X-ray but put off the recommended MRI for two years. It worsened, and she couldn't move her arm without pain or lift her right hand above her head. She finally got that surgery in October but is now forgoing a shoulder procedure, opting for less expensive physical therapy and planning to "tough out the pain."
"You don't want another surgery … another bill," she says. "It may be more of a problem later, but that's the risk you take."
Is Obamacare to blame?
Stagnant salaries also skew budgets
.wide-story-intro { background-attachment:scroll!important; }
Since the ACA took effect, "there's been an accelerated movement" to these types of health plans, says Brian Marcotte, president and chief executive officer of the Washington, D.C.-based Business Group on Health.
Marcotte, whose group represents 400 large employers, says that the looming Cadillac tax is one factor but acknowledged that managing health care costs is another.
Companies have cited the ACA for cutting medical benefits in other ways. For example, United Parcel Service partly blamed the law when it removed thousands of spouses from its plan because they are eligible for medical coverage elsewhere.
But DeAnn Friedholm, director of health reform for Consumers Union, says she's skeptical when employers point to the ACA. "This isn't new," she says. "Companies have been cutting back on benefits and cutting costs for decades."
Sara Collins, vice president for Health Care Coverage and Access at the Commonwealth Fund, says two ACA requirements — keeping children under 26 on their parents' plans and covering preventive care — didn't add much to companies' health care tabs, partly because most already covered preventive care such as physicals and mammograms. Pollitz says the ACA actually holds down the consumer burden by capping out-of-pocket expenses at $6,300 a person — which, although that amount is "more than most people have in the bank," is better than no cap at all.
Experts point out that the ACA requires preventive care to be covered fully and exempt from deductibles — although surveys show many workers still forgo screenings and physicals because they're unaware of this or know they can't afford follow-ups if illnesses are found.
Several experts say the consumer crunch has less to do with the health system overhaul than stagnant salaries. The average hourly wage is nearly identical to what it was 50 years ago in today's dollars: $19.18 in 1964 compared with $20.67 in 2014, according to U.S. Bureau of Labor data analyzed by the Pew Research Center. Meanwhile, U.S. health spending ballooned from 5% of gross domestic product in 1960 to 17% in 2013.
"People are very close to the line in terms of their budgets," Collins says. "What consumers are really seeing is their incomes have grown even slower than the slower growth in health care costs" in the past few years.
Insurers also blame the cost of care, saying that can't be absorbed just by premiums. But Wilson and other patients put much of the blame on insurers.
"Insurance is all about the dollar," Wilson says. The never-ending cost shift to consumers "is something that basically all kinds of people screwed up. … Obamacare is a step in the right direction. But it's not enough. I expected more out of it than I got."
7 setbacks for the middle class - Jan. 24 2014
1. Workers are taking home their smallest slice of U.S. income on record: At around $15.8 trillion a year, the United States produces more in annual economic output than ever before, but it's not the worker that's benefiting. Instead, corporate profits now account for their largest slice of that pie on record, whereas the slice for workers has been steadily declining.
2. Inequality has widened: The recovery has been good to families earning more than $394,000 a year, but the other 99% of Americans have barely felt it.
Whereas income for the richest 1% had grown 31% from 2009 to 2012, income for the rest of Americans has barely budged in recent years, growing just 0.4% over the same time period.
That means the richest 1% of American families have captured 95% of the income gains in the recovery, according to economists at the forefront of income inequality research, Thomas Piketty and Emmanuel Saez.
3. The job market still faces a gaping hole: From the job market's peak in early 2008 to its bottom in 2010, the U.S. economy lost 8.7 million jobs -- about half of which were in construction and manufacturing.
To this day, the United States still hasn't gained back all those jobs. The economy needs about 1.2 million jobs to get back to the 2008 level, and once population growth is added to the mix, the hole looks more like an abyss.
To fill that abyss, the economy still needs about 7.9 million jobs to get back to pre-recession conditions when unemployment was under 5%, according to Heidi Shierholz, economist with the liberal Economic Policy Institute. Even with strong hiring, it could take at least five years to get there.
Part of the problem stems from workers dropping out of the labor force. If these "missing workers" were looking for work, Shierholz estimates the unemployment rate would be closer to 10% today, rather than its current 6.7%.
4. The poverty rate remains high: About 46.5 million Americans are living in poverty -- equivalent to 15% of the entire U.S. population. The poverty rate has barely budged during Obama's presidency, marking the first time it has remained at or above 15% for three consecutive years since 1965.
5. Record number of Americans are on food stamps: Amid the recession, the food stamp rolls surged, and as of 2013, 48 million Americans were receiving the benefits -- the highest number since the program began in 1969.
The average recipient gets $133 a month from the program, but some of those benefits are now on the chopping block in Congress.
Share your story: Were you helped, or left behind by the recovery?
6. The manufacturing revival was a mirage: In his 2012 State of the Union address, the president spoke highly of manufacturers that were bringing jobs back to America. Specifically, he highlighted padlock-manufacturer Master Lock for returning 100 jobs to its Milwaukee factory.
Here's what he forgot to mention though: even after bringing a few jobs back to America, manufacturers like Master Lock are operating with a U.S. workforce that's a small fraction of the size it was two decades ago.
With automation playing a larger role, and many jobs remaining in cheaper overseas markets (like China and Mexico in Master Lock's case), the story of a manufacturing revival is "overwhelmingly imaginary," said Alan Tonelson, research fellow with the U.S. Business and Industry Council.
Overall, manufacturers have added only 568,000 jobs since 2010, about a quarter of those cut in the prior two years.
7. Global trade isn't helping much: Remember when the president unveiled an ambitious goal to double U.S. exports over a five-year period, starting in 2010? With one year left to go, he's far from getting there.
U.S. exports to the rest of the world totaled $1.1 trillion in 2009, adjusted for inflation, and reached $1.4 trillion in 2012. They would need to have a gangbusters year, growing another 57%, to reach Obama's goal by the end of 2014.
"By any reasonable standards, this goal has flopped miserably," Tonelson said.
Plus, more exports mean little for economic growth unless they happen to grow faster than imports. After Obama signed a free trade agreement with South Korea in 2011, exports grew, but imports from the country -- like cell phones, cars and auto parts -- grew even faster.
"The president talks about trade and lifting exports, but ignores imports. That's like reporting the results of a football game by giving the score of just one of the teams. You don't know who won," said Lawrence Mishel, president of the Economic Policy Institute.
EPI estimates the agreement resulted in the loss of 40,000 American jobs, as opposed to the 70,000 jobs the Obama administration said it would support.
Poll: Many Americans feel economy isn't improving
Now, let's add rising healthcare premiums, and the fact that many middle-income Americans are forgoing medical care under Obamacare due to high deductibles...
Dilemma over deductibles Costs crippling middle class
Physician Praveen Arla is witnessing a reversal of health care fortunes: Poor, long-uninsured patients are getting Medicaid through Obamacare and finally coming to his office for care. But middle-class workers are increasingly staying away.
"It's flip-flopped," says Arla, who helps his father run a family practice in Hillview, Ky. Patients with job-based plans, he says, will say: " 'My deductible is so high. I'm trying to come to the doctor as little as possible. … What is the minimum I can get done?' They're really worried about cost."
It's a deep and common concern across the USA, where employer plans cover 60% of working-age Americans, or about 150 million people. Coverage long considered the gold standard of health insurance now often requires workers to pay so much out-of-pocket that many feel they must skip doctor visits, put off medical procedures, avoid filling prescriptions and ration pills — much as the uninsured have done.
.oembed-asset-photo-image { width: 100%; }
A recent Commonwealth Fund survey found that four in 10 working-age adults skipped some kind of care because of the cost, and other surveys have found much the same. The portion of workers with annual deductibles — what consumers must pay before insurance kicks in — rose from 55% eight years ago to 80% today, according to research by the Kaiser Family Foundation. And a Mercer study showed that 2014 saw the largest one-year increase in enrollment in "high-deductible plans" — from 18% to 23% of all covered employees.
Meanwhile the size of the average deductible more than doubled in eight years, from $584 to $1,217 for individual coverage. Add to this co-pays, co-insurance and the price of drugs or procedures not covered by plans — and it's all too much for many Americans.
Holly Wilson of Denver, a communications company fraud investigator who has congestive heart failure and high blood pressure, recently went without her blood pressure pills for three months because she couldn't afford them, given her $2,500 deductible. Her blood pressure shot so high, her doctor told her she risked a stroke.
And LaRita Jacobs of Seminole, Fla., who gets insurance through her husband's job and has an annual family income of $70,000, says $7,500 a year in out-of-pocket costs kept her from dealing with an arthritis-related neck problem until it got so bad she couldn't lift a fork. She's now putting off shoulder surgery.
"How did we get to this crazy life?" asks Jacobs, 54. "We're struggling to pay our bills like we were struggling when we first got started."
Why is this happening? Many patients and doctors blame corporate greed — a view insurers and business leaders reject. Some employers in turn blame the Affordable Care Act, saying it has forced them to pare down generous plans so they don't have to pay a "Cadillac tax" on high-cost coverage in 2018. But health care researchers point to a convergence of trends building for years: the steep rise in deductibles even as premiums stabilize, corporate belt-tightening since the economic downturn and stagnant middle-class wages.
"It's a case of companies trying to offer workers health insurance and still generate profit," said Eric Wright, a professor of sociology and public health at Georgia State University. "But whenever costs go up for the consumers across the board … it promotes a delay in care."
Others disagree, saying that when people pay for their care, they shop more intelligently. Chris Riedl, Aetna's head of product strategy for its national accounts, says her company's research does not indicate that insured patients are showing up sick in emergency rooms with long-neglected illnesses — which to her means, "intuitively, they're not avoiding care."
But many doctors contend it's only a matter of time before the middle class begins crowding ERs. They say putting off care can be dangerous, exponentially more costly and, if it continues and spreads, can threaten the health of the nation.
• Nearly 30% of privately insured, working-age Americans with deductibles of at least 5% of their income had a medical problem but didn't go to the doctor, the Commonwealth Fund found. Around the same percentage skipped doctor-recommended medical tests, treatments or follow-ups.
• Nearly half of middle-class workers skipped health care services or fell into financial hardship because of health expenses, according to a survey by the Associated Press and NORC Center for Public Affairs Research.
• Use of hospital care among insured workers has been dropping since 2010, and use of outpatient care, such as doctor visits, dropped slightly for the first time from 2012 to 2013, according to insurance claim data analyzed by the Health Care Cost Institute.
• Medical professionals across the USA see the reality behind the research. The Arlas' patient load used to be 45% commercially insured and 25% Medicaid; those percentages are now reversed. Stan Brock, founder of Remote Area Medical, which runs free clinics around the nation, says the group's volunteer workers found that around 7% of patients who came to one of the clinics had job-provided insurance — and some waited for days just to keep a prime spot in line.
Patients often do a sort of medical and financial triage when they get sick. Jacobs, a former college professor, says every time a doctor suggests a new test, procedure or medication for her severe arthritis, she asks herself: " 'Is it critical?' You're always playing the odds. ... And I'm constantly asking my doctor: Can I stop taking this medication?"
When her shoulder started hurting a couple of years ago, she had an X-ray but put off the recommended MRI for two years. It worsened, and she couldn't move her arm without pain or lift her right hand above her head. She finally got that surgery in October but is now forgoing a shoulder procedure, opting for less expensive physical therapy and planning to "tough out the pain."
"You don't want another surgery … another bill," she says. "It may be more of a problem later, but that's the risk you take."
Is Obamacare to blame?
Stagnant salaries also skew budgets
.wide-story-intro { background-attachment:scroll!important; }
Since the ACA took effect, "there's been an accelerated movement" to these types of health plans, says Brian Marcotte, president and chief executive officer of the Washington, D.C.-based Business Group on Health.
Marcotte, whose group represents 400 large employers, says that the looming Cadillac tax is one factor but acknowledged that managing health care costs is another.
Companies have cited the ACA for cutting medical benefits in other ways. For example, United Parcel Service partly blamed the law when it removed thousands of spouses from its plan because they are eligible for medical coverage elsewhere.
But DeAnn Friedholm, director of health reform for Consumers Union, says she's skeptical when employers point to the ACA. "This isn't new," she says. "Companies have been cutting back on benefits and cutting costs for decades."
Sara Collins, vice president for Health Care Coverage and Access at the Commonwealth Fund, says two ACA requirements — keeping children under 26 on their parents' plans and covering preventive care — didn't add much to companies' health care tabs, partly because most already covered preventive care such as physicals and mammograms. Pollitz says the ACA actually holds down the consumer burden by capping out-of-pocket expenses at $6,300 a person — which, although that amount is "more than most people have in the bank," is better than no cap at all.
Experts point out that the ACA requires preventive care to be covered fully and exempt from deductibles — although surveys show many workers still forgo screenings and physicals because they're unaware of this or know they can't afford follow-ups if illnesses are found.
Several experts say the consumer crunch has less to do with the health system overhaul than stagnant salaries. The average hourly wage is nearly identical to what it was 50 years ago in today's dollars: $19.18 in 1964 compared with $20.67 in 2014, according to U.S. Bureau of Labor data analyzed by the Pew Research Center. Meanwhile, U.S. health spending ballooned from 5% of gross domestic product in 1960 to 17% in 2013.
"People are very close to the line in terms of their budgets," Collins says. "What consumers are really seeing is their incomes have grown even slower than the slower growth in health care costs" in the past few years.
Insurers also blame the cost of care, saying that can't be absorbed just by premiums. But Wilson and other patients put much of the blame on insurers.
"Insurance is all about the dollar," Wilson says. The never-ending cost shift to consumers "is something that basically all kinds of people screwed up. … Obamacare is a step in the right direction. But it's not enough. I expected more out of it than I got."
