Health Insurance for All?

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FARAI CHIDEYA, host:

From NPR News, this is NEWS & NOTES. I'm Farai Chideya.

Happy Labor Day. And today, we're going to lead off the show as we do every Monday with a little money talk. Unfortunately, the news this week could be better. Credit card defaults are on the rise. And compared to last year, 2007 has seen a 30 percent hike in the number of folks who simply cannot make their payments. Why, is the question. And with the way consumers are relying more and more on credit, will our national economy eventually have to bear the burden of our debt-heavy lifestyle?

For more, we've got author and economist Julianne Malveaux, also president of Bennett College. Julianne, welcome.

Dr. JULIANNE MALVEAUX (CEO, Last Word Productions; President, Bennett College): Thanks, Farai. How are you doing?

CHIDEYA: I am doing great. So defaulting on your credit card payment, that sounds awful. What does it mean?

Dr. MALVEAUX: It means people can't pay. People are over-extended. What you have to understand is these credit card companies basically rain credit cards on people who, oftentimes, can't afford to extend their credit. But you've got a line of credit of $5,000, Farai, and suddenly, you get an e-mail from your company saying, well, you're such a good customer - when you really aren't -that we're going to give you another two grand. Well, something happens and you use that two grand up and then you can't pay.

I mean, this is what happens all too commonly. A lot of people haven't applied for additional credit but they simply get it. And when they get it, if they're cash-strapped, they're going to use it.

Now, for a couple of years, people were able to take these credit card payments and roll them into something or use a home equity loan or something, but as we see what's happening in the housing market, that's less likely to happen these days. If you can't pay, you won't pay. And that's what the defaulting comes from. People will pay their rent or mortgage first and they'll go down the list, and credit cards, for many people, often come last.

CHIDEYA: So say you're at this point where you absolutely cannot make a payment, sometimes credit card bills say if you're having trouble paying, call this number. If you call that number, what are they going to tell you?

Dr. MALVEAUX: They're going to tell you to pay. They might ask you what kind of arrangements you want to make. They might want to find out if you have extenuating circumstances. In some cases, they might refer you to a credit counselor. Be careful of that. Because if it's a counselor referred by the credit card company, it might not be the best one for you.

But it's better to let them know than to have them call you or track you down. And don't forget your credit rating. When you don't pay, you end up hurting yourself and making it more expensive as well as more difficult for you to get credit in the future. So if you come into one of these situations where you lose your job and you owe, you know, $200 a month on a credit card payment, call them and tell them, look, this is my situation. I can pick my payments back up whenever. It's better for you to tell them than for them to track you.

CHIDEYA: So you mentioned credit counselors and that has been a somewhat controversial business. There have been allegations that some of these credit counseling companies are not actually serving their clients. What do you look for if you want to bundle, say, some of your credit card payments - what should you look for from a credit counseling service?

Dr. MALVEAUX: You should never write checks to the credit counseling services. You should write them to your bill people. You should make sure that they - these people are registered, that there are no complaints with them against the Better Business Bureau. Indeed, you can call - I believe it's - the fed has a credit counseling listing. Some of them are just blatantly illegal.

We've had cases, Farai, of people who have worked with a credit counseling company and they told they will give us a thousand a month and we'll figure it out. And they've gone back three months later and find that they've had no bills paid. So this is a business that's ripe for fraud.

Now there are nonprofit organizations and others that provide credit counseling, and those are the better places to go. Some of the churches, some of the organizations, some of the civil rights and other organizations have gotten involved in financial literacy, and those are the type of places that you want to deal with. But you can also do your own consolidation. If you simply get all your bills together, look at what you owe and figure out what you can pay and how to deal with it, writing and calling the people yourself. Now it takes a little more time and effort, but you don't want to put yourself in a situation where you're dealing with an unscrupulous so-called credit counseling company.

CHIDEYA: So let's move onto something called S-CHIP Insurance Program. A recent Georgetown University poll says that Americans overwhelmingly support the implementation of a state-sponsored health insurance program for low-income families. That initiative has been threatened recently by government cutbacks. And can you tell us about that?

Dr. MALVEAUX: Sure. This is one of the most progressive programs that we see in a government that has cut back on programming in recent years because what it's basically done is that states allow people who maybe had a little too much money for Medicaid but not enough to qualify for private health insurance, the states will cover the children of those households, not the parents, but the children. And we know that for formative reasons, it's important for children to have health insurance.

Well, the Bush administration has come in and said that some states have a limit that's - a threshold that's too high. Initially, it was 200 percent of the poverty line or twice the poverty line. So if the poverty line is $20,000, then the threshold will be 40. But in places like New York, like D.C., like L.A., $40,000 is poverty, but it's not enough. You can't do much in L.A. with a $60,000 a year income if you've got two or three children. And so, basically, some states allow an even higher threshold as opposed to 40.

In New York State, for example, it's 400 percent, which is like $80,000. What happens then is that parents are able to basically pull children into health coverage, and the Bush administration is saying, wait a minute, too high. You can't go up until you prove that you've enrolled 95 percent of the children that are 200 percent and below.

Here is the problem with that. You're never going to enroll 95 percent of anybody in anything. We couldn't do it with the elderly. We can't do it with food stamps where people have entitlements. You simply can't enroll 95 percent. So it's a way of really saying that those middle-income families that can't get health insurance, maybe because they're employers are cutting back, maybe because their premiums are too high, they won't be able to get state coverage. It's really pernicious. And it doesn't hurt adults. It hurts kids.

CHIDEYA: So give us an example, just briefly, of what a typical person who could receive this insurance might look like. You're talking about kids whose families are low-income to, I guess, low-middle income?

Dr. MALVEAUX: To middle-income even for us. Let's just say dad's a bus driver and he makes 60 grand. In a state like New Jersey, he would be able - no, a bus driver is a bad example because if he were a municipal bus driver, of course, the city might - would provide health coverage. But let's say that someone is a clerical worker as a temp. And so you're working at a temp agency with no benefits but you're making decent money, say 50 grand a year. But you're a temp. That means your kids aren't getting any health coverage through your job. If you try to get it privately, it might cost you as much as $400 a month even more, and so you say, okay, let me go with the S-CHIP Program. Well, if you're forced - if the state is forced to stop at 200 percent, it's 40,000 not 50 and that mom won't qualify. And that means those children won't qualify.

There are lots of people who are earning a little over 200 percent into 300 percent especially in some of the areas I mentioned, some of our big cities where you have high cost of living. And these are really some of the places where marginal employers are not providing health coverage. We see it every day with the most recent poverty data that came out showed that although poverty line stays flat, increasing numbers of people have difficulty, especially in our ethnic communities with health insurance coverage. And so this is a backdoor way of closing this program down. Some would even view it as draconian. It gives states an impossible threshold. And, Farai, in - I think it's 19 states, they would have to cut back programs that already exist.

CHIDEYA: Well, I want to move onto a listener question. We have folks who are fabulous at asking us about what they really care about. And we've got something from Kim Perry(ph). She says I have a question about state planning and living wills. How do I make sure my parents' assets are properly transferred upon their death? I've heard horror stories from friends who've had to deal with the government, credit card companies, and other third parties wiping out accounts. How do I broach the topic without sounding greedy and disrespectful?

What do you think about that? Because it can be tricky dealing with families on these issues.

Dr. MALVEAUX: Well, I think that a lot of it does depend on the family situation. Does Kim have siblings? What are family relations like? How old are her parents? What is their health like? However, the way that she poses it in her question to us, Farai, is the way that I pose it to parents. Look, Jane's dad just passed and her mom is still fighting with the government about the estate. I hope that doesn't happen to us. What kind of plans have you made?

That's - I think that's a god way to open up the door to make it sound like you're - you know, not sound like but you're concerned about something that has happened to someone else, and you're raising the question. If it's a family that has had a history of contentious relations around money, it would seem greedy and disrespectful. But most folks don't want the government or others to get their money. Now, if someone dies and owes creditors and others, they are -those things will have to be paid. But it is possible to shelter some of your income through living wills. It is possible to do other estate planning kinds of things. And it's only about conversation. It's interesting in America that people would rather talk about how often they have sex than what they do with their money. So it's a dicey conversation many times, but Kim's going to have to just bite the bullet with her parents.

Here's another thing, though, Farai. No one should believe that they're entitled to their parents' money. That's their money. Some people have the philosophy that they want to spend down every dime, enjoy the money that they earned, and there's no reason for them to pass it on. If that's their attitude, live with it. If they, however, have said I'd like to do something for my grandchild's education, I want to make sure that you get this house, things like that - that's the time to say, well, how have you insured that? What are you going to do? Especially with property, because if you don't put it in your will, the government will decide who gets it. Even a simple question - mom, dad - have you made a will, is a way to open up the topic. But, you know, it's in the context of what the family has done about money before that. With a contentious relationship, someone's going to say, what are you doing? Waiting for me to die?

CHIDEYA: So just quickly, and you can delete this Taylor(ph), but just quickly, do you have any resources Julianne, for where people can go to find out more?

Dr. MALVEAUX: Motleyfool.com is a great place to go for any array of financial planning type questions. Nolo Press also has a really great book. If you go on to nolopress.com, they've got a great book on living wills and estate planning. And I think their stuff is very simple, very straightforward, so that people who don't have complicated estates can even do some of the stuff, depending on the state, themselves.

CHIDEYA: Well, Julianne, thank so much.

Dr. MALVEAUX: Thank you.

CHIDEYA: Julianne Malveaux of an author, economist, and president of Bennett College. She spoke with us from member station WFDD in Greensboro, North Carolina.

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