Print

Email story

Comment

Email editor

Betting the house... and the car ... and your health

Faced with soaring basic living expenses, just to make ends meet many people are walking a financial high wire by going without insurance coverage for their property, their vehicles or their health care.

By HELEN HUNTLEY
Published October 16, 2005

	[Times illustration: Rossie Newson]

JoEllen Schilke and her dad, Don Schilke, are serious risk takers. She doesn't insure her health and he doesn't insure his house. If she breaks a bone or his house burns down, they'll be in trouble.

"I take very good care of my health because I can't afford to get sick," said JoEllen Schilke, 44, who owns the Globe Coffee Lounge in downtown St. Petersburg. She has neither health nor disability insurance. "I'm terrified of breaking my hands or an arm," she said. "It would just be a disaster if I couldn't work."

Don Schilke is blase about his risk taking. At 76, he can count on Medicare for health coverage and says he'd move in with his daughter if his house succumbed to disaster - a possibility that prompts her to roll her eyes.

"The only thing I fear is somebody falling on my property," he said. Without homeowners' insurance, he doesn't have liability coverage.

Whether you call it "going bare," "self-insurance" or don't even think about it, risk taking is becoming a bigger part of life for many Americans.

Health insurance is the prime example. One in five Floridians - 3.5-million people - do without it. Most of them are too young for Medicare and too old or otherwise ineligible for the state's Healthy Kids program. Their ranks are heavy with entrepreneurs, early retirees, part-time workers, the unemployed and low-income workers who either don't have insurance offered to them or who can't afford what is offered.

Hewitt Associates says the average U.S. worker who has health insurance through a job will pay $1,612 in premiums and $1,524 in out-of-pocket costs for health care next year. But it's not unusual for the tab to be much higher. And costs soar for people who have to buy individual policies.

"We discontinued our health insurance at my husband's work because the cost was too high," said Carolyn Funk, 43, of Homosassa. She said her husband, a grocery store department manager, made $21,000 last year and they couldn't afford $107 a week for the package of health and dental insurance offered. "We were spending one-fourth of our income on insurance."

She now has coverage through a new job as a reading tutor, but the rest of the family does not. "We just go without when we are sick . . . and pray that we stay healthy."

Cost is a growing issue for homeowners, too. If you have a mortgage on your home, your lender will require you to carry property insurance - and flood insurance if you live in a high-risk zone. But if you own your house free and clear, as many retirees do, whether you insure your property is up to you.

As insurance companies cancel policies to reduce their exposure to hurricane-prone Florida, homeowners often find themselves in a bind. When St. Petersburg retiree Ed Pauley's $688 policy was canceled recently, the state-run Citizens Property Insurance was the only company that would insure him - for $1,800 annually. He plans to pay, but has no insurance while waiting for workers to finish a $4,000 rewiring job Citizens required as a condition for coverage.

"It seems like everything is caving in at one time, between having health problems, not having a lot of money and then having this financial problem hit me," said Pauley, 67. "If this trend continues, it will send me out of state for sure."

Don Schilke sold insurance in New York for 25 years and says he would have told somebody like himself "you're foolish" for going bare. But he said he hasn't been motivated to do anything about it. And he figures he has saved thousands of dollars by forgoing insurance since he bought his modest house in northwest St. Petersburg six years ago.

Other homeowners opt out of flood insurance. If they don't live in a high-risk zone, lenders don't require it and most homeowners figure they are safe and don't bother to get it. However, 20 to 25 percent of flood losses each year occur in low-risk zones, according to the National Flood Insurance Program.

"When people are presented with the idea that a coverage is optional, the vast majority choose not to purchase it," said Robert Hartwig, chief economist for the Insurance Information Institute.

Even when insurance is legally required, not everyone buys it. Most states, including Florida, require auto insurance covering personal injury and damage to others' property. But Florida officials estimate that 6 percent of the vehicles on the road are uninsured and more than 8 percent of those involved in accidents have no coverage.

Denise Blackford, 44, of New Port Richey said she went without car insurance this summer when she couldn't make the payments. Medical and utility bills and gas to get to work were her top priorities.

"Once I realized my license would be affected by this, I got inexpensive, minimum-coverage auto insurance, but unfortunately had to take it out of the mortgage money," she said. Blackford recently started a new job with health benefits she hopes will provide some financial relief.

Sometimes it isn't money that is the issue. If you don't have a driver's license, you can't get insurance, leaving out many illegal immigrants and drivers whose licenses have been suspended or revoked.

And, of course, many who do have insurance don't carry nearly enough to cover the damages if they are in a serious accident. As a result, other drivers are forced to buy uninsured/underinsured motorist coverage if they want to protect themselves.

The whole point of insurance is to transfer to someone else a risk that you cannot afford to take yourself. Financial planners say there is no need to insure yourself against trivial risks - you can forgo the warranty on the television set - but you do need to have a plan for handling those that pose a serious threat to your finances.

"There are chances every day in life," said Sarasota financial planner Margery Schiller. "It's a matter of which ones you will accept and be able to live with or work around, and which ones you feel would be so devastating that you would need help from an insurance company. That's really the decision."

However, she acknowledges that the choices can be difficult.

"If it means you can't buy medicine or put food on the table, it's a very serious decision," Schiller said. "If the difference is you can't take as many vacations in a year, the decision is affected by your value system."

Insurance industry officials say the decision often comes down to a matter of priorities, influenced by our optimism that nothing bad will happen.

"Our culture has changed," said David Woods, president of the Life and Health Insurance Foundation for Education. "Protecting against loss used to be a major issue for almost everyone. People who came through the Depression understood loss and what it was to have no money. We became more affluent as a nation, and the idea of poverty and financial hardship for most Americans became an intellectual possibility, but they didn't see it as a real possibility for them."

He said surveys show 80 percent of households think that life insurance is important, but about a third don't have any. "If you probe that, the No. 1 reason they will give for not owning life insurance they say they need is because it's too expensive," Woods said. "That's bogus."

The Insurance Information Institute estimates a 40-year-old man will be able to buy $500,000 in 20-year term coverage next year for $352 a year if he qualifies as a preferred risk or $641 if he is a standard risk. Rates for women are lower.

"It isn't that it's not affordable," Woods said. "It's that they have other places to put money that are more important to them. That's really the issue here."

Many people who don't have insurance are counting on the government to bail them out in a crisis. Sometimes that happens. Relatively few people buy long-term care insurance, but those who need it still get care. More than 80 percent of the people entering nursing homes in the state's 1999-2000 fiscal year applied for Medicaid within the first three months. Once they spent down their assets, Medicaid paid for nursing home costs their incomes did not cover.

Social Security offers a safety net of survivors' benefits and disability benefits. The Federal Emergency Management Agency provides help - mostly in the form of loans - for people whose homes are wrecked by natural disasters. And hospitals provide emergency care to the indigent.

But these are far from perfect alternatives to insurance, as many people who have relied on them will testify.

Ask Cynthia Besio of New Port Richey. She fell down a flight of steps and cut her leg while waiting for the annual open-enrollment period to sign up for insurance through her husband's job.

"That was a gamble we took and lost," she said. Two years and three surgeries later, Besio has about $100,000 in medical bills she can't pay. "It took my pristine 800 credit score down to about 450. Now I can't even refinance my house."

Besio, 50, also thinks the lack of insurance affected the care she received at hospitals. After her injury, she said she "lay on a gurney in the hallway from 9:30 in the morning until 3:30 in the afternoon before they finally put me in a room." When the wound became infected, she had difficulty finding treatment. One hospital agreed to accept her based on a letter from her lawyer saying that she was suing the owner of the property where the accident occurred (the case is still pending).

"Every other wound care center wanted $1,500 to $2,000 just to walk in their door for the doctor just to look at me," she said. Besio now has health insurance.

A Kaiser Family Foundation study found the uninsured are three times more likely than the insured to do without needed care or prescriptions because of cost. They are less likely to receive preventive care and cancer screening exams and die earlier, the foundation said.

A Florida study released this month had similar disturbing findings. The study of nearly 11,000 children hospitalized with injuries found those without insurance were more than twice as likely to die.

Disability is another thorny issue. A 40-year-old has a 45 percent chance of being disabled for 90 days or more before age 65, but most private-sector workers have no long-term disability coverage. Social Security and workers' compensation are primary sources of income for disabled workers, but qualifying for Social Security benefits can be difficult.

Medical bills and unemployment due to medical problems are major causes of bankruptcy filings.

There are no easy solutions to the insurance shortfall.

Paring back the amount of insurance can help make coverage affordable. Premiums for health, property and car insurance are lower if you increase your deductibles, paying routine costs out of pocket and saving the insurance for catastrophes. Car owners can drop their collision coverage, taking the risk of replacing their car themselves but maintaining personal injury and liability coverage.

Sometimes a change of living arrangements is in order. St. Petersburg financial planner Robert Doyle said selling and moving to a more modest home is an option for homeowners with big insurance bills and highly appreciated properties.

JoEllen Schilke's approach is to use alternative medicine, seeing a homeopathic physician instead of using traditional doctors and hospitals. She also is helping launch an organization for Tampa Bay area artists and musicians that she hopes eventually will be able to offer health insurance to members.

"I'm really tired of having benefits for drummers who had brain aneurisms and had no insurance whatsoever," she said.

Helen Huntley can be reached at 727 893-8230 or hhuntley@sptimes.com

[Last modified October 14, 2005, 18:39:02]