The Healthcare-Coverage Crisis in the Time of Coronavirus August 2020
Coronavirus is pounding economies around the globe. With one of the world's highest infection rates, the US market continues to contract; as a result, US white-collar workers earning $100,000 or more are in jeopardy of losing their jobs. New jobs won't become available until the economy recovers. In April, Moody's Analytics forecast that in 2020, "The nation's output could shrink by roughly 10.5 percent," and the unemployment rate could reach 20% before the economy starts to rebound.
Unlike most first-world countries, United States' employment and healthcare-insurance coverage have an intrinsic link. As the number of pandemic-related job losses grows, a corresponding record number of Americans and their famillies lose healthcare-insurance coverage. The current number of uninsured citizens far exceeds the number of uninsured during the Great Recession (cited as 2008–2009) and rivals the "worst economic downturn since WWI," says the advocacy group Families USA. The Bureau of Labor Statistics reports 14.7% unemployment in July. But, because of how the data are reported and calculated, that number does not account for all people who are unemployed. As early as May, both Forbes Magazine and The New York Times reported the actual unemployment rate to be closer to 20%. The country is not close to a rebound; in fact, quite the opposite.
Employees are the largest single line item in any organization's budget. Wage savings go directly to the bottom line. With consumer spending focused on essential goods and B2B sales withering, companies have no choice but to effect all possible savings—targeting white-collar workers earning $100,000 or more is an obvious starting point for consideration. Of white-collar workers operating from home, people who 'produce' become apparent, as do the deadwood. Which jobs can be eliminated without losing productivity becomes obvious. Few industries will be exempt. In April, Indeed, an employment-related search engine, published a list of 23 industries for which job postings are substantially fewer than they were a year ago: marketing, therapy, media and communications, legal, customer service, banking and finance, and sales top the list.
There are different types, as well as different sources, for healthcare insurance. Insurance may be obtained from work (42% of individuals do so) where policies are from non-government insurance providers. Insurance companies sell both group and individual policies; 39% of adults have non-government policies. Government policies include Medicare and Medicaid (28% of adults are covered), and other types of government insurance (7%) such as TRICARE (US Millitary insurance), US Department of Veterans Affairs health care, and US Department of Defence healthcare. Another form of govement insurance is obtained through a state or national health exchange (5% or 12.5 million adults buy coverage) officially known as the Affordable Care Act (ACA) and commonly referred to as Obamacare. In addition, SBI's June 2020 MacroMonitor Market Trends Newsletter reveals that in 2018, 24.5% of all US households (34.2 million) had no health insurance.
The extent of change between government, non-government, and uninsured populations will depend on the extent that COVID-19 alters the number of people who obtain healthcare insurance though work. The future of healthcare insurance coverage will also depend on a post-election Supreme Court ruling on a Texas case that could invalidate Obamacare. If the ACA is over-turned, more than 12.5 million people will be affected. A negative ruling will also affect people with Medicaid coverage obtained following a provision in the ACA which called for expanded eligibility to cover more low-income Americans.
In consideration of the VALS types most likely to earn $100K or more annually, and the pre-pandemic distribution of VALS types that obtain their healthcare insurance through work, Thinkers (the most likely consumer group to earn a salary between $100K and $250K) followed by Achievers will likely bear the brunt of white-collar layoffs. These are also the two groups more likely than all others to insure not just themselves but their family as well.
Thinkers are members of the "old guard." Many of those still working are mature and experienced. Attentive, detail oriented, and judicious, Thinkers are cautious with money. Disbelieving of most advertising, they're rarely influenced to buy the latest and greatest products and services at top dollar. Instead, they balance what spending is necessary to live a comfortable—not extravagant— lifestyle with saving and investing. Financially, many are better prepared than most to withstand a prolonged layoff. Thinkers' households have the highest mean balances in savings, investment and retirement accounts. Those who are in a position to retire early, may do so. Job losses suffered by Thinkers will be felt in the business-to-consumer marketplace. Although they are not constant buyers, Thinkers are consistent buyers of higher-than-average-priced retail goods.
Achievers are in a different situation entirely. Some are just starting out; most are in the midst of establishing themselves firmly; they are more likely to have children than any other consumer group. Pressure on income is great. Real estate, vehicle, and consumer-loan debt is often higher than that of most other groups. Household income is usually sufficient to cover expenses and some wants but, any reduction of income spells trouble. Unlike Thinkers, Achievers are not adept at belt-tightening and denial. Job losses among Achievers will hit the gut as well as the pocketbook. Egos will be bruised as job replacement will be difficult for the foreseeable future. Achievers' job loss will have both immediate and long-term effects; felt immediately in the consumer marketplace because being seen "buying," and acquisition itself, are the most common ways many Achievers demonstrate their position in society; long-term because of Achievers' inability to save for emergencies, children's educations, and retirement.
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