The Two-Income Trap - Elizabeth Warren [48]
Four months after he returned to work, Jamal took a second job working the evening shift at 7-Eleven. Trish, meanwhile, had already requested all the overtime hours she could get. Their oldest son, Jared, got a job delivering pizzas on the weekends; most weeks he slips a few twenties to his mom. When his sister made the cheerleading squad, Jared quietly paid for her uniform. The Duprees have drained their kids’ college funds, emptied their retirement accounts, and they haven’t eaten in a restaurant in more than a year. They still have several thousand dollars in credit card bills, and Jamal is praying that he can avoid another surgery. But, with a little luck, they just may make it.
An Ounce of Prevention
What makes the Duprees’ story different? Why did they endure, when so many others failed? Some of the answer was luck. Jamal was lucky to have a job to return to. (He was out too long for the Family and Medical Leave Act to safeguard his job.) Trish was lucky to get the overtime pay she badly needed. Most of all, they were lucky that no other disasters hit them while they were vulnerable.
But some part of their survival should be credited to planning, the ounce of prevention that policymakers and anxious families could learn from. Sensible planning starts with insurance. This is the classic prescription from any economist. Whenever a family (or a business) confronts the possibility of a potentially devastating danger, it is time to buy an insurance policy.
The Duprees’ health insurance policy didn’t cover everything; the deductibles are high enough to prevent Jamal from getting the rotator cuff surgery he badly needs. Many families have discovered that the exclusions, copayments, and caps on health insurance mean that they are on the hook for far more than they anticipated, while others have learned that much-needed services such as physical therapy or mental health treatment are scarcely covered at all. Health insurance is no guarantee that a catastrophic illness won’t send a family into a financial tailspin. Approximately 240,000 families with continuous medical insurance file for bankruptcy every year at least in part because of outstanding medical bills.58
But without that insurance policy, the Duprees wouldn’t have had a prayer. Ever since President Clinton promised to expand health insurance coverage to all Americans, coverage for the uninsured has remained a prominent political issue. And for a good reason: A lack of health insurance coverage sends as many as 150,000 families to the bankruptcy courts each year.59
But another form of insurance may be even more critical for preserving families’ financial health in the wake of illness: disability coverage. The liberal policy wonks may stop us right here. What do we mean expansion of health insurance isn’t the most important initiative since The New Deal? Reducing the number of uninsured ranks high on the agenda of both major political parties, whereas disability coverage is virtually nonexistent on the national agenda.
In the age of the Two-Income Trap, when families have sacrificed their own personal safety nets, disability insurance can be all that stands between them and financial ruin. Unfortunately, a majority of workers do not have any private long-term disability insurance, and only a handful of states provide coverage for their residents.60 Unemployment insurance offers no relief, since most states require that an individual be “able” to work in order to qualify for benefits.61 Fortunately, there is some good news here. Fixing the disability coverage problem may be easier than solving the health insurance crisis, because the apparatus already exists. Virtually every worker in America has long-term disability coverage through the Social Security Disability Insurance (SSDI) program. All that remains is to close the holes in the SSDI safety net, many of which are big enough to drive a truck through.
SSDI disability benefits are available only to those whose condition is expected to result in death or to last at least