Tough cookies…

The Wall Street Journal today reports of the twin devastation of abruptly losing a job and health insurance. Not that losing both at once isn’t bad enough, but it’s especially awful when the company goes bankrupt because employees — make that “former employees” — are asked to foot medical bills accrued when they thought they had insurance. (Here is the NY Times story on the same thing)

Archway & Mother’s Cake and Cookie Co. (aren’t they the makers of those cute pink and white sprinkled animal cookies) abruptly closed its doors in October laying off all 673 employees. What ensued was a mad dash to get medical procedures done before insurance ran dry:

…A pregnant employee had labor induced before her due date. Another worker bought a $6,000 insulin pump for her diabetic daughter. “I called my doctor at home and said, ‘I need to have my gallbladder removed this weekend,'” recalls Janet Esbenshade, a 37-year-old mother of two who lost her job packing cookies.

What employees didn’t know was the company was self-insured, meaning that it paid for medical expenses itself, but using a health insurer to administer the program. For employees, that meant once the company declared bankruptcy, announcing to the world it could no longer pay its bills, the medical bills fell back to the employees — tens of thousands of dollars worth of medical bills.

Some medical services rendered in September — the month before the company went belly up — are also becoming the responsibility of employees.

Archway isn’t the only company declaring bankruptcy and leaving employees adrift in Dante’s world. Bankruptcy filings among companies are surging.

Reading stories like this, you wonder, why the heck do we have an employer-based system anyway?

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