Couple finds future dim as costs rise, home value falls

QUAKERTOWN, Pa. — These are scary times for David and Karen Hammerschmidt.

Like most Americans, they're improvising their way through the economic downturn.

When cash was short, they rented out their two guest bedrooms. When carpentry work dried up locally, David, 43, took a lower-paying job outside the area even though the travel costs were greater.

Now, however, as their health problems worsen and their financial woes mount, the Hammerschmidts realize that they can't answer every challenge the economy throws at them, and they're running out of time to figure out how. In two months, the couple's health insurance from David's previous job expires, and they're not sure whether they can get private coverage. Both have medical conditions that most insurers won't touch, and those that do charge dearly.

"I'm not sure what we're going to do if we're not able to get coverage. I just have to trust that we will," he said.

With Karen, 55, unable to work because of an autoimmune disease, David's earnings as a journeyman carpenter were usually enough to carry the day. But frequent absenteeism because of his rare nerve disorder and the worst housing slump since the Great Depression have cut his earnings by up to $25,000 this year.

"My biggest concern would be finding any work at all in the coming months," he said.

The Hammerschmidts' uncertainty is America's uncertainty. The nation's faltering economy has shaken the foundations of family security from coast to coast, leaving no community untouched.

Quakertown, the small borough 29 miles north of Philadelphia where David and Karen Hammerschmidt live, is the third stop on a journey into America to chronicle the effects of the financial crisis on people of all backgrounds. Journalists from McClatchy and the American News Project, an independent video news outlet, will share their stories from the road in print, in video and on the Internet.

On the border of the Lehigh and Delaware valleys in Pennsylvania, Quakertown is only a few minutes south of Bethlehem and Allentown, where the steel industry dominated the economy before cheaper foreign imports forced the mills to close, leaving the area a hollow shell of its former self.

The Hammerschmidts thought that they could tap their home equity if things got really tight, but falling home values and the Wall Street-inspired credit crunch have jeopardized that option.

"Three months ago we could have walked into the bank and walked out with a check, but right now I'm not sure we'd be able to get a home equity loan at all," David Hammerschmidt said. "That was a little bit of peace of mind with our health conditions and all that. As a last resort, I mean if everything else falls out, before we'd end up on the street, we'd have our home equity. Now I don't even know if that's possible."

For folks such as the Hammerschmidts, health-care costs are one of the biggest concerns, and with good reason.

The average cost of family health insurance has increased 119 percent since 1999; that's roughly four times faster than the rate of inflation — 29 percent — over the same period. It's more than three times faster than the growth in workers' earnings, which have increased 34 percent in the last nine years.

Under the health plan of David's former employer, the Hammerschmidts pay $733 a month for joint coverage. The cost has more than doubled since 2003, and David expects that similar coverage in the open market probably will cost $1,100 a month or more. Since 2003, the Hammerschmidts have spent more than $80,000 on out-of-pocket medical expenses.

After going over the couple's monthly medical bills, Karen Hammerschmidt was dismayed to find that they collectively spend about $2,200 a month.

"Wow. It's even worse when you put it down on paper and actually take a look at it. That's sad," she said, putting her head into her hands.

Karen used to run a group home for delinquent boys here in town, but hasn't worked since late 2002 because of her autoimmune problems, which cause pain and swelling throughout her body. Officially disabled in 2004, a monthly disability check from Social Security is her lone source of income.

Because of her other complications, such as fibromyalgia and asthma, she requires supplemental coverage through her husband's plan.

David suffers from occipital neuralgia, a rare nerve disorder that gives him severe headaches three to four times a week and requires emergency room treatment four to six times a month for intravenous pain medication that he can't receive at his doctor's office.

David, a burly, bearded man, said the pain was virtually constant. "Usually I feel like I have an ax in the back of my head. It feels like the back of my head has been blown open."

With insurance, his hospital visits cost him only $100 out of pocket. If he doesn't renew his coverage in December, however, he could be responsible for the entire emergency room cost, which probably will be several hundred dollars more for each visit.

That alone could push the family into a deeper financial hole.

The Hammerschmidts' health-care problems have forced them to look closely at John McCain's and Barack Obama's proposals to address the nation's health-care system.

Obama's proposed universal health-care plan embodies the long-held Democratic Party goal of covering the 47 million Americans who lack health insurance. Employers, insurers, individuals and the government all would have greater roles in assuring coverage through a number of proposals designed to close gaps in the system.

McCain's plan takes a different approach. It follows the Republican belief of trying to make the private-insurance marketplace more affordable and competitive by radically altering the tax treatment of health-care benefits.

To level the playing field, McCain no longer would exempt employees' health benefits from income taxes. Instead, he'd provide refundable tax credits of $2,500 for individuals and $5,000 for families to help purchase private insurance.

Karen Hammerschmidt supports Obama’s plan. She said McCain's $5,000 tax credit wouldn't go very far when family coverage averaged $12,680 a year.

"It sounds, I think, better than it really is when you sit down and figure it out on paper," she said. "It actually doesn't sound much better than we already have."

David Hammerschmidt isn't supporting either proposal yet. He's more concerned about finding work in the coming months in a slow economy.

With his inability to find work or even hold a conventional job because of his chronic headaches, he's having questions about his self-worth, he said.

"I'm feeling like I'm becoming more of a burden . . . because of not being well all the time. I ought to be able to go out and work full time. So that's bugging me more than anything," he said, choking up. "It's just the situation, and feeling helpless. I'm becoming the burden."

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