Access to Employer-Sponsored Health Insurance among Low-Income Families

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Abstract

Lack of health insurance can affect the health and productivity of workers as well as the health of workers’ families, especially for low-income families, who are more likely to have members in poor health.  We show that about half of children in low-income families do not have access to employer-sponsored insurance (ESI).  Among the families without access to ESI, public insurance fills some gaps among children, but parents remain uninsured at high rates.  For these families, children are twice as likely—and parents are nearly three times as likely—to be uninsured compared to families with an ESI offer.

Introduction

Lack of health insurance to facilitate access to health care can affect the health and productivity of workers as well as the health of workers’ families. This is especially true for low-income families (families with incomes below 200 percent of the federal poverty level [FPL]), which are more likely to have members that are in poor health (Bloom, Dey, and Freeman 2006; Pleis and Lethbridge-Çejku 2006).

In 2005, just 39.8 percent of workers with family income below 100 percent of FPL were eligible for employer-sponsored health insurance (ESI), and 60.3 percent of workers with family income between 100 and 200 percent of FPL were eligible. In contrast, 89.6 percent of workers in families above 400 percent of FPL were eligible for ESI (Clemans-Cope, Garrett, and Hoffman 2006). Royalty (2000) finds that when employers are required to raise wages for low-wage workers through an increase in the minimum wage, they compensate by reducing worker benefits such as health insurance. According to Royalty, an increase in the minimum wage of $0.50 from its 1999 level would decrease workers’ eligibility for health insurance by 3.9 percentage points.

Even when workers are eligible, low-income workers may find the required premium contributions unaffordable, leading to lower rates of take-up conditional on offer. For example, among workers with family income below 100 percent of FPL who are offered ESI, only 63.5 percent take it up, relative to 83.7 percent of workers above 400 percent of FPL (Clemans-Cope and Garrett 2006). There is a direct, negative relationship between the percentage of the premium that workers are required to contribute and the rate of take-up (Kaiser Family Foundation 2007).

There is substantial evidence that people who are insured have access to better health care, both in the case of acute illnesses such as heart attacks and for management of chronic conditions such as hypertension. These access differences can result in measurable differences in health outcomes (Hadley 2003).

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Disclaimer: The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.