Health Insurance in Nonstandard Jobs and Small Firms: Differences for Parents by Race and Ethnicity

Abstract

This brief provides new insights about health insurance coverage gaps among racial and ethnic minority groups, focusing on parents with employment in small firms or nonstandard employment. Compared with white parents, a disproportionate share of Latino and black parents have nonstandard employment, and Latino parents are more likely to have employment in small firms. These work arrangements increase the risk of being uninsured since they are less likely to come with an offer of health insurance compared to regular large firm employment. Few uninsured Latino parents could obtain coverage under existing Medicaid programs. Potential impacts of health reform are discussed.

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Introduction

A large body of literature documents the disproportionate lack of access to employer-sponsored health insurance (ESI) among racial and ethnic minorities (AHRQ 2008). Public insurance closes some of the gap, but coverage gaps remain. Among all people living in the United States in 2008, the uninsured rate for non-Latino whites was 10.8 percent, while it was nearly twice as high for blacks (19.1 percent) and nearly three times as high for Latinos (30.7 percent) (DeNavas- Walt, Proctor, and Smith 2009). Among children, uninsured rates were lower than for adults, but with similar racial and ethnic patterns. While the observed disparities in health insurance coverage have many underlying causes, racial and ethnic variation in parents' work arrangements may be one important factor.

Parental work arrangements may affect health insurance coverage through various means. In this brief, we explore whether a disproportionate share of racial and ethnic minority parents is employed by small firms or in nonstandard jobs (i.e., contingent employees and employees in alternative work arrangements). Smaller firms (i.e., with fewer than 25 employees) are less likely to offer health insurance than larger firms, and when smaller firms do offer health insurance their employees are less likely to take it up than employees of larger firms (Clemans-Cope and Garrett 2006; Sommers and Crimmel 2008). Small employers are less likely than larger employers to offer health insurance coverage because they typically face substantially higher administrative loads and have fewer enrollees over which to spread the risk of a high-cost enrollee, both of which raise premiums. In addition, smaller firms are more likely to have low-wage employees, reducing the take-up of offered coverage. Low-wage employees may prefer to take their compensation in wages rather than as health insurance, particularly since they are less likely than higher-wage employees to benefit from the tax advantages of ESI. As for nonstandard arrangements, employment tends to be less secure and to have lower wages and fewer benefits compared with more traditional employment arrangements, and access to and take-up of ESI also tends to be lower (Ditsler and Fisher 2006; GAO 2000; Hipple 2001; Houseman 2003).

This brief provides new insights about coverage gaps among racial and ethnic minority groups. We begin by examining the extent to which parents' work arrangements are associated with the relatively high rate of uninsurance among racial and ethnic minority parents. We examine parents' individual and employment characteristics by race and ethnicity, and whether race and ethnicity are associated with parents' work in small firms and nonstandard employment (e.g., temporary employees, employees of a temporary help agency), which typically offer fewer benefits than traditional large-firm employment. Separating parents by employment type, we examine whether race and ethnicity are associated with insurance status and with access to and take-up of ESI. We then examine eligibility for Medicaid coverage among uninsured parents by key characteristics. We conclude by discussing our findings' relevance to current proposals to reform and expand health insurance coverage.

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