Effects of Recent Employment Changes and Premium Increases on Adult Insurance Coverage

Research Report

Effects of Recent Employment Changes and Premium Increases on Adult Insurance Coverage

October 13, 2006

Abstract

Jack Hadley uses data from 1997, 1999 and 2002 National Surveys of America's Families to estimate a statistical model of the relationships between employment loss, insurance costs, and insurance coverage of non-elderly adults. Using a 2000 to 2003 study period, simulations based on the model suggest that the large increase in private insurance premiums (about 33 percent in constant dollars) was responsible for 3.1 of the 3.4 percentage point drop in private insurance coverage. Employment loss has a substantial impact on the coverage of affected individuals, but its impact on aggregate coverage is relatively small. Expanded public coverage absorbed only about one-quarter of the loss of private coverage. Hadley maintains that controlling insurance (and medical) cost inflation is critical to expanding insurance coverage, even after the employment rate recovers. (Medical Care Research and Review 63(4): 447-476, 2006)

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