Changes in Employer-Sponsored Health Insurance Coverage
|
Publication Date: September 17, 2003 Permanent Link: http://www.urban.org/url.cfm?ID=310849 Share:       No. 9 in Series, "Snapshots of America's Families III" 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.
The share of Americans covered by employer-sponsored health insurance fell significantly between 1999 and 2002, in large part because of the downturn in the economy that began in 2000 and the increasing cost of health insurance (Strunk and Ginsburg 2003). The lower rates of coverage affected adults and children at all income levels, but they were particularly noticeable in low-income families. This Snapshot uses the 1999 and 2002 National Survey of America's Families to examine the changes in employer-sponsored insurance and the factors that contributed to the overall drop in coverage. That drop was caused in part by a decline in employment: With fewer people employed, fewer families could receive coverage through an employer. Another contributing factor was a decline in the number of workers in large establishments, which are more likely to offer health insurance, and a substantial increase in the number of workers in small establishments, which are less likely to offer coverage.1 Finally, employers required workers to pay a greater share of the costs of coverage, which may have led more workers to reject the insurance offered by their employer. Major FindingsRates of employer-sponsored insurance for the U.S. population under age 65 fell from 70.4 percent in 1999 to 68.2 percent in 2002 (table 1). Had the population not grown, the number of people with employer-sponsored insurance would have fallen by 5.4 million. Rates of coverage dropped for both children and adults, regardless of family income. The declines were significantly greater among low-income children and adults (those with incomes below 200 percent of the federal poverty thresholds) than among their counterparts with higher incomes. Since low-income people are only half as likely to have employer-sponsored health insurance as people with higher incomes, the impact of reductions in coverage was much greater on low-income families. As might be expected, decreased employment during an economic downturn translated into fewer people with employer-sponsored coverage. The relationship between employer coverage and the number of workers in a family illustrates this change (figure 1).2 While the U.S. nonelderly population increased by 8.0 million from 1999 to 2002, the number of adults and children living in families with two full-time workers declined by 1.9 million. At the same time, the number living in families with one full-time worker, only part-time workers, and nonworkers increased by 2.0 million, 3.0 million, and 5.0 million, respectively.3 Within each family work status category, the likelihood of having employer coverage was essentially unchanged, except for people living in families with one full-time worker, who experienced a decline from 73.3 percent to 72.0 percent (figure 1). Thus, the overall decline in the rate of employer-sponsored insurance stemmed primarily from an increase in the share of families with lower levels of labor force participation, among whom employer-sponsored insurance is less common. Because rates of employer-sponsored insurance vary with establishment size, changes in the number of workers or the rates of employer-sponsored insurance by establishment size can be important. The number of workers in small and medium-sized establishments (including the self-employed) increased substantially between 1999 and 2002, while the number of workers in large establishments declined substantially (figure 2). The overall rate of employer-sponsored insurance among workers declined significantly, from 76.6 percent to 75.1 percent (figure 2). The picture varied by establishment size, however. Employer coverage of workers in small establishments declined from 64.2 percent to 59.7 percent, but coverage for workers in medium-sized establishments rose from 83.5 percent to 85.0 percent. These findings are consistent with data (not shown) indicating that employer offers of insurance increased in medium-sized establishments but not elsewhere. The decline in employer-sponsored insurance seems to have been the result of the movement of workers from large establishments to medium and, particularly, small ones. As with family work status categories, population shifts into categories where employer-sponsored coverage is less likely appear to explain more of the overall decline than changes in coverage rates within each category. Part of the reason for the decline in employer-sponsored health insurance may have been decreased employer contributions to premiums (table 2). Employers paid the entire insurance premium for 30.7 percent of workers in 1999, a figure that dropped to 27.6 percent in 2002.4 This decrease was particularly striking among workers in small establishments, where 39.2 percent of workers had their entire premium paid by employers in 1999, compared with 33.6 percent in 2002. During the same period, the share of workers whose employers paid none of their health insurance premium increased significantly. DiscussionThe data show a widespread decline in the rates of employer-sponsored health insurance, particularly among low-income families. The causes appear to be the economic downturn and the associated reduction in employment, the increased proportion of workers in small establishments, and the increased cost-sharing requirements attached to employer-sponsored insurance. The decline in employer-sponsored health insurance among children was more than offset by increased enrollment in Medicaid and the State Children's Health Insurance Program, however, resulting in fewer uninsured children in 2002 than in 1999 (Kenney, Haley,and Tebay 2003). For adults, the increase in public coverage was roughly comparable to the decline in employer-sponsored insurance, so there was no change in the uninsurance rate (Zuckerman 2003). Thus, while employer-sponsored health insurance coverage has proved vulnerable to economic setbacks, public program expansions have averted an increase in the number of uninsured Americans, at least to date. But the expansion of public coverage has come at a considerable cost. Medicaid expenditures, for example, rose from $202 billion to $257 billion between 2000 and 2002, owing in part to the enrollment of more children and nondisabled adults. These costs have contributed to the serious budget pressures being faced by most states, and public programs may have difficulty filling in the gaps in employer-sponsored insurance if those gaps continue to grow (Holahan and Bruen forthcoming). Tables and Figures
References
Holahan, John, and Brian Bruen. Forthcoming. "Medicaid Spending Growth 2000-2002." Policy Brief. Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured. Acknowledgments The author is extremely appreciative of the comments from Ken Finegold, Genevieve Kenney, Alan Weil, and Stephen Zuckerman and the research support from John Graves. Endnotes 1 An establishment is a physical location, such as a plant, office, or store, where business is conducted or services are performed. Establishment size is defined as follows: small, 0-24 employees; medium, 25-499 employees; large, 500 or more employees. John Holahan is the director of the Health Policy Center at the Urban Institute. About the SeriesSnapshots III presents findings from the 1997, 1999, and 2002 rounds of the National Survey of America's Families (NSAF). Information on more than 100,000 people was gathered from approximately 40,000 representative households in each round. The NSAF is part of the Assessing the New Federalism project (ANF). Information on ANF and the NSAF can be obtained at http://www.urban.org/anf. The Assessing the New Federalism project is currently supported by The Robert Wood Johnson Foundation, The Annie E. Casey Foundation, the W.K. Kellogg Foundation, The John D. and Catherine T. MacArthur Foundation, The Ford Foundation, and The David and Lucile Packard Foundation. Alan Weil is the director of Assessing the New Federalism. Kenneth Finegold is the editor of Snapshots III. Design is by Bremmer & Goris Communications. Related Publications
Other Publications by the AuthorsThe 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. Usage, posting and reprint of materials on the UI web site: Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required. Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact paffairs@urban.org. If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PDF
Printer-friendly summary
