March 15, 2012
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The enormous loss of employment—the proportion of people younger than 65 with no workers in the family jumped 10 percentage points to 31.6 percent in 2010—was the key driver of the decline in employer health coverage, accounting for about three-quarters of the drop since 2007, according to findings from HSC’s 2010 Health Tracking Household Survey, a nationally representative survey with information on 13,595 nonelderly people.
However, well before the start of the Great Recession in December 2007, a steady decline of employer health coverage was underway with fewer firms offering coverage and fewer workers taking up coverage—likely because of rising health care costs, the study found. While overshadowed by the massive employment loss, declines in access and take up each explain more than 10 percent of the total drop in employer coverage between 2007 and 2010, according to the study.
“What’s happened to employer-sponsored health insurance in recent years is akin to an acute illness aggravating a chronic condition,” said Chapin White, Ph.D., an HSC senior researcher, and coauthor of the study with HSC Senior Fellow James D. Reschovsky, Ph.D. “The acute illness—the sluggish economy and weak employment situation—likely will resolve at some point, but the underlying chronic condition—rising health care costs—likely will persist.”
The core threat to employer health coverage is health care costs increasing faster than wages, which makes employer coverage unaffordable for a larger share of the workforce, particularly low-wage workers. For example, among children and working-age adults with incomes below 200 percent of poverty—$44,100 for a family of four in 2010—the proportion with employer coverage dropped from 42 percent in 2001 to 24 percent in 2010, according to the study.
The study’s findings are detailed in a new NIHCR Research Brief—The Great Recession Accelerated Long-Term Decline of Employer Health Coverage—available online at www.nihcr.org/Employer_Coverage.html. The HSC 2010 Health Tracking Household Survey, funded by the Robert Wood Johnson Foundation, for the first time included a cell phone sample to account for the growing number of households without a landline phone. Response rates were 45 percent for the landline sample and 29 percent for the cell phone sample.
Along with lower-income people, the decline in employer coverage disproportionately affected young adults, people with a high school education or less, and people employed in small firms. Key findings include:
While there has been vigorous debate about the effects of national health reform on employer-sponsored insurance, the study findings indicate that the debate often misses a key point—employer-sponsored insurance likely will continue to erode with or without health reform, especially for lower-income families and those employed by small firms.
The health reform law specifically targets the people—young adults, low-wage workers and those employed by small firms—who are falling out of employer-sponsored insurance and provides an alternative place for them to get health coverage.
The National Institute for Health Care Reform contracts with the Washington, D.C.-based Center for Studying Health System Change to conduct high-quality, objective research and policy analyses of the organization, financing and delivery of health care in the United States. The nonpartisan, nonprofit 501 (c)(3)organization was created by the International Union, UAW; Chrysler Group LLC; Ford Motor Company; and General Motors to help inform policy makers and other decision-makers about options to expand access to high-quality, affordable health care to all Americans.
The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nations changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is affiliated with Mathematica Policy Research.