Fewer Americans Covered by Employer Health Insurance

An Economic Policy Institute (EPI) report noted that the percentage of Americans under 65 who are covered by employer-sponsored health insurance has dropped. The trend, which has continued for the last 11 years, underscores the disconnect between what American families need and what they can afford. 

In 2011, 58.3 percent of those under 65 had employer-based health insurance; in 2010, it was 58.6 percent. Employer-based coverage was highest in New Hampshire at 72 percent and lowest in New Mexico at 47.6 percent.

The non-partisan EPI went on to reveal that the steady downward trend in Americans with job-based coverage began in 2000, when just under 70 percent of Americans below age 65 had employer-sponsored health insurance. Safety nets like Medicaid and the Children's Health Insurance Program provided coverage for millions of Americans. The EPI noted that these programs offered medical insurance coverage for 25 million additional individuals in 2011.  

Between 2009 and 2010, the one age group that benefited from a rise in overall coverage was 18-24 year olds. The number of uninsured in this age group dropped by 500,000. This was due to easier access to public programs. While the Patient Protection and Affordable Care Act allows young adults up to age 26 to piggy-back on their parents' health plans, this hasn't helped uninsured young people whose parents don't have job-based coverage.

 

"Employer-sponsored health insurance is increasingly failing American families, causing far too many people to fall through the cracks," said Elise Gould, the institute's Director of health policy research. "While provisions in the Patient Protection and Affordable Care Act have helped mitigate the trend and will help more individuals and families in the future, the labor market's insufficient job creation and workers' ever-decreasing bargaining power will likely lead to further losses in employer-sponsored insurance coverage before major relief from health reform materializes."

The decline in ESI coverage mirrors an overall drop in health insurance coverage. In 2011, 47.9 million people under age 65 had no health insurance, a drop of 11.7 million since 2000. Uninsured workers tend to be young, Hispanic, and less educated with lower incomes. The tendency for employers to not cover part time employees also grew substantially from 2000 to 2011.

As jobs became increasingly scarce during the recent recession, many employers found they could dump their health care perks. Other employers simply outsourced jobs abroad. Either way, they avoided the ever-escalating rise in employee health care costs.

 

According to a recent study by Chapin White and James Reschovsky of the Center for Studying Health System Change, the recession permanently pushed more employees out of employer health plans. “Even when employment rebounds to pre-recession levels, a return to previous levels of employer-sponsored health insurance is unlikely,” they wrote. “Well before the start of the recession, 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.”

There’s no doubt that employer health care coverage is waning due to ever-rising costs. One solution is the recently enacted Affordable Care Act. Another is to simply tier healthcare so that Americans can pay for the health care they need—not want, e.g., “Cadillac” plans vs. high deductible plans that cover only major illness.

 

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