by Leigh Morgan
June 18, 1998

The fact that people without health insurance are a strain on the healthcare system is well-established, but the statistics behind the scenes may be surprising.

Eight out of every 10 uninsured Americans are in working families, and 78 percent of uninsured people are from families with incomes above the poverty level, according to a 1998 report from the Kaiser Family Foundation. This population—the working uninsured and their families—makes up the bulk of the 40 million uninsured Americans. And despite a robust economy and numerous laws aimed at enhancing access to health coverage, fewer Americans receive health benefits through their employers than a decade ago, according to several studies.

There aren’t any easy explanations of why the trend has occurred or how to reverse it. Researchers suggest the decline has less to do with employers’ failing to provide coverage than with employees’ passing up coverage when it’s offered.

Facts and figures

The Kaiser Family Foundation report shows that the portion of people with employer-based coverage dipped from

69 percent in 1987 to 64 percent in 1995, the last year for which figures are available. A second study, commissioned by the AFL-CIO and conducted by the Lewin Group Inc., concludes that some 8 million people lost job-based coverage in 1996 because of a range of economic factors, including higher premium contributions required by employers.

While the number of workers offered health insurance by their employers actually grew from 1987 to 1996, the proportion of workers holding a health insurance plan from their main job fell during that time, according to data reported in the November/December 1997 issue of the journal Health Affairs.

Why workers opt out

Workers decide against individual or family coverage from an employer for a range of reasons, researchers say. According to the AFL-CIO report, employers are requiring workers to shoulder a larger portion of escalating premium costs, meaning fewer employees can afford the coverage. For example, a typical worker who paid $658 in annual premiums for family coverage in 1988 forked over $1,615 for the same coverage in 1996, according to the report.

While the AFL-CIO report calls cost-shifting the single largest factor in the erosion of job-based insurance, other studies point elsewhere. The Employee Benefit Research Institute reported that a combination of economic issues come into play. Unlike the other studies, the EBRI concluded that fewer companies are offering health insurance benefits. The organization also cites a drop in real wages, a shift from manufacturing to service sector jobs, and an increase in part-time shifts.

The institute’s figures show a small rebound in work-based coverage in recent years. While coverage fell from 69.2 percent to 63.5 percent between 1987 and 1993, it increased to 64 percent by 1996. "I don’t want to give the impression that we’ve gotten back to the state of the world in 1987, but the year-to-year declines have stopped," said Paul Fronstin, PhD, senior research associate at the institute.

Despite the discrepancies, researchers generally agree that health insurance costs are rising and that cost-shifting practices occur, said Catherine Hoffman, ScD, RN, senior researcher for the Kaiser study.

"There’s a consensus that there has been a drop in the portion of Americans with job-based health insurance, and it’s true that higher premiums are being passed on to the employee," she said. "If you’re a low-income worker and premiums increase, it’s simply tougher to afford them."

Who’s going without?

Workers accounted for nearly half of the estimated 8 million who lost coverage in 1996, according to the AFL-CIO. Dependent children and spouses accounted for one-third and one-fifth, respectively. In 1996, 5.8 million dependents lost coverage through an uninsured worker, and the majority were not covered by other public or private insurance, the AFL-CIO reported.

What’s happening to these uninsured people from working families? "Some are getting other policies through Medicaid," said John Shields, vice president for the Lewin Group. "Most employers require families to pay something toward premiums, but Medicaid is free. There are no co-payments, no deductibles, and you can cover kids."

Researchers suggest that some employees who opt out of their own job-based insurance may be covered by a spouse’s job-based package. It’s unlikely that many who pass up employer coverage buy private insurance outside of work, however. According to the Kaiser report, the No. 1 reason cited by the uninsured for not having coverage is that it is too expensive. Buying outside would mean paying the entire premium on a higher priced plan.

Searching for a solution

Labor and business groups have opposite perspectives on how to get more workers insured.

"While universal coverage is the best option, requiring employers to provide health coverage for workers and their families would be a good start to strengthen the faltering system," said John Sweeney, AFL-CIO president. According to the AFL-CIO, if all businesses with 50 or more employees provided family coverage to workers while shouldering 75 percent of the premium, nearly 18 million currently uninsured workers and their families would gain coverage.

Business leaders balk at the notion. "I think their analysis is absolutely flawed," said Neil Trautwein, manager of healthcare policy for the U.S. Chamber of Commerce. Not only do most large businesses already provide affordable coverage, mandates tend to increase health insurance costs and reduce accessibility, he said. For example, if Congress passes proposed legislation to allow patients to sue HMOs or employers for medical malpractice, "most employers would drop healthcare coverage rather than expose themselves to liability," Trautwein said.

Employer-based coverage will ultimately yield to market forces, Fronstin said. "One factor we’ve never considered in this debate is the drop in unemployment. Right now it’s the lowest in 20 years, and employers have to deal with this shortage in labor." Fronstin said more employers may foot the bill for job-based coverage over the next few years just to attract and retain quality workers.

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RELATED
Web Sites

AFL-CIO

Employee Benefit Research Institute

Health Insurance Association of America

Kaiser Family Foundation

Lewin Group

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