Employer-Provided Health Coverage Continues to Decline
While the debate over the health care crisis in America remains focused on the expansion of S-CHIP and the competing proposals of the 2008 presidential candidates, a new study revealed the continuing and steady decline of employer-based health coverage in the United States. Once the lynchpin of the U.S. health care system, workplace health insurance now covers only 59.7% of Americans, down from 64.2% in 2000. And making matters worse, surging health care costs, insurance premiums and employees' own contributions continue to exceed inflation and the growth in wages.
The report from the Economic Policy Institute, "The Erosion of Employment-based Insurance," paints a bleak picture for working Americans. Overall, 47 million people (15.8%) in the U.S. had no health insurance in 2006, up 8 million from 2000 when 13.7% were without coverage. Helping to fuel that dramatic increase is the drop-off in employer-provided insurance, which dropped 4.5 percentage points over the same period resulting in 2.3 million more Americans without medical coverage.
Behind the national data is a startling disparity from state to state. Like most indicators of health care, employment-based coverage generally follows the 2004 electoral map. Blue states including New Hampshire (75.6%), Connecticut (72.3%) and New Jersey (71.2%) led the way in workplace health coverage for residents under age 65. (Those over 65 are generally covered by Medicare.) Unsurprisingly, the situation is worst in precisely those states that voted to re-elect George W. Bush. New Mexico (52.9%), Mississippi (54.5%), Texas (54.6%) and Louisiana (55.3%) were at the bottom of the rankings. The one notable exception is California. Its dismal performance (55.7%) is accounted for by the sheer size of its agricultural, service and tourism economies, sectors traditionally not providing workplace insurance.
The EPI findings also show alarming variations in employer-provided health coverage by race and income. In 2006, 76.4% of white workers received health insurance from their employers, compared to only 65.8% for African-Americans and just 48.4% for Hispanics. And while over 86% of the top quintile of wage earners had workplace health coverage, the figure for the bottom fifth was only 44.6%.
The picture for America's children is even worse. Between 2000 to 2006, 3.4 million fewer children had insurance through their parents' jobs, a decrease of 6.2%. The disparities by family income are shocking. Only 18% of children 17 and under for the bottom quintile of earners had insurance through their parents' work; kids in the top fifth of family incomes were almost five times (86.3%) more likely to be covered. As the report notes, "The group hurt the worst, however, was children in the second lowest quintile; their coverage rates declined by 10.6 percentage points, from 54.6% to 44.0%."
As the EPI points out, these grim numbers for working families not covered by Medicaid make a powerful argument for the expansion of the State Children's Health Insurance Program (S-CHIP), an initiative recently vetoed by President Bush:
Opponents of SCHIP expansion argue that the availability of a public insurance option leads parents to voluntarily drop private coverage and shift their children's coverage to the public sector. As shown in an EPI Economic Snapshot, research shows very little of such "crowding out" actually occurs. The large majority of SCHIP recipients - 86% - were either not covered six months before entering SCHIP or had lost private coverage within six months prior to enrolling.
The erosion of employer-based insurance detailed in the EPI report captures only part of the double-barreled health care squeeze facing American families. That is, even as workplace provided coverage declines, the increase in health care costs and the out-of-pocket expenses of Americans continues to rise at rates far outstripping wage growth.
That is the conclusion of the 2007 Employer Health Benefits Survey jointly produced by the Kaiser Family Foundation and the Health Research and Educational Trust. The average annual family premiums reached $12,106 in 2007, with workers contributing $3,281 of the total. Families' out-of-pocket expenses have surged $1,500 a year over the past six years. Despite a slowing in the rate of increase of health care costs, family incomes still aren't keeping pace:
Premiums for employer-sponsored health insurance rose an average of 6.1 percent in 2007, less than the 7.7 percent increase reported last year but still higher than the increase in workers' wages (3.7 percent) or the overall inflation rate (2.6 percent). The 6.1 percent average increase this year was the slowest rate of premium growth since 1999, when premiums rose 5.3 percent. Since 2001, premiums for family coverage have increased 78 percent, while wages have gone up 19 percent and inflation has gone up 17 percent.
According to the KFF/HRET survey of 3,078 firms, the future looks bleaker still. Employers are looking to shed their rapidly rising health care costs, shifting the burden onto American workers and their families:
Many employers indicate that they expect to make significant changes to their health plans and benefits in 2008. Overall, 21 percent of firms say they are "very likely" to raise workers' premium contribution next year. Some firms also say they are "very likely" to increase office visit cost-sharing (13 percent), increase deductibles (12 percent) and increase prescription drug cost-sharing (11 percent). Very few firms say they are "very likely" to restrict eligibility for coverage or drop health coverage altogether.
Back in Washington, President Bush and obstructionist Republicans in Congress continue to fiddle while the foundation of the American health care system burns. Even as Americans consistently cite health care as one of their most important issues (after the war in Iraq), it looks more and more like full employer-provided health insurance is becoming a thing of the past.
For more background and data on the state of American health care, see "SiCKO Required Reading: U.S. Health Care by the Numbers."