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EMBARGOED FOR RELEASE UNTIL
Tuesday, January 8, 2002, at 12:01 a.m.


NUMBER OF AMERICANS WITH JOB-BASED HEALTH BENEFITS GREW THROUGH EARLY 2001,
DESPITE HIGHER BENEFIT COSTS

Largest Increases in Coverage Occurred in Wholesale and Retail Trade Industries

Washington, D.C. - Despite surging health insurance costs, more employees were offered health benefits by their employers between 1997 and 2001, according to a study published today in the January/February issue of the journal Health Affairs. Yet those gains may be reversed in the coming year because of the recession and a continued escalation in health care costs.

Comparisons of early 2001 data and 1997 data show that 63.5 percent of American workers had job-based health insurance in 2001, up from 62.4 percent in 1997. Overall, the percentage of Americans offered job-based health benefits increased from 75.1 percent in 1997 to 77.4 percent in early 2001, while health care costs soared by nearly 20 percent for some employers during those years.

The study, conducted by Paul Fronstin of the Employee Benefit Research Institute, was based on Current Population Survey data provided by the U.S. Census Bureau.

"Employers did not cut back on benefits because the economy was strong and the labor market was tight," said Fronstin. "Now with the economy in recession and the unemployment rate at its highest level in six years, they are less concerned about recruitment and retention and may begin to trim worker health benefits."

According to the study, nearly 16 percent of employees were uninsured in 1997 compared to 14.9 percent in 2001. Yet the percentage of workers taking coverage from their own employers has declined. Workers are less likely to be uninsured today than they were in 1993 because they are getting health insurance from other sources, such as a working spouse, direct purchase from an insurer, Medicaid, Medicare, or other government coverage.

A closer look at the study data reveals coverage patterns based on hours of work, industry, and race. According to Fronstin, these coverage patterns may provide important clues about the future status of health care for workers who are not offered benefits as often and might have the greatest chance of becoming uninsured.

For example, the percentage of workers offered health insurance–the offer rate–varies widely by hours of work. In 1997, only 46.9 percent of employees that worked twenty-one to thirty-four hours per week were offered health benefits. For employees that worked full-time, the offer rate was 83.3 percent in 1997. However, rates did improve slightly between 1997 and 2001. The offer rate for full time workers climbed to 84.7 percent in 2001, while the rate rose to 50.4 percent for employees working twenty-one to thirty-four hours.

This wide variation in offer rates also exists across industries, although again increases occurred industry-wide. Offers of employer-sponsored benefits increased for workers in all sectors of the economy, with one of the largest increases occurring in the wholesale and retail trade industry. Between 1997 and 2001, this sector's offer rate increased from 50.6 to 53.6 percent. The manufacturing sector realized a smaller gain between 1997 and 2001, with a 1.2 percentage increase taking it to 79.0 percent.

In terms of race, the study found that all workers–whites, Hispanics, blacks, and those classified as "other"–experienced some increase in offer rates since 1997. For Hispanic workers, who have significantly lower offer rates, the percentage participating in a job-based plan only grew between 1997 and 1999, while for whites, blacks, and workers of other races, participation rates continued to increase through 2001.

"As employers now look for ways to cut costs in a climate of shrinking profits and escalating health care costs, there may be segments of the workforce that will be more vulnerable to these cuts," said Fronstin. "Also, we may see a rise in the number of uninsured persons. The recent expansion in health coverage may be reversed given the economic realities of our nation and the health care system."

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. Copies of the January/February 2002 issue will be provided free to interested members of the press. To obtain a copy, or to get an advance copy of this article, contact Jackie Graves at Health Affairs, 301/656-7401, ext. 255, or via email, press@healthaffairs.org. Selected articles from the January/February issue are available free on the journal's Web site, www.healthaffairs.org.

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©2002 Project HOPE–The People-to-People Health Foundation, Inc.