Unemployment And Changes In Employment Patterns
Explain Rising Rates Of Uninsured, Health Affairs Article Says

Loss In Insurance Coverage Concentrated Among Low-Income Adults,
Although Higher-Income Households Affected As Well

BETHESDA, MD — Increases in unemployment, changes in employment patterns, and rising health care costs have driven the increases in the number and percentage of uninsured Americans, according to an analysis of U.S. Census data published today on the Health Affairs Web site.

John Holahan, director of the Urban Institute’s Health Policy Center, and Marie Wang, a research assistant at the center, write that the decline in the number of Americans covered by employer-sponsored insurance has been the chief cause of the rising numbers of uninsured people. Two-thirds of the people who lost insurance during this time were low-income adults, Holahan says.

Loss in the employer-sponsored insurance has resulted from declines in employment overall; a shift from such sectors as manufacturing to such sectors as service with lower levels of employer-sponsored insurance; a shift in employment from larger companies to smaller firms, or self-employment, with lower levels of employer-sponsored insurance; and rising health insurance premiums, which have affected employers’ willingness to offer insurance and employees’ willingness to enroll.

In addition, the number of families with two full-time workers—those households most likely to have employer-sponsored insurance—decreased by 2.7 million to 71.2 million in 2002. Insurance coverage for middle-income workers has been affected in more than one way: Not only have job losses caused many formerly middle-income households to fall into the low-income category (below 200 percent of poverty), but also one-third of the increase in the uninsured population took place among people who remained above 200 percent of poverty.

“The predominant way in which Americans have health insurance coverage is through employers, but in the past two years (2000-2002) we have seen that this coverage is quite vulnerable to economic fluctuations,” Holahan says.

Public programs have absorbed some of those changes, but their effect has been variable. “Whether the loss in (employer sponsored insurance) resulted in losing coverage depended on access to public programs. Thus, children fared far better than adults, women better than men, and parents fared better than nonparents. … But without the expansion of public coverage, the increases in the number of uninsured people would have been much greater than those we have reported here,” Holahan says.

A bright spot has been a steady coverage rate for children, attributable to the expansion in public programs. While the employer-sponsored insurance rate dropped 3.5 percentage points for low-income children, it was offset by a 4.6-percentage-point increase in the coverage rate for Medicaid and state children’s health insurance programs. Overall, the share of children without any insurance decreased slightly from 12.3 percent in 2000 to 12 percent in 2002.

Despite their positive effects on insurance coverage for children, public programs could be vulnerable as states combat budget shortfalls, Holahan says.

“States have closed budget gaps through a variety of measures while still accommodating annual growth rates in Medicaid of about 12 percent,” he says. “To the extent that states are finding these growth rates unsustainable, eligibility standards may be affected. If coverage through Medicaid and state programs declines because of tightened eligibility standards, reduce outreach, or efforts to make enrollment more difficult, increases in public coverage will not offset the decline in (employer-sponsored) insurance, and the number of uninsured people could rise even more sharply.”

To view the article, click content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.31.

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research.

©2004 Project HOPE–The People-to-People Health Foundation, Inc.