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Losses In Employer-Sponsored Insurance Lead To Increase In Uninsurance Rates Between 2000 and 2004

Health Affairs Article Tracks Effects Of Recession, Slow Economy
On Different Segments Of Population


BETHESDA, MD—Erosion in employer-sponsored insurance coverage drove increases in uninsurance between 2000 and 2004, the likely result of increases in health insurance premiums, according to an article published today on the Health Affairs Web site.

A shift in the workforce away from large and medium-size firms and toward small firms and self-employment, as well as a shift from industries with historically high rates of employer coverage also led to lower rates of health insurance coverage, according to the paper by John Holahan, director of the Health Policy Center at the Urban Institute in Washington, and Allison Cook, a research assistant at the center.

The authors write that U.S. Census Bureau data show that the number of uninsured Americans rose by 6 million, to 45.8 million, between 2000 and 2004, a period of recession followed by slow economic growth. Employer-sponsored coverage rates among the nonelderly fell 4.6 percentage points to 63.3 percent between 2000 and 2004. Medicaid picked up some of the slack, increasing its coverage rate 2.4 percent.

Children fared better than adults. While the employer-sponsored coverage rate fell for children as adults, coverage by Medicaid and state programs increased 4.3 percentage points, to 21.9 percent, reflecting continued expansion of State Children’s Health Insurance Programs (SCHIP).

The decline in coverage was more severe for those under 200 percent of the federal poverty level. That income group represented two-thirds of the increase in the uninsured, or 3.9 million people. In part this happened because of the large increase in the number of people below 200 percent of the federal poverty level (9.1 million).

Among the paper’s findings:

-- Adults ages 19–34 accounted for half of the increase in the number of uninsured people.

-- Native-born citizens accounted for three-quarters of the growth in the uninsured.

-- More than half of the growth in uninsurance took place in the South.

-- More than half of the increase in the uninsured occurred among whites.


“The decline in employer coverage is likely to continue,” Holahan says. “Increases in health care costs and thus health insurance premiums, are likely to continue to grow faster than worker’s earnings. The decline in employer coverage will be further exacerbated if the shift from working in large and midsize firms to small firms and self-employment and from high- to low-coverage industries continues.

“The problem of the uninsured can be addressed in many different ways, such as tax credits or public program expansions, but doing so is likely to prove very difficult,” Holahan says. “Federal budget deficits are large, which will limit the federal government’s ability to act for the foreseeable future, and all indications are that the government will pursue spending cuts to address the huge costs of hurricane recovery in the coming years. States also face serious budget problems in part because increases in health care spending outpace the growth in state revenues, a trend that is likely to continue.”

The article was supported by the Kaiser Commission on Medicaid and the Uninsured. It can be read at content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.498.


Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org. The full text of each Health Affairs Web Exclusive is available free of charge to all Web site visitors for a two-week period following posting, after which it will switch to pay-per-view for nonsubscribers. The abstracts of all articles are free in perpetuity. Web Exclusives are supported in part by a grant from the Commonwealth Fund.


©2005 Project HOPE–The People-to-People Health Foundation, Inc.