Between 2007 and 2010, the share of U.S. children and working-age adults with employer-sponsored health insurance dropped 10 percentage points from 63.6 percent to 53.5 percent, according to a new national study by the Center for Studying Health System Change (HSC) for the nonpartisan, nonprofit National Institute for Health Care Reform (NIHCR).
The enormous loss of employment—the proportion of people younger than 65 with no workers in the family jumped 10 percentage points to 31.6 percent in 2010—was the key driver of the decline in employer health coverage, accounting for about three-quarters of the drop since 2007, according to findings from HSC’s 2010 Health Tracking Household Survey, a nationally representative survey with information on 13,595 nonelderly people.
However, well before the start of the Great Recession in December 2007, a steady decline of employer health coverage was underway with fewer firms offering coverage and fewer workers taking up coverage—likely because of rising health care costs, the study found. While overshadowed by the massive employment loss, declines in access and take up each explain more than 10 percent of the total drop in employer coverage between 2007 and 2010, according to the study.
“What’s happened to employer-sponsored health insurance in recent years is akin to an acute illness aggravating a chronic condition,” said Chapin White, Ph.D., an HSC senior researcher, and coauthor of the study with HSC Senior Fellow James D. Reschovsky, Ph.D. “The acute illness—the sluggish economy and weak employment situation—likely will resolve at some point, but the underlying chronic condition—rising health care costs—likely will persist.”
The core threat to employer health coverage is health care costs increasing faster than wages, which makes employer coverage unaffordable for a larger share of the workforce, particularly low-wage workers. For example, among children and working-age adults with incomes below 200 percent of poverty—$44,100 for a family of four in 2010—the proportion with employer coverage dropped from 42 percent in 2001 to 24 percent in 2010, according to the study.
The study’s findings are detailed in a new NIHCR Research Brief—The Great Recession Accelerated Long-Term Decline of Employer Health Coverage—available here.
The HSC 2010 Health Tracking Household Survey, funded by the Robert Wood Johnson Foundation, for the first time included a cell phone sample to account for the growing number of households without a landline phone. Response rates were 45 percent for the landline sample and 29 percent for the cell phone sample.
Along with lower-income people, the decline in employer coverage disproportionately affected young adults, people with a high school education or less, and people employed in small firms. Key findings include:
- Among young adults aged 18 to 27, the share in a working family dropped from 70 percent in 2007 to just more than 50 percent in 2010, and the share enrolled in employer-sponsored health insurance dropped from 43 percent to 31 percent.
- For people in families headed by someone with a high school education or less, the share in working families dropped by 16 percentage points to slightly more than half, and the share with employer health coverage declined from 47 percent to 36 percent between 2007 and 2010.
- Among working families, only those employed by small firms fewer than 100 workers experienced a statistically significant decline in employer health coverage between 2007 and 2010, from 51 percent to 45 percent. Declines in both the offer rate and the take-up rate contributed to the overall decline in coverage for workers in small firms.
While there has been vigorous debate about the effects of national health reform on employer-sponsored insurance, the study findings indicate that the debate often misses a key point—employer-sponsored insurance likely will continue to erode with or without health reform, especially for lower-income families and those employed by small firms.
The health reform law specifically targets the people—young adults, low-wage workers and those employed by small firms—who are falling out of employer-sponsored insurance and provides an alternative place for them to get health coverage.