June 1, 2001
James L. Medoff, Howard B. Shapiro, Michael Calabrese, et al., Center for National Policy.
How the New Labor Market is Squeezing Workforce Health Benefits, James L. Medoff, Howard B. Shapiro, Michael Calabrese, et al., Center for National Policy., The Commonwealth Fund, June 2001
The large majority of American families with health insurance obtain their coverage through employer-sponsored insurance (ESI), either through their own job or a family member's job. ESI covers 155 million Americans, serving as the foundation for the U.S. health insurance system for half a century.
This study by the Center for National Policy (CNP) finds, however, that the proportion of private-sector workers receiving health benefits through their own jobs has declined over the 19-year period from 1979 to 1998. In How the New Labor Market Is Squeezing Workforce Health Benefits, CNP researchers report that while two-thirds of private-sector workers in 1979 had health coverage through their employer, just over half did by 1998. While these rates have stabilized and improved slightly since 1996, because of a high-employment economy and the continuing trend toward two-worker families, the longer-term decline in own-job benefits is troubling.
The decline in own-employer benefits has been sharpest for those Americans earning the least. Among workers in the bottom fifth of the wage scale-those earning less than $7 per hour-the proportion with benefits from their own jobs fell from 42 percent in 1979 to 26 percent in 1998. During this period, the proportion of blue-collar and service employees receiving health coverage through their own jobs declined from 63 to 46 percent. The decrease for white-collar workers was much smaller, from 69 to 60 percent.
U.S. employees also were far more likely to pay a share of their health insurance premiums in 1998 than they were in 1979-a change only partly attributable to the long-term shift from manufacturing to service industries. At the same time, the average purchasing power of employer-paid health benefits fell by 17 percent, after adjusting for health care inflation. Again, the decline was most severe for low-wage workers. Employers' payments per hour were far lower for the bottom third of wage earners than for the top third, which received more than twice the health benefit compensation per hour.
The decline in affordable coverage through work translates into high uninsured rates among low-wage workers. At the end of the 1979-98 period, 39 percent of employees in the bottom fifth of the wage distribution were uninsured.
The study raises basic questions about the future viability of current insurance coverage for workers and their families. Given the substantial variability in coverage by industry, occupation, firm size, income, gender, and age, options for the future must consider whether or not different solutions may be necessary for different sectors or groups. Facts and Figures
- Health benefits obtained through workers' own jobs declined for all private-sector employees from 1979 to 1996, but since 1996 has gone up slightly for the top 40 percent of wage earners, stabilized for the middle 40 percent, and kept declining for the bottom 20 percent of wage earners.
- In 1983, nearly 46 percent of employers paid their workers' insurance premiums in full; by 1998, less than 27 percent did so.
- Among manufacturing employees, the rate of own-employer health coverage fell from nearly 87 percent in 1979 to less than 74 percent in 1998.
- Only 54 percent of women had health benefits through their jobs in 1979, compared with 74 percent of men-a 20-point difference. By 1998, the gender gap had shrunk to 13 points (60% for men vs. 47% for women).