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Workers' Health Insurance: Trends, Issues, and Options to Expand Coverage


Since World War II, employment-based health benefits have been the foundation of health insurance for the under-65 population, providing the primary source of coverage for the vast majority of workers and their dependents. In 2004, more than 100 million workers, or 71 percent of the adult working population, were covered by employment-based health benefits. Taking into account all adults under age 65, the employment-based health benefits system covered 159.1 million individuals, or 62 percent of the nonelderly population (Figure 1).

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In recent years, this foundation has been eroding, resulting in an increasing number of working adults without health insurance coverage and forecasts of continuing declines in coverage. The growing share of the workforce without health insurance has negative implications for individuals and the larger economy. The Institute of Medicine (IOM) conducted a series of studies on the consequences of uninsurance and found the following:
  • Compared with the insured, uninsured adults and children are in worse health and die sooner. The IOM concluded that being uninsured was the sixth-leading cause of death among adults ages 25 to 64 in 1999.
  • High rates of uninsurance are associated with financial instability for health care providers and institutions at the community level, including reduced hospital services and capacity as well as significant cuts in public health programs that may affect access to health care services, even among insured individuals.
  • The nation is at an economic disadvantage as a result of the poorer health and premature death of uninsured individuals. The IOM estimates that the lost economic value due to the uninsured is between $65 billion and $135 billion annually.Trends in employment-based health benefits are driven in part by the rising cost of providing health benefits relative to worker earnings and overall inflation (Figure 2). The rapid increase in the cost of providing health benefits relative to income has led to a drop in the percentage of employers offering health benefits as well as a decline in the percentage of workers who are eligible to participate. A recent study predicts that if premium increases continue to outpace wage and income growth, the number of uninsured will reach 56 million individuals in 2013, or 20.5 percent of the under-65 population (Figure 3). The same study estimates that 27.8 percent of workers—or more than one of four—will be uninsured by 2013.

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    To reverse these trends and expand coverage for workers and their families, a range of public and private policies are under discussion. The approaches vary in the extent to which they would build on the employment-based system, adapt the non-group or individual market, or expand public programs. This report highlights recent trends in employment-based health benefits and compares an array of policy approaches that seek to expand coverage.

Publication Details



P. Fronstin, Workers' Health Insurance: Trends, Issues, and Options to Expand Coverage, The Commonwealth Fund, March 2006