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Decline in Employer Health Coverage Behind Rising Uninsured Rate, Studies Find

By Cheyenne Hopkins, CQ Staff

October 19, 2006 -- The continued decline in employer-sponsored insurance has led to an increasing number of uninsured, according to reports released on Thursday at a Capitol Hill forum.

The reports, prepared by the Urban Institute for the Kaiser Commission on Medicaid and the Uninsured, found that employer-sponsored coverage fell from 81 percent in 2001 to 77 percent in 2005. Also, unlike previous years, there was no increase in Medicaid and State Children's Health Insurance Program (SCHIP) coverage in 2005 to offset the employer-sponsored decline, said John Holahan, director of the Health Policy Research Center at the Urban Institute.

The findings were presented at a forum sponsored by the Kaiser Commission on Medicaid and the Uninsured and the Alliance for Health Reform.

The reports follow Census Bureau figures released in August that found the percent of uninsured rose from 15.6 percent to 15.9 percent, or 46.6 million people, in 2005. Adults accounted for 1 million of the increase while the number of children under age 18 without access to health coverage grew in 2005 for the first time in seven years. Last year, 11.2 percent of children in that age group had no coverage, compared with 10.8 percent the previous year, according to the Census figures.

Bowen Garrett, a senior research associate in the Health Policy Center at the Urban Institute, said the reasons for the decline in employer-sponsored coverage included a decrease in employers not offering the plans and workers going to new jobs where plans were not offered.

The largest plan declines were among employees of firms with fewer than 25 workers and among adults ages 19 to 34, one report found.

Garrett also pointed to changes in the workforce. From 2001 to 2005, more people became unemployed; more employees became self-employed, temporary workers, or small business workers; and more workers had incomes below the poverty level.

One audience member argued that policy needs to reflect this new workforce more. However, this trend is likely to not end soon.

"Job-based coverage is likely to continue to fall because of rising health insurance premiums and greater employee contributions to premiums," Garrett said.

Chip Kahn, president of the Federation of American Hospitals, said consumers cannot look to employers to solve the problem, but public policy action is required.

While about 85 percent of Americans have health insurance, Kahn argued there should be public policy targeted at the 15 percent not insured and another policy to sustain those with coverage.

Kahn also highlighted the cost implications of the uninsured. In a survey of hospitals, his organization found that hospitals' uncompensated cost rose from $5.1 million in 2004 to $7 million in 2005.

The panelists discussed various proposals for solving the issue, such as universal health care, expanding entitlement programs, and using tax credits to expand coverage. Kahn said whatever the solution, it should be a comprehensive one for lasting effect.

Jeanne Lambrew, a senior fellow at the Center for American Progress and a former Clinton administration health policy official, saw good news in the findings. It shows people are not declining health insurance if they are offered it, Lambrew said.

However, she said there is a jarring disconnect between these findings and the solutions supported by the White House and Congress. For example, she said the administration has argued for fiscal responsibility but there is a disconnect between being willing to pay for drugs for seniors without offsets, such as through the drug benefit law, and not being willing to pay for low-income children through the children's health insurance program. Lambrew argued for increased funding for public health programs to target populations, including the poor, children and small businesses.

SCHIP, which was created in 1997, is up for reauthorization next year. Lambrew said maintaining the program will cost from $30 to $40 billion over 10 years.

Lambrew said solving the uninsured problem is "no longer the political pariah it once was."

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