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Recession, Employer Trend Has Led to Decline in Workplace-Based Health Coverage, Study Says

By Dena Bunis, CQ HealthBeat Managing Editor

March 15, 2012 -- The enormous loss of jobs between 2007 and 2010 exacerbated a long-term trend of fewer Americans having employment-based health insurance. Those two factors have led to a 10-percentage-point drop in the number of children and working-age adults with coverage through the workplace, according to a new study released Thursday.

The study by the Center for Studying Health System Change (HSC) for the nonpartisan, nonprofit National Institute for Health Care Reform (NIHCR) found that the proportion of people younger than 65 with no workers in the family jumped 10 percentage points to 31.6 percent in 2010. And that 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 non-elderly people.

But the decline in employer-based insurance coverage goes beyond people losing their jobs. Some workers forced to take part-time work didn’t then get access to employer-based insurance, and rising health costs have led to fewer companies offering coverage and fewer workers signing up as premiums and co-pays increased.

“What’s happened to employer-sponsored health insurance in recent years is akin to an acute illness aggravating a chronic condition,” said Chapin White, an HSC senior researcher, and coauthor of the study with HSC senior fellow James D. Reschovsky. “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,” said a news release on the study. “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 researchers.

Not surprisingly, households that included a worker with a college degree and a higher income were less likely to experience a loss of employer-based insurance than those with a high school or lower level of education. In households headed by someone with a high school education or less, the share with employer health coverage declined from 47 percent to 36 percent between 2007 and 2010.

The size of the company someone works for also affected the likelihood that they got health coverage through work. Among companies with more than 100 workers, employer coverage enrollment declined by less than 2 percentage points. But in companies with fewer than 100 employees, the percentage with health coverage through the job declined by more than 5 percentage points.

The authors make the point that while the health care overhaul targets those people who are most likely to lose employer-based coverage—young people, low-wage workers and those employed by small businesses—“employer-sponsored insurance likely will continue to erode, with or without health reform,” especially for people in those categories.

Dena Bunis can be reached at [email protected].

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