The loss of coverage was greater for men than women, as the coverage rate for working men with employer-provided insurance fell 4.4 percentage points compared to 1.1 points for women workers. Working men, however, still had higher coverage rates than women in 2004 (58.7% vs. 52.5%).
Only 52.5% of workers with a high school education were covered in 2004, whereas 68.5% of college-educated workers had employer-provided health coverage. This disparity reflects the fact that higher-skilled workers are likely to have higher-quality jobs that offer health benefits. That said, even college graduates have not been insulated from the decline in employer-provided health insurance. Nonetheless, workers with only a high school education still fared worse than those with a college degree (a decline of 3.7 vs. 2.8 percentage points).
Workers earning lower hourly wages are significantly less likely to have employer-provided health coverage than those earning higher wages. In 2004, workers in the highest wage quintile were more than three times as likely to have employer-provided health insurance than workers in the lowest quintile (77.5% vs. 24.4%). The decline in employer-provided health insurance from 2000 to 2004 pervaded the entire wage scale, but the number of insured workers with wages in the second quintile (20-40%) fell the most (a drop of 4.9 percentage points). This vulnerable population is likely to have income too high to qualify for public insurance.
Both white collar and blue collar workers experienced declines in coverage, but blue collar workers are insured at lower rates (54.9% vs. 62.4%) and experienced a greater drop (4.1 vs. 2.6 percentage points). Even workers who worked full time and year round had significant declines in coverage between 2000 and 2004. In 2000, 66.2% of full-time, full-year workers had coverage. By 2004, coverage for this group had declined 2.3 percentage points to 63.9%.
Coverage rates in 2004 differ dramatically by the worker’s major industrial sector. As shown in Table 3, the agricultural, arts, and other services industries display the lowest rates—all below 40%of providing health insurance to their workers. On the other side, mining, manufacturing, and the information sectors all have significantly higher-than-average rates (all above 70%) of insurance coverage. The remaining six major industrial classifications fall within the mid-range. (Accurate comparisons cannot be traced back to 2000 as the sectoral categories changed in 2002.)
Employer-provided coverage fell further for children than for any other age group (see Table 4). While overall employer coverage fell from 63.6% to 59.8%, the decline in employer-provided insurance that covered children fell from 65.6% to 60.8%, a drop of 4.8 percentage points. Ranking children by their family’s income is particularly revealing of the unequal distribution of employer-provided health care (Figure A). Only 18.2% of children in the lowest income quintile were found to have employer-provided health insurance, compared with 87.4% of the children in the highest income quintile. In other words, children whose family incomes were in the top 20% were nearly five times more likely to have employer-provided health insurance than children in the lowest 20% of family income. This disparity has only been exacerbated over the past four years: the drop in coverage for those in the lowest income quintile was over four times that for children in the highest quintile. The group hurt the worst, however, was children in the second lowest quintile; their coverage rates declined by 8.5 percentage points, from 54.3% to 45.8%.
The last set of numbers in Table 4 assign each child the education level of their family head. Children with parents of lower education attainment fare much worse than those with college or advanced degrees. Only about 56.4% of children with high-school-educated parents have employer-provided health insurance as compared to 83.1% of children with college-educated parents. The declines in coverage from 2000 to 2004 were much worse for the former group as well.
In many ways, children fared the worst of any group in terms of employer-provided health coverage, but the strength of government programs aimed at children kept many from falling into the ranks of the uninsured. As shown in Figure B, growth in enrollment in both Medicaid and SCHIP increased the percent of children covered from 20.9% to 26.9%. Overall, 4.8 million more children were covered by these programs in 2004 than in 2000. This increase more than compensated for the 2.5 million decline of employer coverage among American youth, who experienced a slight decline in the number of uninsured during this period.
Medicaid and SCHIP provided little help for Americans between the ages of 25 and 54. Those in the middle income quintile (with annual income of about $45,000-$67,000) experienced declines in employer-provided coverage from 80.6% in 2000 to 75.8%, a drop of 4.8 percentage points (see Table 5). During the same period, people in this age/income grouping increased their Medicaid coverage from 1.3% to 2.0%, an increase of only 0.7 percentage points. Therefore, unlike the phenomenon that occurred for children, the decline in employer-provided health insurance left middle-income adults much more vulnerable (see Figure C). The share of these adults that became uninsured increased 3.5 percentage points, from 13.2% in 2000 to 16.7% in 2004.
Even those adults in the lowest income quintile did not offset their declines in employer-provided coverage with comparable increases in public insurance. The lowest quintile experienced a decline in employer coverage of 9.1 percentage points in the past four years, whereas the increase in Medicaid coverage was only 3.8 percentage points. While this public coverage did enable some to remain covered by some sort of health insurance, many more fell into the ranks of the uninsured.
While the majority of states experienced significant declines in employer-provided coverage between the 1999-2000 and 2003-04 periods, the level and extent of coverage loss varied by state, as shown in Table 6. The states with the highest employer-provided coverage rates in the merged 2003-04 years were New Hampshire (72.7%), Minnesota (69.5%), and Delaware (68.4%). The lowest coverage rates were found in New Mexico (49.6%), Montana (50.7%), and Arkansas (51.1%). Maryland, Maine, Missouri, North Carolina, and Wisconsin all experienced losses in coverage rates in excess of 6.0 percentage points.
Among the working population, the average loss in employer-provided coverage was 2.7 percentage points between the 1999-2000 and 2003-04 periods. As shown in Table 7, some states fared better than others. Workers in nine states experienced significant declines in coverage during this period. The sharpest rate decline was in Virginia, with a 6.7 percentage-point decline in coverage. The next largest declines were in Indiana, Massachusetts, and New Jersey, all with 5.6 percentage-point declines.
Social insurance is intended to insulate people from negative shocks such as job loss, illness, or natural disaster. Public insurance is intended to provide a safety net to people who have limited access to private insurance markets. Clearly, there are many Americans who fall through the growing crack between employer-provided coverage and government health programs. A universal system, one that provides a minimum standard of care to everyone, would provide Americans with access to the type of health care appropriate for the most prosperous nation in the world. Taking insurance out of the job market and into the public sector has the potential to provide a stronger safety net, particularly during times of weak labor growth. This can lead more Americans to have steadier insurance access and increase their ability to secure regular medical care.
Unfortunately, the day when Americans might see universal health care in the United States seems a distant one. To make matters worse, Congress and President Bush are attempting to weaken both the government safety net and the employer system. A recent congressional budget resolution calls for substantial cuts to Medicaid, and President Bush’s tax reform panel is apparently proposing a cap on the employer income deduction for health insurance benefits, diminishing incentives for providing insurance in the workplace. At the same time, states are facing fiscal difficulties that may cause them to cut publicly provided health benefits even deeper.
From 2000 to 2004, this country saw a substantial rise in the number of uninsured. A continued decline in those with employer-provided health insurance along with a weakening of the health insurance safety net will undoubtedly cause more and more Americans to lose coverage and therefore access to adequate health care.
The author thanks Jin Dai for his research assistance on this Briefing Paper.
* “Pay-or-play:” A measure that requires businesses to provide health insurance to its workers, or pay into a government fund that will do it for them. For further discussion, see the N.Y.C. Health Care Security Act web site: http://nychealthcaresecurity.org/news.html
1. Mead, Julia C. 2005. “Suffolk requires big stores to help with health care.” The New York Times, September 28.
2. Rosenbaum, David E. 2005. “Tax panel says popular breaks should be cut.” The New York Times, October 12, page A1.
3. Taylor, Andrew. 2005. “Budget battles to center on long-term cuts.” Washington Post, September 27.