25% of Employed Uninsured Work at Large Firms, Commonwealth Fund Study Finds

About one-quarter of the nation's uninsured, or 9.6 million people, are employees or dependents of employees at large firms with more than 500 workers, according to a study released Tuesday by the Commonwealth Fund, the Wall Street Journal reports (Fuhrmans, Wall Street Journal, 10/22). Some of the study's findings include the following:

Workers at large firms accounted for 32% of the uninsured workforce in 2001, up from 25% in 1987 (Norris, Detroit Free Press, 10/22).
The percentages of workers in firms with 500 or more employees who are uninsured increased from 7% in 1987 to 11% in 2001 (Appleby, USA Today, 10/22).
The percentage of uninsured workers in firms with fewer than 100 employees decreased from 67% in 1987 to 57% in 2001.
The percentage of uninsured workers in firms with between 100 and 499 employees decreased from 14% in 1987 to 12% in 2001 (Strope, AP/Newport News Daily Press, 10/21).
Companies with more than 1,000 employees are 9.7 times more likely to offer health insurance than companies with fewer than 25 employees (Detroit Free Press, 10/22).

While the percentage of large employers offering health benefits has increased slightly to more than 99%, the number of employees opting out of coverage because of costs has increased, and "companies' lowest-wage earners have been hit hardest by the rising costs," the Journal reports (Wall Street Journal, 10/22). According to the study, 46% of all low-income workers go without health insurance for at least part of the year, compared with 14% of middle-income workers and 8% of high-income workers (Perotin, Fort Worth Star-Telegram, 10/22).

Contributing Factors

The increase in the number of uninsured people who work for large companies, which have "long formed the bedrock" of health insurance in the United States, reflects a "broader, longer-term shift in the labor market," the Journal reports (Wall Street Journal, 10/22). The percentage of workers who hold manufacturing jobs, which have traditionally offered strong benefits and pay, has fallen from 23% in 1987 to 17% in 2001 (USA Today, 10/22). This drop has "ma[de] room" for an increase in the number of retail and service industry jobs, which generally pay less and have higher turnover and more part-time workers, according to the Journal (Wall Street Journal, 10/22). Sixty-eight percent of uninsured large-company employees in 2001 worked in retail and the service industry, the report found (Berestein, San Diego Union-Tribune, 10/22). For example, at Wal-Mart, the nation's largest private employer, new hourly workers must wait six months to sign up for benefits, and part-time workers must wait two years. Retailers with similar waiting times contend that they are necessary because of high employee turnover; without the waiting times, they say the administrative costs of employees joining and leaving plans would be "out of control," the Journal reports (Wall Street Journal, 10/22). The report also said that the increase stems from stagnant wage growth in large firms, the Union-Tribune reports (San Diego Union-Tribune, 10/22).

Reaction

USA Today reports that the study's findings might be "troubling to policymakers, because large companies provide the lion's share of health insurance in the United States." The report "shows a weakening in the bedrock of employer-based coverage," Glenn Melnick, a health researcher at Rand, said (USA Today, 10/22). Cathy Schoen, vice president for health policy and research for the Commonwealth Fund, said, "Large firms really haven't stopped providing health coverage. It's that employee-participation rates are going down" (Wall Street Journal, 10/22). Len Nichols, an economist with the Center for Studying Health System Change, said, "We have a system where, every year, an increasing fraction of the workforce cannot afford health insurance" (USA Today, 10/22). Report co-author Jeanne Lambrew, associate professor of health policy at George Washington University, said, "Policy-makers seeking solutions to the growing uninsured problem must look beyond workers in small firms, or they risk leaving out a large group of low-wage uninsured workers" (Detroit Free Press, 10/22). Commonwealth Fund President Karen Davis added that the study "points to a critical need for programs that target large as well as small firms if we are to protect the health security of the nation's workforce" (USA Today, 10/22). The report is available online. Note: You must have Adobe Acrobat to view the report.

AFL-CIO Releases Report on Wal-Mart

In related news, the AFL-CIO Tuesday released a report criticizing Wal-Mart for its health benefits and wages, USA Today reports. According to the report, the health benefits offered by Wal-Mart might be too expensive for families relying on an $8-an-hour employee. "Less than half the employees of this company have health coverage," Gerald Shea of the AFL-CIO said (USA Today, 10/22). The report also criticized the waiting times before Wal-Mart employees could sign up for health benefits; the additional $1,300 per year employees must pay to cover a spouse who could receive coverage elsewhere; and the company health plan's lack of coverage for some components of other companies' benefits, such as cholesterol tests, childhood immunizations and prostate exams (Fort Worth Star-Telegram, 10/22). However, Mona Williams, a spokesperson for Wal-Mart, said that 90% of Wal-Mart employees have health coverage -- 50% through the company and 40% through spouses, parents or other providers. In addition, 40% of Wal-Mart employees did not have coverage before joining the company, she said. "These are people who would have fallen through the cracks," Williams added (USA Today, 10/22).

Additional Coverage

The Wall Street Journal on Tuesday examined how the number of part-time workers has increased in the "otherwise moribund job market," but health insurance coverage for such workers "is scarcer than ever." The Journal reports that part-time workers make up about 75% of the 70,000 grocery store workers striking in Southern California over health care coverage issues. According to the Journal, part-time workers have been "particularly hard hit" by increasing health care costs and efforts by employers to shift more of the costs to workers. About 9% of part-time workers have employer-sponsored health care coverage, and the cost of providing such coverage has increased to 43 cents per hour of work time this year from 28 cents in 2000 (Tejada, Wall Street Journal, 10/22).
The New York Times on Tuesday examined how employers have been shifting the cost of health care to the employees "who make the heaviest use of medical services." The Times reports that companies have begun increasing copayments and deductibles as well as payroll deductions to cover spouses and children. The average annual out-of-pocket costs for employees of large companies have more than doubled since 1998 to $2,126 this year, according to the Times. However, employers have "sought to temper" out-of-pocket cost increases to keep healthy workers from dropping coverage, the Times reports. Paul Ginsburg, president of the Center for Studying Health System Change, said, "[Employers] have made a very conscious decision to increase the patient's cost-sharing rather than increase the employees' share in the premium" (Freudenheim, New York Times, 10/22).

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