EMPLOYER-BASED INSURANCE: Rocky Road for Uneducated
Jon Gabel, vice president of health systems studies at the Health Research and Educational Trust, borrowed Monday from Dickens in describing America's employment-based health insurance system as "the best of times ... and the worst of times." While the nation's college graduates anticipate a "bright future" in terms of employer-sponsored health coverage, the "picture for Americans without college degrees is grim," he said. In a new study published in the November/December issue of Health Affairs, Gabel analyzes trends in job-based insurance over the past 20 years, finding that the erosion of such coverage -- from 71% of the population under age 65 in 1977 to 64% in 1998 -- disproportionately affected high school drop-outs and college non-graduates. While the percentage of college graduates with employer-based health insurance remained steady at 80% over the last two decades, the percentage of high school graduates with coverage across the same period fell from 68% to 63%. High school drop-outs bore the brunt of eroding coverage, with 52% insured through their employers in 1977, but only 34% receiving coverage in 1996. Other segments of the population also experienced dramatic coverage erosion: the portion of African Americans with job-based insurance fell from 59% in 1977 to 48% in 1996, and Hispanics insured through work dropped from 58% to 42%. By contrast, employer coverage for whites declined only 6% from 77% to 71%.
Choice Costs More
"In this information-based, global economy, those elements of society most vulnerable to changes in the economy ... are the most likely to lose work-based coverage," Gabel said, explaining that low-skilled workers have become victims of the information age, as traditionally higher-paying and insurance-providing jobs, such as those in the manufacturing industry, succumb to low-paying service-oriented jobs. As incomes continue to rise for college graduates, real wages have declined by 11% for high school graduates and by 17% for high school drop-outs. Combined with a 2.6-fold increase in the real cost of health insurance and a subsequent 3.5-fold hike in employee contributions to health plans since 1977, these lower wages put health insurance even further out of reach for most unskilled workers, who, even when offered work-based plans, often decline them due to their high cost. Gabel noted that although there was a slight increase in the percentage of workers eligible for coverage from their employer, the share of employees taking such offers fell from 88% in 1987 to 80% in 1996, while the overall percent of workers with coverage from their employers also declined from 67% in 1977 to 60% in 1996. When there is "less money in your pocket and you have to pay more for your product, you don't buy as much of the product," he explained. Gabel also cited the changing "nature of work," in which more people are employed on part-time and contractual bases, as a contributing factor to the 20-year decline in employer-based health insurance.
Narrowing the Focus
A second study also published in the November/December issue of Health Affairs reveals that despite the long term decline in employer-based health coverage, "the share of workers enrolled in their employer's health plan remained essentially constant," from 1993 to 1997, as did premium prices and employees' out-of-pocket expenses. This "low premium inflation is probably a key factor contributing to the stability in coverage rates," according to Susan Marquis, senior RAND economist and co-author of the study. The constant enrollment across time, however, "mask[s] a lot of variability in circumstances facing individual employees," she added, noting, "There is a lot of underlying volatility in the job-based insurance market, with large numbers of small employers dropping coverage. But overall coverage appears stable because many other employers are adding coverage." Although almost two million workers lost employer-based health insurance from 1995 to 1997, four million employees gained coverage as their firms decided to begin offering insurance plans. "Many people think that the employer-based system is eroding and that is why the number of uninsured people is rising. What we found is that overall employer-based insurance coverage was stable, and the sky is not falling," Stephen Long, study co-author and senior RAND economist, concluded.
But Gabel disagrees, saying that as "the twin economic forces of globalization and the information revolution ... exacerbate disparities in health coverage and income among skilled and unskilled Americans," the "job-based system is likely to serve an even smaller portion of the population than today," with the outlook for the poorly educated the most bleak. "To ignore this state of affairs constitutes malign neglect," he said, adding, "Trying to save job-based health insurance will be futile." Calling Bill Bradley's health care plan "very savvy," because it expands coverage without building a new bureaucracy, Gabel concluded, "We should really look at tax credits and other means to bring more people" into the private insurance system (Heather Weaver, American Health Line).