The rising cost of insurance premiums, rather than the loss of employment, is the primary factor driving the decline in private health coverage among U.S. adults, according to an analysis by Jack Hadley, an Urban Institute researcher.
The analysis reviews data from 1997, 1999 and 2002 -- years in which there were major changes in employment rates, the cost of private insurance and moderate expansions in eligibility for public health insurance programs -- to determine the relationship between employment, the cost of insurance and the distribution of insurance coverage.
According to Hadley, a growing number of small businesses that do not offer insurance to employees contributes to rising health insurance premiums. The analysis states that even if employment rates increase, continuing inflation in the cost of private health insurance will make it difficult for individuals to obtain coverage. In addition, Hadley finds that state and federal budget constraints make it unlikely that public insurance programs -- primarily Medicaid -- will be able to expand to prevent an increase in the number of uninsured individuals.
The analysis notes that eliminating private insurance coverage tax subsidies for high-income people would provide $48 billion, the estimated cost of additional medical care that uninsured individuals would use if they had coverage. Hadley suggests that 1% to 2% of high-income individuals would drop insurance coverage if they lost the subsidy.
The analysis suggests that cost-control strategies to limit medical and insurance cost inflation and make private insurance more affordable and government programs and subsidies more manageable (Hadley, Medical Care Research and Review, August 2006).