As the Economy Improves, the Number of Uninsured Is Falling But Not Because of a Rebound in Employer Sponsored Insurance

This analysis provides insight into changing uninsured rates since the recession and has several implications for what might happen to coverage moving forward. First, while the rate of employer sponsored insurance has stabilized for some groups in recent years, it has not led to large gains in ESI as the economy has improved. The overall stability of the ESI rate between 2010 and 2012 in part reflects the movement of the number of workers towards full time work, which would itself increase the ESI rate as full-time workers are more likely to have insurance than part-time or non-workers. However, the ESI rate among full-time workers as a group has actually declined, offsetting the potential positive effect of increases in full-time workers on coverage. Similarly, the rate of ESI continued to decline in low ESI industries and among small and medium firms, which have had sizable job growth in recent years.  Given patterns of coverage for adults over age 26, which are not impacted by the ACA policy allowing young adults to stay on parents’ coverage and are thus indicative of underlying trends, it appears that an underlying trend of declining ESI persists. While coverage expansions under the Affordable Care Act will create more coverage options outside of employer-based coverage, ESI is still expected to remain the foundation of the health insurance system moving forward. Thus, it will be important to monitor whether recent trends in ESI coverage continue and whether and how the ACA can fill in gaps in availability of ESI.

Second, most of the changes in the uninsured occurred among low-income individuals. The severe recession and associated slow economic growth are increasing the size of this group. The number of people living in families with incomes below twice the poverty level grew by 13.9 million between 2007 and 2010 and another 1.1 million between 2010 and 2012. The low-income population saw large declines in coverage leading up to the peak of the recession (2007 to 2010) and small gains in coverage as the economy has started to improve (2010 to 2012). These changes have largely driven overall coverage, indicating that coverage for the low-income population is an important contributor to national trends. Correspondingly, coverage expansions under the ACA focus on increasing coverage for people with low or moderate incomes. However, with about half of states not expanding their Medicaid programs, many low-income adults are likely to remain uninsured.

Last, coverage changes for different age groups indicate that policies regarding the availability of insurance can make a difference in coverage patterns. During and after the recession, coverage for children was stabilized by growth in Medicaid and CHIP enrollment that offset loss of private coverage. In contrast, adults, who were less likely to be eligible for Medicaid, had smaller gains in public coverage to offset losses in private insurance, particularly during the period leading up to the peak of the recession (2007-2010). In more recent years, gains in private coverage among young adults (age 19-25), reflecting a 2010 ACA policy enabling these individuals to remain on their parents’ coverage, drove a decline in the number of uninsured adults. These patterns indicate that recent policies to expand coverage available to people of other ages may affect coverage moving forward. Given that the largest increases in the number of uninsured continue to be in the South and West, regions where many states have been the most resistant toward the expansion in the ACA, it will be important to monitor how availability of affordable coverage affects patterns in the future.

This issue brief was prepared by John Holahan and Megan McGrath of the Urban Institute

Changes in Coverage Among Workers Appendix: Methods Notes

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