________. “Employment-Based Health Insurance: dependents were covered by employment-based health insurance coverage in 1999 than in 1998. Employers have Mr. Chairman, and members of the Committee, I am pleased to appear before you today to discuss unin- A Look at Tax Issues and Public Opinion.” EBRI Issue Brief no. EBRI sured not been shifting the cost onto workers. 211 (Employee Benefit Research Institute, July 1999). Americans. My name is Paul Fronstin. I am a senior research associate and director of the Health Security An annual survey by William M. Mercer indicates that the worker share Chart 5 Chart 8 Chart 12 Chart 3 Chart 10 Chart 1 EMPLOYEE and Quality Research Program at the Employee Benefit Research Institute (EBRI), a private, nonprofit, nonparti- of the premium has been unchanged since 1993 (W ________. “Employment-Based Health Insurance: Ailliam M. Mercer Look at Who is Offered Coverage and Who T , 2000). In contrast, an annual survey by the akes It.” EBRI Percentage of Employers Offering Health Benefits, by Firm Size, 1998-2000 Percentage of Children, Ages 0-17, With Medicaid, 1987-1999 Percentage of Working Adults, Ages 18-64, Percentage of Americans Ages 0-64 Number of Uninsured Americans Ages 0-64, 1987-1999 BENEFIT Percentage of Americans Ages 0-64 with Medicaid Coverage, 1987-1999 san, public policy research organization based here in W Kaiser Family Foundation and the Health Research and Educational T Issue Brief no. 213 (Employee Benefit Research Institute, September 1999). ashington, DC. EBRI has been committed, since its rust found that there was a slight reduction Without Health Insurance Coverage, 1987-1999 T-123 With Employment-Based Health Insurance Coverage, 1987-1999 RESEARCH 30% founding in 1978, to the accurate statistical analysis of economic security issues. Through our research we strive ________. “Employment-Based Health Insurance For Children: Why Did Coverage Increase In the Mid-1990s?” between 1996 and 2000 in the percentage of the premium workers were required to pay (Gabel, 2000). 100% 50 99% 99% 14% INSTITUTE 100% ® 70% to contribute to the formulation of effective and responsible health and retirement policies. Consistent with our Health Affairs. 20% Despite rising health insurance costs, employers are increasingly offering health benefits to workers— Vol. 18, no. 5 (September/October 1999): 131–136. 12.7% 69.2% 12.5% 12.5% 43.9 1998 1999 2000 18.2% 69.0% 43.1 18.1% 45 12.1% mission, we do not lobby or advocate specific policy solutions. ________. “Sources of Health Insurance Coverage and Characteristics of the Uninsured: again, because of the tight labor market. Between 1998 and 2000, the percentage of small firms offering health 17.8% 17.8% 17.8% Analysis of the March 17.6% 42.1 17.5% 17.5% 68.6% 11.8% 17.3% 41.4 69% 23.9% 25% 12% 16.8% 16.8% 40.3 23.2% benefits increased from 54 percent to 67 percent, with much of that increase occurring among the smallest of the 1999 Current Population Survey.” EBRI Issue Brief no. 217 (Employee Benefit Research Institute, January 22.9% 39.3 39.4 11.1% 11.0% 22.0% 38.3 40 21.8% 80% 15.6% 68% small firms (chart 12). Most small employers report that offering health benefits helps with recruitment and 2000). 10.4% 10.4% Health Insurance Coverage 20.8% 36.3 10.2% 20.5% 35.6 14.6% 20.2% 19.8% 67.0% 15% 34.3 67% retention, and keeps workers healthy ________. “The Working Uninsured: Who They , which ultimately reduces absenteeism and increases productivity (Fronstin Are, How They Have Changed, and the Consequences of Being 33.6 10% The most recent Census Bureau data, released just last week, shows that for the first time since at least 18.9% 20% 35 67% 31.8 66.3% 8.8% 60% 60% and Helman, 2000). Clearly Uninsured.” EBRI Issue Brief 8.7% , many employers realize there is real business value in providing health care coverage no. 224 (Employee Benefit Research Institute, August 2000). 1987, the number of 8.6% Americans without health insurance coverage has declined. In 1998, the number of unin- 65.8% 60% 16.0% 55% 15.9% 54% 66% to their workers. ________. “Health Insurance Coverage and the Job Market in California.” 30 15.5% Testimony EBRI Special Report no. 36 (Employee sured (nonelderly) Americans had reached 43.9 million (chart 1). In 1999, the number of nonelderly Americans 8% 49% 64.9% 15% Benefit Research Institute, September 2000). Also worth mentioning is that American workers clearly identify health insurance coverage as far and without health insurance coverage declined to 42.1 million. The percentage of nonelderly 64.7% Americans without 65% 10% 25 64.2% ________ “Counting the Uninsured: away the single most valued work-place benefit. When asked to rank the importance of all employee benefits, A Comparison of National Surveys.” EBRI Issue Brief no. 225 (Employee health insurance coverage declined from 18.4 percent in 1998 to 17.5 percent in 1999 (chart 2). Before the 64.0% 40% 63.8% 63.6% 64% health benefits are by far the benefit most valued by workers and their families. Sixty-five percent of workers Benefit Research Institute, September 2000). 6% 63.5% The main reason for the decline in the number of uninsured Americans is the strong economy and low 20 10% Fronstin, Paul, and Rachel Christensen. “The Relationship Between Income and the Uninsured.” responding to a recent EBRI survey rated employment-based health benefits as the most important benefit EBRI Notes, no. unemployment. Since employment-based health insurance is by far the most common source of health coverage in 63% Health, Education, Labor, & Pensions Committee (Salisbury and Ostuw 3 (Employee Benefit Research Institute, March 2000): 1–4. , 2000). the United States, it is not surprising that the lower rate of unemployment is beginning to translate into lower 15 4% 5% 20% United States Senate 62% Fronstin, Paul, and Lawrence G. Goldberg, and Philip K. Robins. “Differences in Private Health Insurance Cover- rates of uninsured. As a result of the strong economy, more workers and their dependents are covered by employ- 5% age for W 10 orking Male Hispanics.” Inquiry. Vol. 34, no. 2 (Summer 1997): 171–180. The Future ment-based health insurance: Between 1998 and 1999 the percentage of nonelderly Americans covered by employ- 61% Hearing on 2% Fronstin, Paul, Lawrence G. Goldberg, and Philip K. Robins. “An Analysis of Trends in Private Health Insurance ment-based health insurance increased from 64.9 percent to 65.8 percent (chart 3). When findings from the March 2001 CPS are released, I expect the data for 2000 will show that the 0% 5 Health Insurance Coverage and Uninsured Americans 0% 60% Coverage, 1988–1992.” Social Science Quarterly. Vol. 78, no. 1 (March 1997). number of uninsured Americans continued to decline. The drop may even be larger than the 1.7 million decline Employment-based health insurance coverage increased substantially for adult workers last year. In 0% 3-9 Workers 3-199 Workers 200+ Workers Fronstin, Paul, and Ruth Helman. “Small Employers and Health Benefits: Findings from the 2000 Small Em- 1987 1987 1988 19881989 19891990 1990 1991 1991 1992 1992 1993 1993 1994 19941995 19951996 1996 1997 1997 1998 1998 1999 1999 1998, 72.8 percent of workers were covered by an employment-based health plan (chart 4). By 1999, 73.3 percent experienced between 1998 and 1999. As mentioned above, between 1998 and 2000, the percentage of firms with 0% 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 0 ployer Health Benefits Survey.” EBRI Issue Brief no. 226 (Employee Benefit Research Institute, October 2000). were covered. The likelihood that an adult worker was uninsured declined from 18.1 percent in 1998 to 17.5 per three to 199 employees offering health benefits increased (Gabel, 2000). In addition, S-CHIP will continue to - 1987 1987 1988 1988 1989 1989 1990 1990 1991 1991 1992 1992 1993 1993 1994 1994 1995 1995 1996 1996 1997 1997 1998 1998 1999 1999 Source: Jon Gabel et al., "Job-Based Health Insurance in 2000: Premiums Rise Sharply Fronstin, Paul, and Sarah C. Snider. “An Examination of the Decline in Employment-Based Health Insurance expand health insurance coverage. Last week, the Clinton administration announced that 2.5 million children had cent in 1999 (chart 5). Even nonworking adults experienced an increase in the likelihood of having employment- Source: Employee Benefit Research Institute. Source: Source: While Employee Employee Coverage Benefit Grows," Benefit Research Research Health Institute. Affairs Institute. Vo. 19, no. 3 (September/October 2000): Source: Employee Benefit Research Institute. Between 1988 and 1993.” Inquiry. Vol. 33, no. 4 (Winter 1996/97): 317–325. based health insurance coverage, increasing from 40.5 percent in 1998 to 41.7 percent in 1999 (chart 6). been enrolled in the S-CHIP 144–151. program by June 30, 2000. An October 1999 report by the Health Care Finance Source: Employee Benefit Research Institute. by Gabel, Jon, et al. “Job-Based Health Insurance In 2000: Premiums Rise Sharply While Coverage Grows.” Health Administration predicted that 2.7 million children would be enrolled in S-CHIP by Sept. 30, 2000. This combina- The likelihood that a child is covered by employment-based health insurance has been increasing since Paul Fronstin, Ph.D. Affairs. Vol. 19, no. 3 (September/October 2000): 144–151. tion of more employers adding health benefits, along with more children covered by S-CHIP, will result in contin- 1994 (chart 7). In 1994, 58.1 percent of children were covered by employment-based health insurance. By 1999, Health Care Financing Administration (HCFA). The State Children’s Health Insurance Program Annual Enroll- 61.5 percent were covered. Because of declining enrollment in Medicaid (chart 8), the percentage of children ued expansion of health insurance coverage. Senior Research Associate and ment Report (October 1, 1998–September 30, 1999). without health insurance coverage has actually been growing over most of this period. However It is also worth noting that while the uninsured declined between 1998 and 1999, it did not drop by Chart 11 Chart 2 , between 1998 Chart 13 Director, Health Security and Quality Research Program Chart 4 Salisbury, Dallas L., and Pamela Ostuw. “Value of Benefits Constant in a Changing Job Environment: The 1999 44 million. More than 42 million Americans continue to be uninsured. Even if the number drops again next year, and 1999, the percentage of children without health insurance coverage declined dramatically from 15.4 percent to Chart 9 Percentage of Americans Ages 0-64 Without Health Insurance, 1987-1999 Premium Increases by Firm Size, 1988-2000 Number of Uninsured Americans, Ages 0-64, Chart 6 Percentage of Working Adults, Ages 18-64, WorldatWork/EBRI Value of Benefits Survey.” EBRI Notes, no. 6 (Employee Benefit Research Institute, June 13.9 percent (chart 9). when the 2000 data are released, it is likely that 40 million 14% Americans will still be uninsured—more than 15 per- Percentage of Children, Ages 0-17, Various Assumptions About Percent Uninsured, 1999-2010 20% Percentage of Nonworking Adults, Ages 18-64, 2000): 5–6. with Employment-Based Health Insurance Coverage, 1987-1999 cent of the population. Despite the State Children’ As long as the economy is strong and unemployment is low s Health Insurance Program (S-CHIP), public health insurance coverage is not , employment-based health Without Health Insurance Coverage, 1987-1999 70 18.4% 18.3% William M. Mercer With Employment-Based Health Insurance Coverage, 1987-1999 . 12.0% Mercer/Foster Higgins National Survey of Employer-sponsored Health Plans 1999. New York, insurance coverage will expand and the uninsured will gradually decline. However increasing. Between 1998 and 1999 the percentage of nonelderly Employee Benefit Research Institute Americans covered by Medicaid and other 17.7%, even if the United States 17.5% 80% 17.4% 17.3% 18% 66 All Firms 17.1% Small Firms (3-199 Workers) 63 12% 17.0% 20% NY: William M. Mercer, Inc., 2000. 61 government-sponsored health insurance coverage did not change (chart 10)—remaining at 10.4 percent in 1999. experienced five more years of similar declines in the uninsured as it did in 1999, 34 million 2121 K Street NW, Suite 600 Americans would still 16.3% 50% 16.1% 46.4% 60 46.2% 15.7% 10.3% 15.5% 45.1% 59 be uninsured in 2005 (chart 13). If the economy continues to soften or comes close to a recession (for instance, While the March Current Population Survey (CPS) does not allow researchers to count the number of children 16% Washington, DC 20037 53 14.8% 76.1% 43.3% 1 45% 42.0% The CPS (and most other surveys) are well known for under 75.5% -reporting Medicaid coverage and coverage from 41.7% because of rising energy costs), the uninsured would easily and quickly start to increase again as unemployment enrolled in S-CHIP 10% , it does appear that some children benefited from expansions in government-funded programs. 15.4% 48 40.5% Voice: 202/775-6300 15.0% 39.7% 14.8% 39.1% 38.8% 39.0% 38.7%38.7% 14% 14.2% other government programs. In the case of the CPS, it may not be picking up all Medicaid recipients because some 15% 75% 50 Findings from the CPS indicate that the percentage of children in families just above the poverty level without rises. Even for those who keep their jobs, small employers would likely drop health benefits, and large employers 40% 73.9% 73.9% 13.9% 13.7% 13.8% 13.6% 8.5% Fax: 202/775-6312 13.3% 13.2% 45 73.3% 8.3% 13.1% 12.9% 12.7% states do not call the program Medicaid. In fact, there is strong evidence that the CPS under 72.8% -reports Medicaid 46 health insurance coverage declined dramatically would likely shift the cost of coverage onto workers, resulting in fewer workers accepting coverage. If the unin- , from 27.2 percent uninsured in 1998 to 19.7 percent uninsured in 72.4%72.4% 72.3% 72.2% 72.2% 43 72.2% 35% 8% 12% Internet: http://www.ebri.org 71.8% coverage, based on comparisons of these data with enrollment and participation data provided by the Health Care 38 6.9% 1999. Some of the decline can be attributed to expansions in Medicaid and S-CHIP sured returned to its 1999 level of 17.5 percent of the nonelderly population, 38 million . Between 1998 and 1999, the Americans would be 41 40 39 30% Financing Administration (HCF 42 A), the federal agency primarily responsible for administering Medicaid. See Paul percentage of near uninsured in 2005. In contrast, if the downturn in the economy was severe and the uninsured represented 25 per -poor children covered by these programs increased from 39.3 percent to 40.5 percent. However-, 10% 10% 70% Fronstin, “Counting the Uninsured: 6% A Comparison of National Surveys,” EBRI Issue Brief no. 225, Employee it appears that expansions in employment-based health insurance had an even larger effect. Specifically cent of the nonelderly population, 63 million Americans would be uninsured. , the 25% 5.2% 37 30 Benefit Research Institute, September 2000, for more information. 8% percentage of near-poor children covered by an employment-based health insurance plan increased from 30.5 per- 34 28 20% 1 cent to 34.5 percent. Mr. Chairman, this concludes my statement. It has been my pleasure to appear before the Committee 4.8% 4% 6% 5% 20 15% today. I offer the Committee the assistance of the Employee Benefit Research Institute as you continue your work, October 4, 2000 65% 2.1% which is vital to the economic security of all Americans. 10% 4% 2% 17.6% 15% 25% Gradual Decline Constant Increase Health Insurance Costs and Benefits 10 5% 0% 2% It is notable that this decline in the uninsured has occurred at a time when health insurance costs are 0.8% Bibliography 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 going up. Since 1998, health insurance cost inflation has been increasing. 0% According to data from a recent study 60% 0% 0 The views expressed in this statement are solely those of the author and should not be attributed to the 0% (Gabel et al., 2000), health insurance costs increased 8.3 percent for all firms between spring 1999 and spring Fronstin, Paul. “Children Without Health Insurance: An Analysis of the Increase in Uninsured Children Between 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Employee Benefit Research Institute, or the EBRI Education and Research Fund, its officers, trustees, 1987 1988 1999 1989 1990 1991 2000 1992 1993 1994 2005 1995 1996 1997 1998 20101999 2000, and they increased 10.3 percent for smaller firms (with between three and 199 workers) (chart 1 1992 and 1993.” Inquiry. Vol. 32, no. 3 (Fall 1995): 353–359. 1). When sponsors, or other staff. The Employee Benefit Research Institute is a nonprofit, nonpartisan, public policy Year Source: Employee Benefit Research Institute. ________. “T health care costs increase, health insurance coverage would be expected to decline, with employers shifting the Source: rends in Health Insurance Coverage.” Source: Jon Gabel Employee et al., Benefit "Job-Based Research Health EBRI Issue Brief Institute. Insurance in no. 185 (Employee Benefit Research Institute, 2000: Premiums Rise Sharply Source: Employee Benefit Research Institute. research organization which does not lobby or take positions on legislative proposals. Source: Employee Benefit Research Institute. While Coverage Grows," Health Affairs Vo. 19, no. 3 (September/October 2000): 144–151. cost of coverage onto workers, or even dropping coverage completely May 1997). Source: Employee Benefit Research Institute. . But as shown above, more workers and their 1 12 11 10 9 8 3 2 7 Millions Millions Uninsured