Witness Disclosure Statement, Testimony of Paul Fr Chart 11 onstin the percentage of children without health insurance coverage has actually been growing over most of Outlook Chart 5 Bibliography EBRI Chart 9 Chart 3 pursuant to Clause 2(g)(4) of Rule XI of the Rules of the House: Number of Uninsured Senior Resear Chart ch Americans, 7 Associate and Ages 0-64, this period. However, between 1998 and 1999, the percentage of children without health insurance Percentage of Working Adults, Ages 18–64, Chart 1 As long as health benefit costs continue to increase, employers will seek ways to reduce those Percentage of Children, Ages 0–17, Without Health Insurance Coverage, 1987–1999 EMPLOYEE Percentage of Americans Ages 0–64 With Employment-Based Fronstin, Paul. “Children Without Health Insurance: Percentage of Children, Ages 0–17, An Analysis of the Increase in Uninsured Children Between 1992 and coverage declined dramatically from 15.4 percent to 13.9 percent (chart 9). Various DirAssumptions ector, Health Security and Quality Resear About Percentage Uninsured, 1999-2010 ch Program Without Health Insurance Coverage, 1987–1999 costs. However, as long as unemployment remains low, employers will likely be unable to modify BENEFIT 20% Number of Uninsured Americans Ages 0–64, 1987–1999 Health Insurance Coverage, 1987–1999 1993.” Inquiry. Vol. 32, no. 3 (Fall 1995): 353–359. With Employment-Based Health Insurance Coverage, 1987-1999 Employee Benefit Research Institute 20% Despite the State Children’s Health Insurance Program (S-CHIP), public health insurance cover- T-126 existing health benefit programs. With low unemployment, the cost of not providing health benefits, RESEARCH 70 (millions) 18.2% 68%70% 18.1% age did not increase during this time period. Between 1998 and 1999 the percentage of nonelderly 17.5% • The Witness: INSTITUTE such as the cost of recruiting and retaining employees, often outweigh the cost savings that can be ® 17.8% 17.8% 17.8% 17.6% ________. “Trends in Health Insurance Coverage.” EBRI Issue Brief no. 185 (Employee Benefit Research Institute, May 17.5% 17.5% 66.7% 66 50 17.3% 65 66.5% 69.2%69.0% 63 Paul Fronstin is a Senior Research Associate and Director of the Health Security and Quality Research Program at the Testimony Before the Committee on Ways and Means Americans covered by Medicaid and other government-sponsored health insurance coverage did not 16.8% 16.8% attributed to cutting back on health benefits. 1997). 65.8% 69% 68.6% 15.4% 61 43.9 Employee Benefit Research Institute (EBRI), Washington, DC. EBRI is a private, nonprofit, nonpartisan public policy 15.0% 66% 14.8% 43.1 change (chart 10)— remaining at 10.4 percent in 1999. 45 60 15.6% Subcommittee on Health While the Census Bureau’s March Current Whether the slowing economy has an impact on employment-based health benefits depends on a 42.1 15% 14.2% 59 41.4 research organization based in Washington, DC. Founded in 1978, its mission is to contribute to, to encourage, and to 13.9% 39.4 13.8% 40.3 15% 13.7% 14.6% 13.6% ________. “Employment-Based Health Insurance: 68% A Look at Tax Issues and Public Opinion.” EBRI Issue Brief no. 211 Population Survey (CPS) does not allow researchers to count the number of children enrolled in S-CHIP United States House of Repr 39.3 esentatives , 13.3% 64.0% number of factors. First, massive layof 15% fs have yet to have a substantial impact on the unemployment 13.2% 13.1% 38.3 53 enhance the development of sound employee benefit programs and sound public policy through objective research and 40 55 12.9% 12.7% 64% (Employee Benefit Research Institute, July 1999). 67.0% 36.3 it does appear that some children benefited from expansions in government-funded programs. Findings 35.6 rate. While the unemployment rate has jumped from a 30-year low of 3.9 percent in October 2000 to 4.2 education. EBRI does not lobby and does not take positions on legislative proposals. Fronstin has been with EBRI since 62.7% 67% 34.3 33.6 50 66.3% 35 48 62.0% from the CPS indicate that the percentage of children in families just above the poverty level without Hearing on 1993. percent in January 2001, it has remained at 4.2 percent in February and 4.2 percent is still a very low 31.8 61.5% ________. “Employment-Based Health Insurance: A Look at Who is Offered Coverage and Who Takes It.” 25% EBRI Issue Brief 62% 65.8% 45 66% Health Insurance Coverage and Uninsured 46 Americans health insurance coverage declined dramatically, from 27.2 percent uninsured in 1998 to 19.7 percent 45 level of unemployment for the nation. Second, the combination of a slowing economy 42 , rising health no. 213 (Employee Benefit Research Institute, September 1999). 30 43 10% 60.2% Testimony 64.9% uninsured in 1999. Some of the decline can be attributed to expansions in Medicaid and S-CHIP 59.7% . Be- care costs, and worker uncertainty about the future may make it easier for employers to modify health 10% 64.7% 59.5% 60%65% 38 40 • The Organization: 25 41 58.9% 39 ________. “Employment-Based Health Insurance For Children: Why Did Coverage Increase In the Mid-1990s?” 64.2% Health tween 1998 and 1999, the percentage of near-poor children covered by these programs increased from April 4, 2001 58.6% benefit programs. Even with low unemployment, if employees feared that they could lose their job, Gradual 64.0% The Education and Research Fund (ERF), established in 1979, performs the charitable, educational, and scientific 58.1% 63.8% Affairs. Vol. 18, no. 5 (September/October 1999): 131–136. 64% 63.6% 35 Decline in 63.5% 39.3 percent to 40.5 percent. However, it appears that expansions in employment-based health insurance 20 37 employers may have more flexibility to reduce health benefits (and other components of total compensa- 58% functions of the Institute. EBRI-ERF is a tax-exempt organization (under IRC Sec. 501(c)(3)) supported by contributions Coverage Before the had an even larger effect. Specifically, the percentage of near-poor children covered by an employment- and grants. EBRI-ERF is not a private foundation (as defined by IRC Sec. 509(a)(3)). tion) in order to control costs in a slowing economy. 34 30 5% 63% ________. “The Working Uninsured: Who They Are, How They Have Changed, and the Consequences of Being Uninsured.” 15 1 Constant Madam Chairwoman, and members of the Committee, I am pleased to appear before you today 28 based health insurance plan increased from 30.5 percent to 34.5 percent. 56% 5% Adding to the confusion over the impact of rising health benefits costs on employment-based EBRI Issue Brief no. 224 (Employee Benefit Research Institute, August 2000). 25 Increase in EBRI-ERF has a number of programs: 62% Committee on Ways and Means 10 to discuss uninsured Americans. My name is Paul Fronstin. I am a senior research associate and direc- health benefits may be the release of the March 2001 CPS in the Fall 2001. When those findings are Coverage American Savings Education Council Subcommittee on Health ________. “Health Insurance Coverage and the Job Market in California.” 54% EBRI Special Report no. 36 (Employee Benefit tor of the Health Security and Quality Research Program at the Employee Benefit Research Institute 20 released, the data for 2000 are expected to show that the number of uninsured Health Insurance Costs and Benefits Americans continued to ® 61% 5 Choose to Save Education Program Research Institute, September 2000). United States House of Representatives (EBRI), a private, nonprofit, nonpartisan, public policy research or 1999 2000 2005 2010 ganization based in Washington, DC. decline. It is notable that the decline in the uninsured occurred at a time when health insurance benefit The drop may even be larger than the 1.7 million decline experienced between 1998 and 1999. Consumer Health Education Council 0% 52%0 60% EBRI has been committed, since its founding in 1978, to the accurate statistical analysis of economic Defined Contribution Research Program As mentioned above, between 1998 and 2000, the percentage of firms with three to 199 employees costs were going up. Since 1998, health insurance cost inflation has been increasing. 0% According to data Source: EBRI. 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 ________ “Counting the Uninsured: A Comparison of National Surveys.” EBRI Issue Brief no. 225 (Employee Benefit 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1987 1987 1988 1988 1989 1989 1990 19901991 19911992 19921993 1993 1994 1994 1995 1995 1996 1996 1997 1997 1998 1998 1999 1999 Fellows Program security issues. Through our research we strive to contribute to the formulation of effective and respon- o from a recent study (Gabel et al., 2000), health insurance costs increased 8.3 percent for all firms be- ffering health benefits increased (Gabel 1987 1988 1989 1990 1991 et al., 2000). In addition, S-CHI 1992 1993 1994 1995 1996 P will continue to expand 1997 1998 1999 Research Institute, September 2000). Health Confidence Survey Program Hearing on sible health and retirement policies. Consistent with our mission, we do not lobby or advocate specific health insurance coverage. tween spring 1999 and spring 2000, and they increased 10.3 percent for smaller firms (with between Source: Employee Benefit This combination of more employers adding health benefits, along with more Research Institute. Source: Employee Benefit Research Institute. Source: Employee Health Security and Quality Research Program Benefit Research Institute. Source: Employee Benefit Research Institute. Source: Employee Benefit Research Institute. ________. “Sources of Health Insurance Coverage and Characteristics of the Uninsured: Analysis of the March 2000 Current policy solutions. children covered by S-CHIP Health Insurance Coverage and Uninsur , will result in continued expansion of health insurance coverage. However ed Americans , three and 199 workers). When health care costs increase, the percentage of Americans covered by an Policy Forums Population Survey.” EBRI Issue Brief no. 228 (Employee Benefit Research Institute, December 2000). it should be noted that the delay in collecting and reporting data often adds to the confusion on health employment-based health insurance plan is expected to decline, with employers shifting the cost of Retirement Confidence Survey Program Chart 6 Health Insurance Coverage Retirement Security Research Program coverage and the uninsured: The data are often misinterpreted as applying towards the current time coverage onto workers, or even dropping coverage completely. But as shown above, more workers and Fronstin, Paul, and Rachel Christensen. “The Relationship Between Income and the Uninsured.” Chart 4 EBRI Notes, no. 3 (Em- Social Security Research Program Percentage of Nonworking Adults, Ages 18–64, Data from the Census Bureau collected in March 2000, shows that for the first time since at least Chart 10 period, rather than the nearly two-year period prior to the release of the data, when it was collected. their dependents were covered by employment-based health insurance coverage in 1999 than in 1998. Paul Fronstin, Ph.D. ployee Benefit Research Institute, March 2000): 1–4. Percentage of Working Adults, Ages 18–64, With Employment-Based Education Programs—Policy Forums, Briefings, Round Tables With Employment-Based Health Insurance Coverage, 1987–1999 Percentage of Americans Ages 0–64 With Medicaid Coverage, 1987–1999 Employers have not been shifting the cost onto workers. 1987, the number of It is also worth noting that while the uninsured declined between 1998 and 1999, it did not drop Americans without health insurance coverage has declined. In 1998, the number of An annual survey by William M. Mercer Chart 2 Health Insurance Coverage, 1987–1999 Publication Programs—printed and online Fronstin, Paul, and Lawrence G. Goldberg, and Philip K. Robins. “Differences in Private Health Insurance Coverage for by 44 million. More than 42 million uninsured (nonelderly) 50% Americans had reached 43.9 million (chart 1). In 1999, the number of nonelderly Senior Americans continue to be uninsured. Even if the number drops Research Associate and indicates that the worker share of the premium has been unchanged since 1993 (W 14% Percentage of Americans Ages 0–64 Without Health Insurance, illiam M. Mercer 1987-1999 , 80% EBRI Issue Briefs, EBRI Notes, EBRI Databook on Employee Benefits, Working Male Hispanics.” Inquiry. Vol. 34, no. 2 (Summer 1997): 171–180. Chart 8 46.4% 46.2% 12.7% again later this year Americans without health insurance coverage declined to 42.1 million. 2001). In contrast, an annual survey by the Kaiser Family Foundation and the Health Research and , when the 2000 data are released, it is likely that 40 million Dir 45.1% ector, Health Security and Quality Research Pr The percentage of nonelderly ogram Americans will still be EBRI Health Benefits Databook, Fundamentals of Employee Benefit Programs, Policy Studies 12.5% 12.5% 20% 45% 43.3% 12.1% Percentage of Children, Ages 0–17, With Medicaid, 1987–1999 18.4% 18.3% uninsured—more than 15 percent of the population. Americans without health insurance coverage declined from 18.4 percent in 1998 to 17.5 percent in Employee Benefit Resear 11.8% As long as the economy is strong and unemploy- ch Institute Educational Trust found that there was a slight reduction between 1996 and 2000 in the percentage of 42.0% 41.7% Fronstin, Paul, Lawrence G. Goldberg, and Philip K. Robins. “An Analysis of Trends in Private Health Insurance Coverage, 17.7% 12% 17.5% 17.4% 40.5% 17.3% 18% 17.1% 76.1% 11.1% 39.7% 17.0% 1999 (chart 2). 30% 11.0% ment is low the premium workers were required to pay (Gabel, et al., 2000). , employment-based health insurance coverage will expand and the uninsured will gradually 2121 K Street, NW, Suite 600 39.1% 39.0% 1988–1992.” Social Science Quarterly. Vol. 78, no. 1 (March 1997). 38.8% 38.7% 38.7% 40% 75.5% 16.3% 16.1% • Contracts: 10.4% 10.4% 15.7% 15.5% 10.2% decline. However The main reason for the decline in the number of uninsured Despite rising health insurance costs, employers have been increasingly of , even if the United States experienced five more years of declines in the uninsured Washington, DC 20037 Americans was the strong economy fering health benefits 16% 75% EBRI does not have any contracts with the federal government in 2001, and did not in 1999 or 2000. 14.8% 73.9% 73.9% Fronstin, Paul, and Ruth Helman. “Small Employers and Health Benefits: Findings from the 2000 Small Employer Health 10% similar to that which occurred between 1998 and 1999, 34 million and low unemployment. Since employment-based health insurance benefits are by far the most common Voice: 202–775–6352 Americans would still be uninsured in to workers. Between 1998 and 2000, the percentage of small firms of 35% 23.9% fering health benefits increased 73.3% 25% 23.2% 8.8% 22.9% 72.8% Benefits Survey.” EBRI Issue Brief no. 226 (Employee Benefit Research Institute, October 2000). 14% 8.7% 8.6% 72.4% 72.4% 72.3% 22.0% 2005 (chart 1 source of health coverage in the United States, it is not surprising that the low rate of unemployment from 54 percent to 67 percent, with much of that increase occurring among the smallest of the small 1). In contrast, if the economy continues to weaken and health benefit costs continue to 72.2% Fax: 202–775–6312 72.2% 21.8%72.2% 71.8% 20.8% 20.5% 30% 20.2% 19.8% increase, the uninsured would quickly start to increase again. Even for those who keep their jobs, small translated into lower rates of uninsured. E–mail: fr As a result of the strong economy onstin@ebri.org , more workers and their firms. Most small employers report that offering health benefits helps with recruitment and retention, 8% 12% Fronstin, Paul, and Sarah C. Snider. “An Examination of the Decline in Employment-Based Health Insurance Between 1988 18.9% 20% dependents were covered by employment-based health insurance benefits: Between 1998 and 1999 the employers would likely drop health benefits, and lar and keeps workers healthy, which ultimately reduces absenteeism and increases productivity (Fronstin Internet: www ge employers would likely shift the cost of coverage .ebri.org and 1993.” Inquiry. Vol. 33, no. 4 (Winter 1996/97): 317–325. 25% 70% 10% 15.9% 16.0% 15.5% onto workers, resulting in fewer workers accepting coverage. If the uninsured returned to its 1999 level and Helman, 2000). Clearly percentage of nonelderly Americans covered by employment-based health insurance increased from 64.9 , many employers realize there is real business value in providing health care 6% 15% Gabel, Jon, et al. “Job-Based Health Insurance In 2000: Premiums Rise Sharply While Coverage Grows.” Health Affairs. Vol. of 17.5 percent of the nonelderly population, 38 million percent to 65.8 percent (chart 3). Americans would be uninsured in 2005. In coverage to their workers. 8% 20% 19, no. 3 (September/October 2000): 144–151. contrast, if the downturn in the economy was severe and the uninsured represented 25 percent of the Also worth mentioning is that Employment-based health insurance coverage increased substantially for adult workers between American workers clearly identify health insurance coverage as far 6% 15% 4% 10% nonelderly population, 63 million 1998 and 1999. In 1998, 72.8 percent of workers were covered by an employment-based health plan Americans would be uninsured. 4 April 2001 and away the single most valued work-place benefit. When asked to rank the importance of all employee Health Care Financing Administration (HCFA). The State Children’s Health Insurance Program Annual Enrollment Report 65% (chart 4). By 1999, 73.3 percent were covered. 4% The likelihood that an adult worker was uninsured benefits, health benefits are by far the benefit most valued by workers and their families. Sixty-five (October 1, 1998–September 30, 1999). 10% declined from 18.1 percent in 1998 to 17.5 percent in 1999 (chart 5). Even nonworking adults experi- percent of workers responding to a recent EBRI survey rated health benefits as the most important Madam Chairwoman, this concludes my statement. It has been my pleasure to appear before the 2%5% 2% Salisbury, Dallas L., and Pamela Ostuw. “Value of Benefits Constant in a Changing Job Environment: The 1999 Committee today enced an increase in the likelihood of having employment-based health insurance coverage, increasing . I offer the Committee the assistance of the Employee Benefit Research Institute as employee benefit (Salisbury and Ostuw, 2000). 5% WorldatWork/EBRI Value of Benefits Survey.” EBRI Notes, no. 6 (Employee Benefit Research Institute, June 2000): 5–6. 0% you continue your work, which is vital to the economic security of all from 40.5 percent in 1998 to 41.7 percent in 1999 (chart 6). Americans. 0% 0%60% 1 0% 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 The views expressed in this statement are solely those of the author and should not be attributed to the The likelihood that a child is covered by employment-based health insurance has been increasing The CPS (and most other surveys) are well known for under-reporting Medicaid coverage and coverage from other government programs. In the case of the William M. Mercer. Mercer/Foster Higgins National Survey of Employer-sponsored Health Plans. 2000. New York, 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1987 1987 1988 1988 1989 19891990 19901991 1991 1992 1992 1993 1993 1994 1994 1 1995 995 11996 996 1997 19971998 19981999 1999 CPS, it may not be picking up all Medicaid recipients because some states do not call the program Medicaid. In fact, there is strong evidence that the CPS 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 since 1994 (chart 7). In 1994, 58.1 percent of children were covered by employment-based health Employee Benefit Research Institute, its officers, trustees, sponsors, or other staff. The Employee Ben- NY: William M. Mercer, Inc., 2001. under-reports Medicaid coverage, based on comparisons of these data with enrollment and participation data provided by the Health Care Financing Source: Employee Benefit Research Institute. Source: Employee Benefit Research Institute. insurance. By 1999, 61.5 percent were covered. Because of declining enrollment in Medicaid (chart 8), efit Research Institute is a nonprofit, nonpartisan, public policy research organization. Administration (HCFA), the federal agency primarily responsible for administering Medicaid. See Paul Fronstin, “Counting the Uninsured: A Comparison of Source: Employee Benefit Research Institute. Source: Employee Benefit Research Institute. Source: Employee Benefit Research Institute. National Surveys,” EBRI Issue Brief no. 225, Employee Benefit Research Institute, September 2000, for more information. 10 8 2 4 3 6 7 1 5 9 Millions