EBRI Income— In formulating public policy for the uninsured population, it is important to understand the characteris- Income plays an important role in whether or not an individual is uninsured. The uninsured are concen- STATEMENT OF PAUL FRONSTIN Chart 4 Table 1 EMPLOYEE Chart 8 Chart 6 tics of the uninsured population. The remainder of this testimony presents this information. trated disproportionately in low-income families. For example, 37 percent of individuals in families with income SENIOR RESEARCH ASSOCIATE AND Chart 10 Chart 2 Percentage Uninsured, by State, 1997 Nonelderly Americans With Selected Sources of Health Insurance Coverage, 1987-1997 Likelihood of Workers Being Uninsured, by Firm Size, 1997 Distribution of Americans and Uninsured Americans by Age, 1997 BENEFIT Likelihood of Being Uninsured, by Industry, 1997 just above the poverty line were uninsured in 1997 (chart 7). This compares with 8 percent uninsured among DIRECTOR, HEAL Percent TH SECURITY age of Nonelderl AND QUALITY RESEARCH PROGRAM y Americans Covered by an Employment-Based Health Plan, 1987–1997 T-119 a RESEARCH 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 individuals in families with income at 400 percent or more of the poverty level. EMPLOYEE BENEFIT RESEARCH INSTITUTE Data 35% INSTITUTE 33.7% ® BEFORE THE COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE ON HEALTH 40% 34.7% (millions) The data in this testimony come from three sources: the Current Population Survey (CPS) and the Survey of 30% 70% Uninsured 35% 69.2% U.S. HOUSE OF REPRESENTATIVES Total Population Work Status Total Population 35% 214.4 69.0%216.6 218.5 220.6 222.9 225.5 228.0 229.9 231.9 234.0 236.2 Income and Program Participation (SIPP), both conducted by the U.S. Bureau of the Census, and the 1996 Medi- 29.7% 30% 68.6% JUNE 15, 1999 Total Private 30% 162.8 162.9 164.3 162.1 161.3 160.5 161.5 162.8 163.9 165.8 167.5 Approximately 84 percent of the uninsured were members of families with a working head of household in 1997 cal Expenditure Panel Survey (MEPS), conducted by the 30% Agency for Health Care Policy and Research. 22.2% 25% 24.1% Employment-based coverage 148.5 149.4 149.8 147.7 147.7 145.9 144.9 146.3 147.9 149.8 151.7 25% 25% 68% 18.2% (Fronstin, 1998). The CPS is conducted monthly As a result, it is just as important to understand the job characteristics of uninsured workers as , and health insurance status is measured by a survey of 145,000 individu- 20.9% own name 72.5 73.5 74.0 73.1 73.1 71.7 74.9 75.2 75.9 76.9 77.4 25% 67.0% 21% 16.2% 18.2%20% 14.2% dependent coverage 75.9 75.9 75.8 74.7 74.6 74.3 69.9 71.1 72.1 72.9 74.3 it is to understand the characteristics of the uninsured in general. als conducted in March of each year. The CPS has become the most widely used source of data on the uninsured 66.3% 15.8% 19% 20% 18% Mr. Chairman, ranking member Other private coverage 20% 14.3 , and members of the Committee, I am pleased to appear before you today to 13.5 14.5 14.3 13.6 14.6 16.6 16.4 16.0 16.0 15.8 15% 17% and is the source of the estimate that 43.1 million nonelderly Americans were uninsured in 1997. This is the 12.7% 12.3% 66% 8.0% Total Public 28.5 28.8 28.7 31.9 34.4 36.0 38.1 38.9 38.4 37.4 34.9 20.4% to 28.3% discuss uninsured 15% Americans. My name is Paul Fronstin. I am a senior research associate and director of the 14% 10% survey that has been used to track the uninsured since as far back as 1980. While the questionnaire has been Firm size—Workers employed in small firms are more likely to be uninsured than workers employed in large firms 64.7% Medicare 3.1 3.2 3.2 3.4 3.5 3.9 3.7 3.7 4.1 4.6 4.7 8.0% 15% 17.9% to 20.4% Health Security and Quality Research Program at the Employee Benefit Research Institute (EBRI), a private, 64.2% Medicaid 10% 18.4 18.9 19.2 22.4 24.8 26.5 29.0 28.7 29.0 28.2 26.0 64.0% 5% 11% 11% changed in various years to improve the accuracy of the data, many researchers feel comfortable making adjust- (chart 8). As a result, the uninsured population is more likely to be composed of workers in small firms than the 63.8% b 63.6% 15.0% to 17.9% 9% 63.5% nonprofit, nonpartisan, public policy research organization based here in W CHAMPUS/CHAMPVA 8.5 8.2 7.9 7.9 7.9 7.5 ashington, DC. EBRI has been commit- 7.4 8.7 7.4 6.8 6.6 64% 5% general working population. In 1997, over 60 percent of uninsured workers were employed in firms with fewer ments to the data that result in a consistent time series since 1987 (see Fronstin, 1998, for more details). 10% 0% 7% No Health Insurance 31.8 33.6 34.3 35.6 36.3 38.3 39.3 39.4 40.3 41.4 43.1 7% 13.4% to 15.0% ted, since its founding in 1978, to the accurate statistical analysis of economic security issues. Through our Total Agriculture 6% , Manufacturing Wholesale & Personal Public than 100 employees or were self-employed (98 percent of the self-employed reported a firm size of less than 100 The MEPS also contains data on the uninsured, but is not used as often by researchers as the CPS 5% 0% Retail Trade Services Sector Forestry, Fishing, 8.9% to 13.4% (percentage) research we strive to contribute to the formulation of effective and responsible health and retirement policies. 5% Total Self- Public Fewer than 10–24 25–99 100–499 500–999 1,000 or More employees). because it has been conducted only intermittently since 1977 (previously under the name National Medical According to chart 9, 12 percent of uninsured workers were self-employed; 22 percent were in firms 62% Mining and Statement Employed Sector Total Population 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Consistent with our mission, we do not lobby or advocate specific policy solutions. 10 Employees Employees Employees Employees Employees Employees Construction with fewer than 10 workers, 13 percent were in firms with 10–24 workers; and 14 percent were in firms with 25– Expenditure Survey), and because of the smaller sample size. However, data were collected in MEPS that are not Total Private 75.9 75.2 75.2 73.5 72.4 71.2 70.8 70.8 70.7 70.9 70.9 Before the Committee on Ways and Means 0% Employment-based coverage Source: Employee Benefit Research Institute estimates of the March 1998 Current Population Survey. 69.2 69.0 68.6 67.0 66.3 64.7 63.5 63.6 63.8 64.0 64.2 collected in CPS. For example, MEPS asks workers if their employer offers them health insurance coverage and 99 workers. Under 18 18–20 21–24 25–34 35–44 45–54 55–64 Subcommittee on Health Source: Employee Benefit Research Institute estimates of the March 1998 Current Population Survey. 60% Introduction own name 33.8 33.9 33.9 33.1 32.8 31.8 32.9 32.7 32.7 32.9 32.8 about health care utilization. Additional data on premiums, plan design, health care expenditures, and source of 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Age dependent coverage 35.4 35.0 34.7 33.8 33.5 32.9 30.7 30.9 31.1 31.2 31.5 U.S. House of Representatives Source: Employee Benefit Research Institute estimates of the March 1998 Current Population Survey. Between 1987 and 1997, the percentage of Industry— payment are expected to be released later this year Workers employed in the public sector or the manufacturing sector were least likely to be uninsured Americans without health insurance coverage increased from 14.8 per . - Other private coverage 6.7 6.3 6.6 6.5 6.1 6.5 7.3 7.1 6.9 6.8 6.7 Source: Emplo Source: Emplo yee Benefit Research Institute estimates of the March 1998 Current Population Surve yee Benefit Research Institute estimates of the March 1988–1998 Current Population Surve y. y. Total Public 13.3 13.3 13.2 14.5 15.5 16.0 16.7 16.9 16.6 16.0 14.8 cent to 18.3 percent, and now comprises 43.1 million nonelderly (chart 10). W SIPP contains data on the uninsured, but is not used as often as CPS for a number of reasons, primarily orkers were more likely to be uninsured if they were employed in agriculture, forestry Americans (chart 1 and table 1). However , fishing, , when Medicare 1.4 1.5 1.5 1.6 1.6 1.7 1.6 1.6 1.8 2.0 2.0 Hearing on because of the time lag in obtaining SIPP examining this increase it is important to recognize that the determinants underlying the trend are different in mining, construction, wholesale and retail trade, or the personal service sector data. The strength of using the SIPP. data for analysis of health insur- Medicaid 8.6 8.7 8.8 10.2 11.1 11.8 12.7 12.5 12.5 12.1 11.0 Uninsured Americans b ance coverage is that it allows researchers to track individuals for as long as 36 months. This allows researchers to the pre-1993 period from those in the post-1993 period. Prior to 1993, the percentage of uninsured was increasing CHAMPUS/CHAMPVA 4.0 3.8 3.6 3.6 3.5 3.3 3.3 3.8 3.2 2.9 2.8 No Health Insurance 14.8 15.5 15.7 16.1 16.3 17.0 17.3 17.1 17.4 17.7 18.3 conduct comprehensive analyses of the duration of insurance status, some of the results of which are discussed in large part because the percentage of Americans covered by an employment-based health plan was declining. In Duration of Being Uninsured 1987, 69.2 percent of the nonelderly below. Americans were covered by an employment-based health plan (chart 2 and Source: Employee Benefit Research Institute estimates of the March 1988–1998 Current Population Survey. Finding solutions for reducing the level of the uninsured is like trying to hit a moving target. While the character- Note: Details may not add to totals because individuals may receive coverage from more than one source. table 1). That was down to 63.5 percent by 1993. The erosion of employment-based health insurance was in large a istics of the uninsured population do not vary much from year to year, the people within that population do Medicaid and uninsured data are not completely consistent with data from previous years. Starting with the March 1998 Current Population Survey, the Bureau of the part due to rising health care costs, resulting in small employers dropping insurance and large employers shifting The Uninsured by change. For example, a recent study by my colleague Craig Copeland at the Employee Benefit Research Institute Census modified its definition of the population with Medicaid and the population without health insurance coverage. Previously Chart 5 , individuals covered solely by the Chart 11 1 the cost of coverage onto workers. Chart 9 Indian Health Service were counted in the Medicaid population. Beginning with data from the March 1998 CPS, individuals covered solely by the Indian Health Service Likelihood of Being Uninsured, by Age, 1997 Distribution of Nonelderl Paul Fronstin, Ph.D. y Americans With an Uninsured Spell, found that most uninsured spells were either very short or very long (Copeland, 1998). Specifically When examining the uninsured, it is important to understand that some uninsured workers are offered health , 37 percent of are counted as uninsured. This change decreased the Medicaid population and increased the uninsured population by 300,000, or 0 Distribution of Uninsured Workers, by Firm Size, 1997 .2 percent. Between 1993 and 1997, health insurance costs increased modestly and health care costs were in line with b by Length of Spell, 1994-1995 all uninsured spells lasted four months or less, while 33 percent lasted 12 months or longer (chart 1 insurance by their employer while others are not. For example, a 1997 study found that 24 percent of uninsured Senior Research Associate and 1). Spells were Chart 3 Civilian Health and Medical Program of the Uniformed Services and the Civilian Health and Medical Program of the Department of Veterans’ Affairs. 34% overall inflation. According to an annual survey by William M. Mercer, health insurance costs declined in 1994, workers were offered health insurance by their own employer more likely to last longer than four months for the following groups: 35% Change in Health Insurance Costs and , while an additional 5.1 percent could have received the Uninsured, Director, Health Security and Quality Research Program increased 2.1 percent in 1995 and 2.5 percent in 1996, and barely increased in 1997. Low health care cost in- Self-Employed A Comparison of 1987–1993 With 1994–1997 • coverage through a family member (Cooper and Schone, 1997). W Hispanics. ith an effective access rate of 29.1 percent, it is 12% creases and the strong economy had an effect on employment-based coverage levels and the uninsured during this 30% 26% likely that over 12.5 million of the 43.1 million uninsured actually have access to an employment-based health • Individuals ages 25 and older 1,000 or More Emplo . yees Chart 7 13.6% period. Unlike the period prior to 1993, between 1993 and 1997 the percentage of nonelderly Americans covered by 20% 24% • plan. The self-employed. Likelihood of Being Uninsured, by Family Income, 1997 4 Months or Less 25% 12 Months or Longer Employee Benefit Research Institute an employment-based health plan increased from 63.5 percent to 64.2 percent. 14% 1987–1993 1994 At the same time, the percentage of –1997 Public Sector 36% 33% • Workers not employed in manufacturing or the public sector. 6% Americans without health insurance coverage continued to increase, though at a slower rate than experienced 2121 K Street NW, Suite 600 Chart 1 17% 20% 37% 40% • Access to Health Insurance— Individuals with long spells of unemployment. 12%This same study found that between 1987 and 1996 the percentage of workers offered 15% 35% Percentage of Nonelderly Americans W 34% ithout Health Insurance, 1987-1997 between 1987 and 1993. 14% Washington, DC 20037 14% an employment-based health plan increased, but take-up rates were down. The study found that while take-up 35% 15% 10% The period since 1993 is unique. It is likely the first time in history that the United States population has Voice: 202/775-6352 rates declined across all income groups, they were down the most for low-income workers. Mr. Chairman, this concludes my statement. Thank you for the opportunity to testify today 500–999 Employees . I would be 28% experienced an increase in the uninsured population while the percentage of 20% Americans covered by an employ- 3% 30% Fax: 202/775-6312 happy to answer any questions that you or members of the committee may have, and invite you to call on EBRI in 10% 8% ment-based health plan also increased. Researchers have yet to completely understand this trend, but speculation 18.3% Geographic Region— the future for additional information. The proportion of the nonelderly population with and without health insurance varies by E-mail: fronstin@ebri.org 25% 17.7% 6% has been offered. It appears that individuals leaving welfare (and Medicaid) because of the strong economy and 5% 17.4% 18% 17.3% 17.1% geographic region. In 14 states, 20 percent or more of the population was uninsured in 1997 (chart 4). These states Internet: http://www.ebri.org 17.0% 2.9% 2.6% welfare reform are contributing to both the increase in the uninsured and the increase in employment-based 20% 16.3% 15% 4% References are in large part concentrated in the south central and southwestern parts of the United States. Many of these 16.1% 100– 0% 499 Employees 1.4% coverage. As former welfare recipients get jobs, some get jobs that offer health insurance while others get jobs that 15.7% 15.5% states have a higher concentration of minority groups, such as Hispanics, who are less likely to be covered by 10% 16% 15% Under 18 18–20 21–24 25–34 35–44 45–54 55–64 Copeland, Craig. “Characteristics of the Nonelderly with Selected Sources of Health Insurance and Lengths of 14.8% 2% do not offer health insurance. Fewer than 10 Employees health insurance. The higher uninsured rates may be due in part to the fact that Hispanics are more likely to be in Age 8% Uninsured Spells.” EBRI Issue Brief no. 198 (Employee Benefit Research Institute, June 1998). 10% 22% The growth rate in the uninsured population has slowed since 1993, and may also be attributable to 9–11 Months 0% low-income families than other races. States with a low percentage of uninsured individuals include Hawaii, 14% Source: Employee Benefit Research Institute estimates of the March 1998 Current Population Survey. Cooper, Philip F., and Barbara Steinberg Schone. “More Offer, Fewer Takers For Employment-Based Health 9% modest health insurance cost increases. Between 1987 and 1993, health insurance costs increased an average of Average Percentage Increase in Average Percentage Increase in 5% Wisconsin, Minnesota, Vermont, and Pennsylvania. Insurance: 1987 and 1996.” Health Affairs 16(6) (November-December 1997). Health Insurance Costs the Uninsured 13.6 percent per year, according to chart 3. During this period the uninsured increased an average of 2.6 percent June 15, 1999 5–8 Months 0% Fronstin, Paul. “Sources of Health Insurance and Characteristics of the Uninsured: Analysis of the March 1998 12% per year. In contrast, between 1994 and 1997, when health insurance costs increased an average of 2.9 percent per Source: Employee Benefit Research Institute estimates of the March 1988–1998 Current Population 22% Age—Young individuals are typically more likely to be uninsured than older individuals (chart 5). This is apparent 0–99% 100%–124% 125%–149% 150%–199% 200%–399% 400% or More 25–99 Employees Survey, and William M. Mercer, 1999. Current Population Survey.” EBRI Issue Brief no. 204 (Employee Benefit Research Institute, December 1998). year, the uninsured increased an average of 1.4 percent per year. While the uninsured did not decline, lower by looking at the data in chart 6, which shows that the uninsured population is disproportionately younger than 14% Family Income as a Percentage of the Federal Poverty Level Fronstin, Paul, and Sarah C. Snider. “An Examination of the Decline in Employment-Based Health Insurance health insurance cost increases did result in a slowing of the growth in the uninsured. 10% Source: Copeland, 1998. The views expressed in this statement are solely those of the author and should not be attributed to the the general population. The high proportion of young adults without health insurance may occur because they are 10–24 Employees Between 1988 and 1993.” Inquiry 33 (Winter 1996/97: 317-325). 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Source: Employee Benefit Research Institute estimates of the March 1998 Current Population Survey. 13% Employee Benefit Research Institute, or the EBRI Education and Research Fund, its officers, trustees, no longer covered by a family policy and may not have established themselves as permanent members of the work 1 force. Some young adults may also have lost access to Medicaid, which covered them up through age 18 in some sponsors, or other staff, or to the EBRI-ERF Consumer Health Education Council. The Employee Benefit The decline in coverage was also the result of declining real income and structural changes in the economy, such as the Source: Employee Benefit Research Institute estimates of the March 1988-1998 Current Population Survey. Source: Employee Benefit Research Institute estimates of the March 1998 Current Population Survey. Research Institute is a nonprofit, nonpartisan, public policy research organization which does not lobby or states. Many in this group may think that they do not need health insurance because their probability of encoun- movement of workers from the manufacturing sector to the service sector, the increased use of part-time workers, and the decline of unionization (Fronstin and Snider, 1996/97). take positions on legislative proposals. tering a high-cost medical event is very low. 7 6 9 4 5 8 2 1 3