benefits to workers continues to run double th som Chairm It does appear, however, that e form of e an Kohl and m mployment-based health bene embers of the comm retirees ages 55–64 are becom fit. During this tim e growth in workers’ earnings and is also ittee: My name is Paul Fronstin. I am ing m e period, the uninsured ore likely to get Trends in Coverage for Individuals 55–64 Statement Before the Figure 2 Figure 9 double the rate of overall inflation. em director of the Health R rate for this group bounced around between ployment-based coverage through another esearch and Education P 13.6 percent and 16.4 percent. In 2006, 14.6 fam rogram ily me of the nonpartisan Em mber and less likely to get it ployee While workers have for the most part experienced a small erosion in coverage, older Highlights Worker Eligibility Rate foFi r Ow gure 8 n Employer Health Benefits, Labor Force Participation Rates Among Persons through a form percent of retirees ages Benefit Research Institute (EBR Because of the ris er employer. For the m ing cos 55–64 were uninsured. t of providin I). I am o pleased to appear be st part, g benefits, there has b the percentage of reti fore you today to testify on een som rees with coverage e erosion in the workers and individuals are particularly vulnerable if they were to lose health insurance Percentage of Persons Ages 55–64 Not Working Because of Health Wage and Salary Workers Ages 18–64, 1988–2005 (Select Years) Ages 55–64, by Gender, 1986, 1996, 2006 U.S. Senate Special Committee on Aging trends in health care coverage for worker through a form availability of health insurance through er employer or through a spous sm s and retirees. Established in 1978, EBRI is aller e e did not show a cl mployers (in large p ear trend between 1994 art, all large 80% coverage. O Status lder workers With Em m ploy ay lose co ment-Bas verage ed He because of job displacem alth Benefits and Public Co ent and m verage, ay be • In 2006, nearly 162 million individuals under age 65 had health insurance through 90% and Percentage Uninsured, 1994–2006 comm and 2006 (Figure 7). However, the percentage employers offer health benefits to w itted exclusively to data dissem orkers). In 2005, 59 percent of em ination, policy research of retirees with coverage through a form , and education on financial ployers with 3– er unable to afford or obtain health insurance on their own due to their age and/or health an employment-based plan. Sixty-two percent were covered by an employment- 69.6% Figure 5 90% 70% 77.8% 67.3% security and em em 199 em ployer was at 35.4 percent in 2006, the ployees offered health benefits, down ployee benefits. EBRI 67.0% does not lobby or advocate specific policy lowest point between 1994 and 2006 except from 68 percent in 2000 (Figure 1). The 80% status. Furthermore, retirees are less likely than in the past to have access to retiree 76.2% 75.7% based health plan, with 70.9 percent of workings adu 74.9% lts covered, 37.5 percent of Percentage of Workers Ages 74.0% 55–64 With Employment-Based 74.0% 73.6% 1986 1996 2006 78.0% recomm decline in employer sponsorship followed an during 2000. Sim endations; the m ilarly, the percentage of ission is to provide retirees with coverage through a fa ob expansion that occurred between 1996 and jective and reliable research and mily 76.7% health benefits as em 80% ployers have been cutting back on this benefit (Fronstin, 2006). 75.9% 74.4% 73.9% 74.1% 74.4% nonworking adults covered, and 57.1 percent of children covered. 73.7% 74.2% 74.0% Health Benefits, and Percentage Uninsured, 1994–2006 72.1% 70% 58.2% 60% 71.0% inform 2000. Between 2005 and 2007, the percentage member was 22.6 percent in 2006, essent ation. All of our research is available on the Internet at ially the highest level during 1994–2006. of employers with 3–199 em www.ebri.org. All views ployees 90% 69.9% Despite the vulnerabilities that older individuals face when it comes to health 70% • In 2005, 59 percent of employers with 3–199 employees offered health benefits, expressed are m offering health benefits rem Some individuals ages 55–64 are not working y own, and should ained constant at about 59 percent. not be attributed to EBRI. because of their health status. They do 60% insurance coverage, they are the least likely age group among adults to be uninsured. In 49.6% Employment-Based down from 68 percent in 2000. The decline in employer sponsorship followed an 50% 60% 80% Health Benefits Hearing on not report being retired, but instead report that they are not working because of an illness 2006, 12.7 percent of individuals ages 55–64 were uninsured (Figure 4). This is lower 80.1% Public Coverage 80.0% 80.9% 79.2% expansion in sponsorship that occurred between 1996 and 2000. Between 2005 79.5% 79.1% 42.3% 78.7% 50% 79.2% 78.4% 77.1% 79.1% 77.3% 77.8% 50% or disability. About three-quarters of these individuals get health insurance through a “Scrambling for Health Insurance Coverage: Introduction than the overall uninsured rate of 17.9 percent among persons under age 65, and lower Fi No Health Ins gure 1 urance 40% 70% and 2007, the percentage of employers with 3–199 employees that offered health public program, such as Medicare or Medicaid (Figure 8). The recent trend for these 40% than all other age groups except for children. There is a strong link between health benefits and employment. As a result, 40% Percentage of Employers With 3–199 Health Security for People Between 55–64 Years of Age” benefits remained constant at about 59 percent. individuals is that public programs are becoming less prevalent. Between 2002 and 2006, employm 60% ent-based health benefits are the Employees Offering He mo alt st comm h Benefi on form of health insurance for ts, 1996–2007 28.5% 28.8% 27.9% 27.9% 29.3% 30% 27.4% 26.4% 26.7% 30% • The percen 26.7% tage of workers reporting that they have access to health benefits 30% 26.2% 24.2% 24.4% 24.0% Employment-Based the percentage covered by a public program fell from 78 percent to 74 percent. This nonpoor and nonelderly individuals in the United States. In 2006, nearly 162 million 80% Health Benefits through their job is largely unchanged Figur from e 4 the mid-1990s. In 2005, 74 percent 20% 50% April 3, 2008 occurred after an expansion of public progr 20% am availability, increasing from about 70 20% individuals under age 65 had health insurance through an employment-based plan Percentage Uninsured, by Age, 2006 of workers who were not self-employed reported that they were eligible for health No Health Insurance percent in 1994. The percentage of thes 10% 68% e individuals who are uninsured increased 14.1% (Fronstin, 2007a). Just over 62 percent of 70% 562 Dirksen Senate Office Building individuals below age 65 were covered by an 12.4% 11.9% 11.0% 66% 40% 11.0% 65% 10.2% 10% benefits through their own job, up slightly from 73.6 percent in 1995, but down 50% 10.3% 9.3% 8.3% 8.3% 10% 6.5% between 2003 and 2006, rising from 6.5 percent to 11.9 percent. Prior to 2003, the 6.2% 6.5% 63% employment-based health plan, with 70.9 percent of workings adults covered, 37.5 0% from 77.8 percent in 1988. 60% 60% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 uninsured rate am 45% ong these individuals had been falling. It was 14.1 percent in 1994. 0% percent of nonworking adults covered, and 57.1 percent of children covered. 30% 59% 59% • Between 1994 and 2000, the percentage of workers with health benefits through 59% 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 0% Source: Employee Benefit Research Institute estimates based on data from the Current Population Survey, March Supplement. Employment-based coverage is less prevalent for persons not working because of illness It was during World War II that many employers began to offer health benefits. 40% Men Women 50% an employer held steady at between 73 percent and 75 percent. Since 2000, the 20% or disability, and it has fallen from 29.3 percent in 2003 to 24.2 percent in 2006. Because the National W Source: Employee Benefit Research Ina str Labor Board fro itute estimates based on data from ze wages, em the Current Population S ployers sought ways to get urvey. Source: http://www.bls.gov/emp/emplab05.htm. percentage of workers with health benefits has fallen to about 71 percent. 11.1% 10.3% 35% 11.3% 10.7% 10.7% 10.2% 33.0% 10.8% 10.2% 10.0% 10.9% 11.1% 10.4% 9.7% around the wage controls in order to attract scarce workers. In 1943, the National War 40% 10% Testimony by: • Despite the vulnerabilities that older individuals face when it comes to health 30% Labor Board ruled that employer contributions to insurance did not count as wages, and, 27.1% insurance coverage, they are the least likely age group among adults to be Given the erosion in availability of retiree health benefits it might be surprising that 30% thus, were not subject to the wage co 24.6%ntrols. Health insurance became an attractive means 0% 25% Paul Fronstin, Ph.D. uninsured. In 2006, 12.7 percent of indi Figur viduals ages 55–64 were uninsured. e 7 References the percentage of retirees ages 55–64 with health benefits through a former employer 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 to recruit scarce workers. Director, Health Research and Education Program Percentage of Retirees Ages 55–64 With Employment-Based 20% • Like the overall trend for workers, workers ages 55–64 have experienced a slight 18.9% have not fallen more than we have seen. Rates of retiree health benefits coverage may 20% Source: Employee Benefit Research Institute estimates based on data from the Current Population Survey, March Supplement. 17.9% Today, employers provide health benefits voluntarily. They offer health benefits to Figure 3 Health Benefits, by Source of Coverage, 1994–2006 Employee Benefit Research Institute Fronstin, Paul. “Savings Needed to Fund Health Insurance and Health Care Expenses in Retirement.” erosion in coverage and a slight increase in the likelihood of being uninsured. In 15.3% not be falling for a number of reasons. First, there is a strong link between the 45% attract and retrain workers based on the generally accepted view that most employees 15% 10% Percentage of Workers, Ages 18–64, With EBRI Issue Brief no. 295 (July 2006), 12.7% T-150 2006, 78.4 percent of workers ages 55–64 we 11.7% re covered by an employment-based availability of retiree health benefits and the decision to retire early. Workers often Figure 6 desire them more than the equivalent cash Employment-Based Hcom ealth p ensation and evidence that they ou Benefits, 1994–2006 trank http://www.ebri.org/publications/ib/index.cfm 39.1% ?fa=ibDisp&content_id=3650. 38.7% 38.3% 40% 10% health plan, down from 80.1 percent in 2003, but higher than the levels seen in the remain in the labor force longer than expected to maintain health insurance. EBRI’s 37.4% Percentage of Retirees Ages 55–64 Wi 37.1% th Employment-Base 36.7% d 0% every other employee benefit in importance (Helman and Fronstin, 2004). Employers 80% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 late-1990s. Similarly, the percentage uninsured increased from 9.7 percent in Health Confidence Survey (HCS) has found that 30 percent of 74.9% workers expecting to retire Health Benefits, a74. nd 6%Percentage Uninsured, 1994–2006 Fronstin, Paul. “Sources of Health Insura 74.2 nce % Coverage and Characteristics 74.3% of the Uninsured: Analysis of 5% 73.5% 73.6% 73.3% 73.3% also offer he 37.1% alth benefits in order to provide wor 37.0% kers and th 73.0 eir f % amilies with protection 35% 36.2% 72.1% 71.7% 36.4% 71.4% 35.7% 70.9% the Mar 70c %h 1999 to 11.1 percent in 2006, which is esse 2007 Current Population Survey.” EBRI Issue Brntially the sam ief no. 310 (Octob ee uninsured rate among r 2007a), 35.4% before becoming eligible for Medicare would not do so if they did not receive retiree 34.4% 70% Source: Kaiser Family Foundation. from financial losses that can accompany unexpected serious illness or injury, to promote 0% 2 http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=3850. these workers (11.3 percent) from back in 1994. health benefits. 30% Total Under Age 18 18–20 21–24 25–34 35–44 45–54 55–64 health, and to increase worker productivity. 60.3% They generally regard health benefits as a 59.7% 59.4% 58.7% 59.0% • The declin There was n ing availability of retiree health o erosion in health insuran benefits m ce coverage rates am ay in part explain the rising ong retirees ages 55– 58.0% 60% 60% 57.4% voluntary compensation arrangement dependent on business priorities, and their level of Fronstin, Paul. “The Future of Employment-Based Health Benefits: Have Employers Reached a Tipping 22.7% 25% 22.6% While there has been an erosion of availability of health benefits at the small labor force participation rate am 64. The percentage of these Source: Employee Benefit Research Institute e ong i stimates b retirees with em ndividuals 55–64. Between 1996 and 2006, the ased on data from the Currploym ent Populate ion nt-bas Survey, Med health benefits from arch 2007 Supplement. 58.5% 21.6% 21.8% Point?” EBRI Issue Brief no. 312 (December 2007b), commitment to this benefit fluctuates in re 21.2% 57.0% sponse to a variety of 56.9econom % ic pressures. 56.7% 20.8% 56.1% 20.0% 20.2% 55.5% 19.0% 50% employer level since 2000, the percentage of workers reporting that they have access to labor force participation rate for m either a former employer or spouse en increahas bounced around between 56 percent and sed from 67 percent to 69.6 percent, while for http://www.eb 50% ri.org/publications/ib/index.cfm?fa=ibDisp&content_id=3868. 20% However, they also have a motivation to provide health benefits as a means of protecting 21.2% 21.1% 20.5% 20.9% health benefits through thei r job is largely unchanged from the mid-1990s and down only women it increased from 49.6 percent to 58.2 pe 60 percent between 1994 and 2006. During th rcent (Figure 9). The percentage of is time period, the uninsured rate their investment in workers. The cost of absenteeism and presenteeism related to health 40% Employment-Based Helman, Ruth, and Paul Fronstin. “Public Attitudes on the U.S. Health Care System: Findings from the 15% retirees with health coverage from slightly from the late-1980s. In 2005, 74 perc for this group bounced around between a former em ent of workers who were not self-em pl 13.6 percent and 16.4 percent. Health Benef oyer m itsay not be declining as quick ployed ly as 40% status reduces productivity and can trigger other costs, such Employment-Based as sick pay and disability Like the overall trend for workers, workers ages 55–64 have experienced a slight Health Confidence Survey.” EBRI Issue Brief no. 275 (November 2004), reported that they were eligible for health benefits through their own job, up slightly from Health Benefits the availability of retiree health benefits because workers without access to this benefit • Retirees ages 55–64 are becoming more likely to get employment-based coverage 30% No Health Insurance costs. erosion in coverage and a slight increase in the likelihood of being uninsured. In 2006, http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=3507. 10% 73.6 percent in 1995, but down from 77.8 percent in 1988 (Figure 2). may be remaining in the labor force longer than workers with access to retiree health through another family member and less likely to get it through a former No Health Insurance 78.4 percent of workers ages 55–64 were cove 30% red by an employment-based health plan, 20% In terms of whether workers have health insurance coverage, for the most part, the coverage. employer. The percentage of retirees with coverage through a former employer 5% down from 80.1 percent in 2003, but higher than the levels seen in the late-1990s (Figure Trends in Coverage for Workers percentage of workers with coverage either from their own employer or from someone was at 35.4 percent in 2006, the lowest point between 1994 and 2006 except 5). Sim Endnotes ilarly, the percentage uninsured increased from 9.7 percent in 1999 to 11.1 The question of whether em 20% ployers have reached a tipping point with health benefits 10% 16.4% 0% 15.1% 15.3% else’s em The views expresse ployer has been rem d in this statement are s arkably stable, olely those considering what has happened with the cost of Pa 15ul .0% Fronstin and should not be attributed to the during 2000. Similarly, the percentage of retirees with coverage through a family 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 percent in 2006, which is esse ntially the sam e uninsured rate among these workers (11.3 is starting to be asked (Fronstin, 2007b). The question is coming up for various reasons Employee Benefit Research Institute (EBRI), the EBRI Education and Research Fund, any of its programs, of providing health benefits and the fact that fewer small employers have offering 1 member was 22.6 percent in 2006, essentially the highest level during 1994–2006. 14.9% 14.6% 14.6% 14.6% 14.7% 14.9% 14.4% See 0%http://www.kff.org/insurance/7672/ind 14 e.x 5% .cfm. percent) from back in 1994. 13.6% but is being primarily driven by the ever-increasing cost of providing health benefits to officers, tru 10% stees, sponsors, or other staff. The Employee Benefit Research Institute is a nonprofit, coverage since 2000. Between 1994 and 2000, the 1994 Source: Em 1995 ployee Benefit Resear 1996 ch 199 Inst 7 itute es 199 timates b 8 ased 199on data 9 fr 200 om0 the Cupercentage of workers with health rr200 ent1 Populati200 on S 2urvey, M 200 arch 3 Supplem 200ent. 4 2005 2006 There is no erosion in health insurance coverage rates among retirees ages 55–64. nonpartisan, education and research organization established in Washington, DC, in 1978. EBRI does not workers. Between 2000 and 2007, the cost of providing health benefits doubled, while 2 benefits through an employer held steady at between 73 percent and 75 percent (Figure See http://www.ebri.org/pdf/surveys/hcs/2003/03hcspq.pdf. take policy positions and does not lobby. The testimony draws heavily from research publications of the The percentage of these retirees with employment-based health benefits from either a workers’ wages and overall inflation increased only 25 percent and 21 percent, S0% ource: Employee Benefit Research Institute estimates based on data from the Current Population Survey, March Supplement. 3). Since 2000, the percentage of workers with health benefits has fallen to about 71 Employee Bene 1fit Research Institute, but any errors or misinterpretations are those of the witness. 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 former employer or spouse has bounced around between 56 percent and 60 percent respectively. While the growth rate in the cost of providing health benefits fell between percent. between 1994 and 2006 (Figure 6). In 2006, 58 percent of 55–64 year old retirees had 2003 and 2007 from 13.9 percent to 6.1 percent, growth in the cost of providing health Source: Employee Benefit Research Institute estimates based on data from the Current Population Survey, March Supplement. 10 4 5 6 7 8 2 9 3