EBRI Issue Brief

The Impact of the Recession on Employment-Based Health Coverage

May 4, 2010 24  pages


• HEALTH COVERAGE AND THE RECESSION: This Issue Brief examines changes in health coverage among workers during the recession that started in December 2007. Data from the Survey of Income and Program Participation are used to examine health coverage prior to the recession, and as recently as July 2009. Monthly changes are examined for 2007 and May 2008?July 2009, with emphasis on changes that occurred between September 2007 and April 2009.

• EMPLOYMENT-BASED COVERAGE STILL DOMINANT: Health coverage through the work place is by far the most common source of health insurance among the population under age 65. In 2008, 160.6 million individuals under age 65, or 61.1 percent of that population, were covered by employment-based health benefits. Fifteen percent were covered by Medicaid or the State Children’s Health Insurance Program (SCHIP), 6.3 percent purchased coverage directly from an insurer, and about 3 percent were covered by Medicare or Tricare/CHAMPVA. Nearly 17.5 percent were uninsured.

• UNINSURED GROWING: Since the recession started in December 2007, the uninsured have grown. The unemployment rate was as low as 4.4 percent in May 2007, but by July 2009 it had reached 9.4 percent. The percentage of the nonelderly population with employment-based coverage was 61.3 percent in May 2007, and by July 2009 it was down to 58.2 percent. The uninsured rate was 12.3 percent in May 2007, and by July 2009 it was up to 16.4 percent.

• EMPLOYMENT-BASED COVERAGE ERODING: Between December 2007–May 2008, the percentage of workers with coverage in their own name (the policyholder) fell from 60.4 percent to 56.8 percent. The period between May 2008–July 2009 shows a continuing decline in the percentage of workers with employment-based coverage in their own name, falling to 55.9 percent.

• CHANGES TO THE BENEFITS PACKAGE: The benefits that are being offered have also changed. Deductibles, co-payments for office visits, and prescription drug copayments have been increasing.

• VULNERABLE POPULATION LOSES THE MOST: In general, workers least likely to have employment-based coverage at the beginning of the recession were more likely than other workers to experience a decline in the percentage with such coverage one year later. Younger workers were more likely to lose coverage than older workers. Hispanic workers were more likely to lose coverage than whites or blacks. Part-time workers were more likely than full-time workers to have lost employment-based coverage.

• EMPLOYMENT SECTOR: The percentage of workers with own name employment-based coverage declined the most among those employed by for-profit private-sector employers and those employed by the federal government. Workers with the lowest earnings were the least likely to have employment-based coverage in their own name and experienced the largest decline in coverage.