Although employment-based coverage remains the dominant source of health insurance, it continues to erode, according to a new analysis of recent U.S. Census Bureau data.

Employment-based health benefits remain the most common form of health coverage in the United States, yet the number of Americans with employment-based health insurance dropped by more than 2 percentage points last year, according to a new analysis by the Employee Benefit Research Institute (EBRI).

Based on estimates from recently released U.S. Census Bureau data, EBRI found that employment-based health benefits provided coverage for more than 156 million people under the age of 65 in 2009. “Full-time, full-year workers, public-sector workers, workers employed in manufacturing, managerial and professional workers, and individuals living in high-income families are most likely to have employment-based health benefits,” the nonprofit, nonpartisan research institute explains.

However, the percentage of the non-elderly population (under age 65) with employment-based coverage dropped to 59 percent in 2009, down from 61.1 percent in 2008 and 68.4 percent in 2000.

Conversely, those in this group who did not have health insurance increased to 18.9 percent in 2009, up from 17.4 percent in 2008 and the highest level in the 1994-2009 period, according to EBRI calculations. This means that nearly one in five individuals under 65 did not have health insurance at any point in 2009, with 50 million uninsured (up from 45.7 million in 2008).

“These trends are due to job losses resulting from the recent recession and the slow economic recovery, fewer workers being eligible for health insurance coverage, and more workers with coverage choosing to drop it,” Paul Fronstin, a senior research associate at EBRI and the author of the report, said in a statement. “With unemployment remaining high, these trends are almost certain to continue when the data are released for 2010.”

An increase in enrollment in public programs offset much of the decline in employment-based health plans, with such coverage expanding as a percentage of the population. While the majority of individuals insured last year received coverage through an employment-based health plan, 56 million (or 21 percent of the under-65 population) were covered by public programs. Enrollment in Medicaid and the State Children’s Health Insurance Program increased, reaching a combined 44.1 million in 2009, and covering 16.7 percent of the non-elderly population, significantly above the 10.5 percent level of 1999.

An additional 16.7 million (or 6.3 percent) were covered by policies purchased directly from an insurer. Individually purchased health coverage has generally hovered between 6 percent and 7 percent since 1994.

2009 is the most recent year for data on sources of health coverage. Unemployment in 2010 averaged 9.7 percent during the January-August period and reached a high of 9.9 percent in April. As a result, “the nation is likely to see continued erosion of employment-based health benefits when the data for 2010 are released in 2011,” according to the EBRI report.

In his statement, Fronstin noted that fewer individuals are likely to be working this year, which means fewer people with access to health benefits in the workplace. Moreover, federal COBRA subsidies that aimed to stem the erosion in employment-based coverage expired this summer.

“Coupled with uncertainty about the economy, the future of job security and prospects for health reform, an increasing number of workers are likely to forego health coverage when it is available,” Fronstin said.

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Resources

Sources of Health Insurance and Characteristics of the Uninsured…
by Paul Fronstin
Employee Benefit Research Institute, September 2010

Employment-based Health Coverage Still Dominates, but Slow Decline Continues
Employee Benefit Research Institute, Sept. 22, 2010