Employer-Based Health Coverage Declines in Oregon, U.S.
Jon Perr
While the debate over the health care crisis in Oregon remains focused on the defeat of Measure 50 and the national battle over the expansion of S-CHIP, a new study revealed the continuing and steady decline of employer-based health coverage in in Oregon and the United States as a whole. Once the lynchpin of the U.S. health care system, workplace health insurance now covers only 59.7% of Americans, down from 64.2% in 2000. And making matters worse, surging health care costs, insurance premiums and employees' own contributions continue to exceed inflation and the growth in wages.
The report from the Economic Policy Institute, "The Erosion of Employment-based Insurance," paints a bleak picture for working Americans. Overall, 47 million people (15.8%) in the U.S. had no health insurance in 2006, up 8 million from 2000 when 13.7% were without coverage. Helping to fuel that dramatic increase is the drop-off in employer-provided insurance, which dropped 4.5 percentage points over the same period resulting in 2.3 million more Americans without medical coverage.
Behind the national data is a startling disparity from state to state. Like most indicators of health care, employment-based coverage generally follows the 2004 electoral map. Blue states including New Hampshire (75.6%), Connecticut (72.3%) and New Jersey (71.2%) led the way in workplace health coverage for residents under age 65. (Those over 65 are generally covered by Medicare.) Unsurprisingly, the situation is worst in precisely those states that voted to re-elect George W. Bush. New Mexico (52.9%), Mississippi (54.5%), Texas (54.6%) and Louisiana (55.3%) were at the bottom of the rankings. The one notable exception is California. Its dismal performance (55.7%) is accounted for by the sheer size of its agricultural, service and tourism economies, sectors traditionally not providing workplace insurance. Meanwhile, at 62%, Oregon lags behind the national average of 63.2%, with a 4.4% drop between 2000 and 2006 in the percentage of Oregonians under 65 covered by workplace insurance.
The EPI findings also show alarming variations in employer-provided health coverage by race and income. In 2006, 76.4% of white workers received health insurance from their employers, compared to only 65.8% for African-Americans and just 48.4% for Hispanics. And while over 86% of the top quintile of wage earners had workplace health coverage, the figure for the bottom fifth was only 44.6%.
The picture for America's children is even worse. Between 2000 to 2006, 3.4 million fewer children had insurance through their parents' jobs, a decrease of 6.2%. The disparities by family income are shocking. Only 18% of children 17 and under for the bottom quintile of earners had insurance through their parents' work; kids in the top fifth of family incomes were almost five times (86.3%) more likely to be covered. As the report notes, "The group hurt the worst, however, was children in the second lowest quintile; their coverage rates declined by 10.6 percentage points, from 54.6% to 44.0%."
As the EPI points out, these grim numbers for working families not covered by Medicaid make a powerful argument for the expansion of the State Children's Health Insurance Program (S-CHIP), an initiative recently vetoed by President Bush:
Opponents of SCHIP expansion argue that the availability of a public insurance option leads parents to voluntarily drop private coverage and shift their children's coverage to the public sector. As shown in an EPI Economic Snapshot, research shows very little of such "crowding out" actually occurs. The large majority of SCHIP recipients - 86% - were either not covered six months before entering SCHIP or had lost private coverage within six months prior to enrolling.
The erosion of employer-based insurance detailed in the EPI report captures only part of the double-barreled health care squeeze facing American families. That is, even as workplace provided coverage declines, the increase in health care costs and the out-of-pocket expenses of Americans continues to rise at rates far outstripping wage growth.
That is the conclusion of the 2007 Employer Health Benefits Survey jointly produced by the Kaiser Family Foundation and the Health Research and Educational Trust. The average annual family premiums reached $12,106 in 2007, with workers contributing $3,281 of the total. Families' out-of-pocket expenses have surged $1,500 a year over the past six years. Despite a slowing in the rate of increase of health care costs, family incomes still aren't keeping pace:
Premiums for employer-sponsored health insurance rose an average of 6.1 percent in 2007, less than the 7.7 percent increase reported last year but still higher than the increase in workers' wages (3.7 percent) or the overall inflation rate (2.6 percent). The 6.1 percent average increase this year was the slowest rate of premium growth since 1999, when premiums rose 5.3 percent. Since 2001, premiums for family coverage have increased 78 percent, while wages have gone up 19 percent and inflation has gone up 17 percent.
According to the KFF/HRET survey of 3,078 firms, the future looks bleaker still. Employers are looking to shed their rapidly rising health care costs, shifting the burden onto American workers and their families:
Many employers indicate that they expect to make significant changes to their health plans and benefits in 2008. Overall, 21 percent of firms say they are "very likely" to raise workers' premium contribution next year. Some firms also say they are "very likely" to increase office visit cost-sharing (13 percent), increase deductibles (12 percent) and increase prescription drug cost-sharing (11 percent). Very few firms say they are "very likely" to restrict eligibility for coverage or drop health coverage altogether.
Back in Washington, President Bush and obstructionist Republicans in Congress continue to fiddle while the foundation of the American health care system burns. Even as Americans consistently cite health care as one of their most important issues (after the war in Iraq), it looks more and more like full employer-provided health insurance is becoming a thing of the past. And in Oregon, the rejection of Measure 50 will keep over 100,000 children here from receiving health coverage. By all indications, they are going to have a lot more company in the future.
(For more background and data on the state of American health care, see "SiCKO Required Reading: U.S. Health Care by the Numbers.")
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8:54 p.m.
Nov 16, '07
Just re-enrolled in my husband's health insurance plan tonight. We picked the cheapest options at all three levels - health, dental, and vision. But we couldn't afford to add on anything - no life insurance, no extra disability insurance, etc.
Our premium will cost us $4,934.28 for the year.
And nowhere did it show what the co-pays would be for the coming year. Last year we got hit with a big increase in copays. We currently pay $30 for a doctor visit, $45 for a specialist (which include ObGyn), $150 for an ER visit, and $50 for an Urgent Care facility visit.
Just a few years ago, it was $10 to visit our PCP and ObGyn, $20 for a specialist, and $50 for an ER visit.
When we went into the doctor's office with our new card earlier this year, the receptionist said "I'm sorry" when I handed her our card. I looked at her strange, as I didn't know why she said it. She said that it was the most expensive co-pay she'd seen. And she probably sees at least dozens of them a day. With the usual doctor's visit costing $45-60, we're paying 2/3 to 1/2 of visit, even with our insurance.
9:58 p.m.
Nov 16, '07
Jenni, Why are you wasting money on silly health insurance? The solution is simple, I read it in the Huffington Post Sept 27th: Responding to a question about the growing number of uninsured Americans, President George W. Bush observed: "No one goes without health care in America. After all, you just go to an emergency room.''
So I guess when the Prez has his annual health exam or needs a pretzel dislodged from his brain, he does NOT go to Bethesda Naval Hospital, he just rides the ol' Schwinn down to St Elsewhere and gets in line with the rest of the folks. Must be how he stays in touch with his constituents and work buddies and so on. "Hey, Scooter, how's it goin'? Hi Ma! You here for a new hip or sumpthin'?"
10:12 p.m.
Nov 16, '07
Yea, and then you get those nice big bills from the ER. And they call every day and send you letters and threaten you with court cases and putting a lien on your wages.
One of my ER visits would definitely cost more than a quarter's premiums for my insurance. A few run more than a year's premiums. And don't even get me started on the cost of an emergency c-section.
But Bush has never been poor. Heck, he's never even been middle class. So he doesn't understand.
Nov 16, '07
Why do we complain about the cost of a doctor or dental visit a co-pay of $45.00? How much to you pay to have the oil changed in your car and a tune up? In the 70's & 80's most people only had major medical insurance and paid for routine care out of pocket.
We have to pay for our car upkeep and upkeep on our home, but don't want to pay anything on the upkeep of our most important asset, our own health?
Why should health care be free or at low cost? I just don't get it.
11:24 p.m.
Nov 16, '07
This isn't about free or low cost. It's about already purchasing something that is supposed to cover the majority of the costs of going to the doctor, yet doesn't.
I don't have insurance that covers the oil changes, tune ups, etc. If I owned a home, I also wouldn't have an insurance plan that covered that. As such, those types of things have to be paid for out-of-pocket. There are often times packages like that you can purchase when you buy a car. We bought one when we got our last car, which covered such things for a year.
I do have insurance that covers doctor's visits, dental visits, etc. And I pay quite a bit for that coverage. The cost to visit my doctor's office in cash hasn't changed in years. But if you have insurance, in our case the cost has gone up 300% in a span of 3 years.
We're quickly approaching having to pay full price for a doctor's visit, even though we have insurance (we're at $50-75 right now, depending on the visit type).
We have the option of coverage that covers only the major things, which is much, much less per month. Instead, we purchase one that is supposed to cover the simple things as well since that's what we use the most - wellness checks for the kiddo, colds, strep throat, etc.
If things get much more expensive, we'll probably end up taking the cheaper option of doing major medical only, with the money we'd normally spend on health insurance going into a savings account. We then get a debit card that we can use at the doctor's office, pharmacy, etc. The way things are going, that would be a heck of a lot cheaper for us.
11:26 p.m.
Nov 16, '07
Ugh, that's what I get for posting while I'm coding...
That should have said:
(we're at 50-75% right now, depending on the visit type)
11:53 p.m.
Nov 16, '07
Alijane, When the fuel pump fails in your 10 year old car, it's inconvenient. When the fuel pump fails in your 10 year old's chest fails, it is tragic and you may lose your home and your kid and yes even your car. Not the kid's fault, not your fault, just a crappy deal. I would be willing to pay a fair share for everyone to have health care (not just ER after the damage is done) so your kid can see a Dr to find his heart problem before it kills him. And I'm willing to see health insurance become nont-for-profit like it used to be, so that 5% of the premium goes to admin, instead of 40% going to "upper management" and investors. And maybe you had crappy health care in the 70s & 80s, but I had full coverage from my parent's family plan and then my employers' plans, and it included allual exams, dental exams 2X year, and vision. And it was mostly paid by my employer, small monthly premiums, deductables and co-pays. Every year since about 1985 it became more expensive, now it is just crazy.
9:09 a.m.
Nov 17, '07
Interesting stuff--thanks for putting it together, Jon.
Nov 17, '07
Could this be a reason that Oregon kids, especially rural kids, need SCHIP?
12:36 p.m.
Nov 17, '07
The average annual family premiums reached $12,106 in 2007, with workers contributing $3,281 of the total. Families' out-of-pocket expenses have surged $1,500 a year.......
This of course, means that employers are picking up $8825 per average employee.
It's no wonder then that:
86% of the top quintile of wage earners had workplace health coverage, the figure for the bottom fifth was only 44.6%.
Employers who have employees earning between $55,000 and $90,000 are hit pretty hard by a $9000 premium, but it's way worse for an employer who's employees earn say $25,000 to $35,000.
That's why the Church of Milton Friedman will ultimately loose this one. The very idea that insurance firms, who according to "free market" dogma, owe their allegiance to their shareholders, can ever be honest brokers in the health care biz is pretty much insane.
Their "free market" imperative is to deny as much coverage as possible. Any other stance would be unfair to the shareholders.
There are plenty of small businesses that simply cannot provide quality coverage and remain in business.
Nov 17, '07
It is too bad that health care and the insurance industry were deregulated in the early 80's. I wish we could put health care, insurance and the utilities, basic human services back to being highly regulated closely held private companies. I don't know if we can put the Genie back into the bottle.
HSA's are a great idea, but they have such a short life span, use it or lose it. People should be allowed place pre-tax dollars into an HSA, and let it accumulate like and IRA. They could use it as they needed it and they would have saving available for their retirement years.
I support the Oregon Health Plan, but now see it as a boondoggle. I tried to follow a dollar through the system and couldn't get beyond grants to counties. I was trying see how much of a health care dollar hits the street level. I wish some investigative reporter (if we actually had any) would do that, so people could see and understand where the money goes.
Nov 18, '07
The cost of health care delivery through the US employer based insurance system is seriously out of whack. Health insurance costs have risne well above the annual rate of inflation for over a decade. What was originally a neat ploy to get around New Deal wage freezes has balloned to a huge line item cost for most employers. Health care insurance for many employers exceeds 11 percent of true direct payroll costs.
So many wring their hands and ask why? The answer is as simple, and complicated, as looking into the mirror. In the US, we are generally a very unhealthy group. We eat the wrong foods, drink too much, smoke and live sedentary lifestyles. Then, after decades of ruining our health, we demand (and mostly recieve) end of life heroic healthcare. I don't have the exact figures, but apparently 90 percent of the average US person's healthcare costs are generated in their last 10 percent of their life.
Of course we all know of good, decent people who have had horrible chronic diseases befall them w/out any cause from them. That is not what I refer to. Other causes are rapidly rising technology, the free market of consumer capitalism (do we REALLY need all those fancy hospitals and "lifestyle" pharmaceuticals?), cut throught insurance business tactics and uncontrolled liability lawsuit costs.
US business is also to blame. For years employers supplied healthcare to employees and their families w/out explaining what the cost was. The user, then became a disinterested third party in the equation until the costs were pushed over to them. Its kind of like the folks who will be getting Harry & David fruit baskets this Christmas. They would NEVER pay those outrageous costs on their own, but a faceless third party has done it for them.
Nov 18, '07
Just imagine how much we could save in health care costs if we could get rid of the insurace companies and HMOs!
Nov 18, '07
I'm not interested in a universal health care plan for one simple reason. Whenever I go to a public place I see a lot of really fat people. This country is full of big, fat people. I see huge fat people at fast food places and at the grocery store. Now why would I want to pay a nickel in extra taxes so that all these fat people can have health care?
Sorry, I guess I'm just too old fashioned to go along. I'll pay for my own heathcare and expect others to pay for theirs. Kind of like we've been doing since the dawn of time. I don't see any reason why I should pay any money into the central piggy bank to take care of people who don't bother to take care of themselves.
Nov 20, '07
I'm sorry I waited so long to read this post. It is an excellent summary of the current issues and research in health insurance.
One question about crowd-out from private insurance, though. Most SCHIP plans, I'm pretty sure including Oregon, require a six-month period of uninsurance before you qualify. (That period is not required for Medicaid recipients.) So the stat that most people were uninsured before going onto SCHIP struck me as odd, because I thought that was required. Since the data came from the Urban Institute -- where I used to work -- I'll have to assume they took that into account, but it seemed odd not to mention it.
Even if crowd-out is only 14%, though, that's not an insignifianct number since most SCHIP plans only go up to about 200% of poverty. If the limits increase to 300%, we have to assume the number of people switching from private insurance will be higher than 14%. That's what consevatives dislike -- they would rather see two or three kids go without insurance than one kid switch from private to public insurance.
As progressives, we shouldn't be afraid of making the opposite argument. Even if crowd-out is 14%, or 25%, or 50%, it's better to get health coverage to the kids who don't have it, even if some kids who do switch over to public insurance. Programs like SCHIP are more efficient than private insurance and significantly improve the lives of those enrolled, so let's not buy into the premise that the government program is by definition inferior.