Job Loss, Rising Premiums Take Toll on Employer Health Coverage in 2003

Dramatic Decline in Employer Coverage Offset by Public Coverage Gains, Especially for Children

August 3, 2004 – ASHINGTON, D.C.�The proportion of Americans under age 65 with employer health coverage fell dramatically from 67 percent in 2001 to 63 percent in 2003, translating into almost 9 million fewer people with employer coverage after accounting for population growth, according to a national study released today by the Center for Studying Health System Change (HSC).

Despite the drop in employer coverage, public coverage gains forestalled a significant increase in the uninsured, according to findings from HSC’s 2003 Community Tracking Study Household Survey, a nationally representative survey involving information on about 25,400 families and 46,600 people. The proportion of the under-65 population enrolled in public coverage�primarily Medicaid and the State Children’s Health Insurance Program (SCHIP)�increased from 9 percent to 12 percent between 2001 and 2003.

By far, low-income children�those living in families with incomes below 200 percent of the federal poverty level, or $36,800 for a family of four in 2003�saw the largest gains in public coverage, with enrollment growing from 37.9 percent in 2001 to 49.3 percent in 2003, or an increase of almost 5 million low-income children covered by public insurance.

“Clearly, public insurance expansions provided a safety net for millions of people�especially children�who otherwise probably would have lost coverage as the country moved through a recession and jobless recovery,” said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded principally by The Robert Wood Johnson Foundation.

Because of the recession, there was a notable drop in the proportion of the U.S. population in a family with at least one worker: 84.2 percent of the under-65 population was in a working family in 2001 compared with 81.4 percent in 2003, according to the HSC study.

“While the economic downturn reduced employment and accounted for much of the decline in employer coverage, the rapidly rising cost of health insurance, which increased about 28 percent between 2001 and 2003, likely contributed to the decline as well,” said HSC Health Researcher Bradley C. Strunk, who co-authored the study with HSC Senior Health Researcher James D. Reschovsky, Ph.D.

Released today at the launch of the Covering Kids & Families Back-to-School Campaign, the study is detailed in a new HSC Tracking Report—Trends in U.S. Health Insurance Coverage, 2001-2003.

Other key findings include:

  • Age. All age groups saw a decline in employer coverage, but changes were particularly pronounced for young adults 19 to 39 and children 18 and under. Between 2001 and 2003, the proportion of young adults with employer coverage declined from 64.9 percent to 59.4 percent. About half of the decline in employer coverage among young adults was offset by growth in public insurance enrollment from 5.5 percent to 8.3 percent between 2001 and 2003, but, at the same time, the rate of uninsured young adults increased from 21.2 percent to 23.8 percent.
    Among all children, employer coverage declined from 63.4 percent to 59.5 percent. But children saw a large increase in public insurance enrollment, which grew from 17.6 percent in 2001 to 24.1 percent in 2003.

  • Income. Changes in insurance coverage between 2001 and 2003 were concentrated among low-income people. Among the under-65 population with family income less than 200 percent of the federal poverty level-$36,800 for a family of four in 2003-the proportion with employer coverage declined from 37.4 percent to 32.5 percent. Gains in public insurance enrollment offset the large decline, as the proportion of the low-income population in Medicaid or SCHIP grew from 23.5 percent in 2001 to 29.6 percent in 2003.

    Middle-income people-those with family income between 200 and 399 percent of poverty-experienced a smaller decline in employer coverage from 74.4 percent in 2001 to 72.2 percent in 2003. While trends by income partly reflect changes within income groups, they also reflect shifts of the under-65 population from higher-income to lower-income groups. The proportion of the under-65 population with low incomes rose from 29.5 percent to 33.1 percent between 2001 and 2003.

  • Race. Among the under-65 population of major ethnic and racial groups, Latinos were the least likely to have employer coverage and the most likely to be uninsured. Employer coverage for Latinos declined from 46.7 percent in 2001 to 39.7 percent in 2003. During the same period, public insurance enrollment among Latinos increased from 15.3 percent to 22.1 percent. Whites also experienced offsetting changes in employer coverage and public insurance program enrollment, with employer coverage declining from 73.3 percent to 71.3 percent as public coverage increased from 5.7 percent to 7.9 percent for whites between 2001 and 2003. Trends for blacks were not statistically significant: 51.3 percent of blacks in 2003 had employer coverage, 21.5 percent had public coverage and 17.9 percent were uninsured.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.

Covering Kids & Families, a program of The Robert Wood Johnson Foundation, is a national initiative to increase the number of children and adults who benefit from federal and state health care coverage programs. For more information, visit