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Fewer Employees Benefit From Health Insurance

By Vanessa Fuhrmans
From The Wall Street Journal Online

The number of Americans with job-related health benefits declined to 63% from 67% between 2001 and 2003, a new study estimates.

The study, based on a national survey of 46,600 people under the age of 65, highlights the erosion in employer-sponsored health coverage caused by a sluggish economy and rapidly rising health-insurance premiums. During the economic boom of the late 1990s, the percentage of Americans with health benefits tied to their jobs rose modestly.

The decline in coverage represents one of the largest shifts in employer health-care coverage in recent years, according to the Center for Studying Health System Change, a Washington-based independent policy research group that conducted the study. The center is funded principally by the Robert Wood Johnson Foundation.

A recession and then a largely jobless economic recovery over the two-year period in the survey caused much of the decline. The proportion of people surveyed that had at least one worker in a family dropped to 81.4% from 84.2% in the two-year period. Some families had a worker with only a part-time job; part-time work is much less likely to offer health benefits.

While sluggish job growth drove most of the decline in coverage, it was compounded by a roughly 28% increase in health-insurance costs over the two years. Employers didn't drop health-care coverage on a grand scale. But some made health-care benefits less attractive or more expensive for some low-income employees, through stricter eligibility criteria and higher premium contributions, especially for dependents. The decline in employees electing to take health coverage from an employer was most notable among young adults, falling to 89.9% in 2003 from 91.4% in 2001.

Employer health-care coverage typically fluctuates with economic cycles. But the shifting of health-care costs to employees could trigger a more sustained drop this time. The last time the U.S. saw such a decline in employer coverage was in the early 1990s, when an economic recession and soaring health-care costs converged. Those pressures led to the rise of managed care, which brought health-care costs under control and helped to somewhat expand coverage to more people. Since then, however, consumers pushed back against the system's tight restrictions on care.

"One of the differences is there doesn't seem to be the same kind of silver bullet this time," said Paul Ginsburg, president of the Center for Studying Health System Change.

Rather, the overall trend has been to shift more financial responsibility to employees and patients. Yet, incomes aren't rising at the same pace as health-care costs.

Sluggish job growth has made it difficult for managed-care companies to acquire new health-plan members and increase revenues. But recent signs of job growth don't necessarily spell more health-plan business, some executives say.

"It's fair to say that some jobs that are being created may not be the jobs that come with benefits," said Ron Williams, president of Aetna Inc., at an investor conference earlier this summer.

Much of the new job growth comes from smaller businesses or service-sector companies, many of which don't offer full health-care coverage, some analysts say. Other companies offer coverage only to employees, not their families.

The cutback in family benefits may help explain one of the sharpest drops in employer health coverage: The 5.3 percentage-point decline among low-income children, according to the survey. Such children also had the biggest increase in public health-care assistance, thanks to expansions in the State Children's Health Insurance Program, or SCHIP. The share of children who enrolled in such programs rose to 49.3% from 37.9% between 2001 and 2003, a big reason why the survey's uninsured numbers didn't grow significantly.

The survey found Latinos -- the fastest growing population group in the U.S. -- were the least likely to have employer coverage and the most likely to be uninsured. Over the two-year period, the proportion of Latinos with job-related medical benefits dropped 6.9 percentage points to 39.7%, compared with a 3.1 percentage-point decline among blacks and a two percentage-point drop among whites.






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