Number of Americans With Employer-Sponsored Health Insurance Drops Significantly Over Last Decade

Small employers will likely increase offers of insurance—and their premium costs will fall—under the Affordable Care Act

    • June 21, 2011

Two new reports released today by the nonpartisan Robert Wood Johnson Foundation (RWJF) show there has been a significant erosion in employer-sponsored insurance (ESI) over the last decade, but that the Affordable Care Act (ACA) is expected to help reverse the trend among small employers.

A report from the State Health Access Data Assistance Center (SHADAC) at the University of Minnesota shows the percentage of nonelderly Americans who get their health insurance through their jobs declined eight percentage points in a decade – from 69 percent in 1999/2000 to 61 percent in 2008/2009, the most recent years data are available—with low- and moderate-income families hardest hit. Recent analysis from the Urban Institute finds that the Affordable Care Act (ACA) will likely help stem this decline, especially among small businesses.

The SHADAC report, State-Level Trends in Employer-Sponsored Health Insurance, shows 7.3 million fewer people have ESI than approximately one decade ago.

“For 60 years, American businesses have been the conduit to health insurance for most families, so this decade-long decline in ESI is troubling” said Risa Lavizzo-Mourey, M.D., M.B.A., president and CEO of the Robert Wood Johnson Foundation. “Policy-makers must work hand-in-hand with business leaders and insurers to make certain that this pillar of health insurance doesn’t further erode.”

The SHADAC report documents large differences across states in terms of the percentage of employers who offer health insurance, and employees who accept it. Forty-two states saw a statistically significant decline in the percentage of nonelderly residents with ESI, with 12 states experiencing declines of 10 percentage points or more: Arizona, Arkansas, Indiana, Michigan, Minnesota, Mississippi, Missouri, North Carolina, Ohio, Rhode Island, Tennessee and Texas.

While the decline has occurred across all income levels, more than half of those who lost ESI (3.8 million) were in families earning moderate incomes (between 200 and 399 percent of federal poverty level, or about $44,000 – $88,000 for a family of four).

Nationwide, the share of private employers offering ESI declined by 3.6 percentage points between 1999/2000 and 2008/2009. The decline among small businesses, those with less than 50 workers, was greater—from 47 percent in 1999/2000 to 42 percent in 2008/2009.

Focusing on small business, where the coverage erosion has been greatest, the Urban Institute analysis released today, The Effects of Health Reform on Small Employers and Their Workers, finds that ACA will likely help reverse these trends due largely to the introduction of the Small Business Health Options Program (SHOP) and reforms to health insurance markets.

Using Urban’s Health Insurance Policy Simulation Model, researchers estimated that insurance offer rates for all firms with fewer than 100 employees would increase by 9.7 percent under ACA, from a projected 43.4 percent to 47.6 percent. The biggest jump would be seen in the smallest firms, with a projected increase in offer rates of 14.2 percent among businesses with fewer than 10 employees. When combined with a projected drop in premium costs, the report indicates that ESI coverage will increase modestly for workers employed by firms with fewer than 50 employees, as well as for their dependents. [For purposes of completing the simulation, researchers assumed ACA was fully implemented in 2010.]

“Small business owners have struggled for years to provide health insurance to employees,” said Lavizzo-Mourey. “The estimates based on the Urban Institute’s simulation model suggest that relief could be in sight for small businesses that want to cover their employees, but have been unable to do so in the past due to ever-rising costs.”

The SHADAC report documents the rise in insurance costs over the past decade for both employers and employees. In 2008/2009, the average annual premium for ESI coverage was $4,528 for private-sector workers enrolled in single coverage – an increase of 82 percent above 1999/2000 premiums. Premiums for family coverage increased 75 percent over the same time period, for a national average cost of $11,208 in 2008/2009.

The report underscores that dependents – spouses and children – rather than employees themselves, are the ones most likely to be losing coverage. Half of those with ESI are dependents who are covered by someone else’s policy, and employee contributions to premiums are typically much higher for family coverage than for single employee coverage. Of the 7.3 million people who lost ESI over the decade, 4.1 million—nearly 57 percent—are dependents.

The SHADAC report uses data from the Annual Social and Economic Supplement (ASEC) of the Current Population Survey (CPS), sponsored by the U.S. Census Bureau, and the Medical Expenditure Panel Survey – Insurance Component (MEPS-IC), sponsored by the Agency for Healthcare Research and Quality. Because of small sample sizes in some states, researchers used two-year averages of each for greater precision of the estimates.


About Robert Wood Johnson Foundation
The Robert Wood Johnson focuses on the pressing health and health care issues facing our country. As the nation’s largest philanthropy devoted exclusively to improving the health and health care of all Americans, the Foundation works with a diverse group of organizations and individuals to identify solutions and achieve comprehensive, meaningful, and timely change. For nearly 40 years the Foundation has brought experience, commitment, and a rigorous, balanced approach to the problems that affect the health and health care of those it serves. When it comes to helping Americans lead healthier lives and get the care they need, the Foundation expects to make a difference in your lifetime.