The two recessions that Americans have weathered in the first decade of the 21st century have taken a tremendous toll on people’s ability to afford health insurance—and employers’ capacity to offer it. A new report from the nonpartisan Robert Wood Johnson Foundation (RWJF), documents that while the situation has been tough for everyone, it’s America’s middle class that has been hardest hit.
The report shows that the number of middle-income earners who obtained health insurance from their employers dropped by 3 million people from 2000 to 2008. Just 66 percent of people in families earning roughly $45,000 to $85,000 are now insured through their employer—a drop of seven percentage points from 2000 to 2008.
Employer-sponsored insurance (ESI) has long been the mainstay of health coverage for middle-class families, who typically do not qualify for government insurance programs. Among middle-income Americans, only about half of the decline in employer-sponsored coverage from 2000 to 2008 was offset by government insurance programs. For people who earned less money, declines in ESI were even steeper, but those numbers were mostly offset by increases in coverage through government insurance programs like Medicaid.
The result is that America's middle-class became uninsured at a pace faster than those with less or more income. In total, 13 million middle-income earners were uninsured in 2008—about 2 million more than in 2000.
“America’s uninsured crisis means that hard-working people with average incomes are being squeezed,” said Risa Lavizzo-Mourey, M.D., M.B.A., president and CEO of the Robert Wood Johnson Foundation. “The fallout from rising health insurance costs hits everyone. Employers must choose between either passing on costs to workers who cannot afford the increase and therefore drop coverage, or paying more for their employees’ coverage at the cost of creating and preserving jobs.”
The most recent estimates from the U.S. Census Bureau indicate that 46.3 million people are uninsured, but these figures were compiled before the downturn in the current economy. Experts assume millions more have become uninsured since the 2008 data, due to job loss and rising costs of health insurance since that time.
The report released today—Barely Hanging On: Middle-Class and Uninsured—chronicles state-by-state health coverage trends. In the first decade of this century, nearly every state has seen increased numbers of uninsured residents, greater costs for individual and family policies for health insurance and significant erosion in private coverage. The report was prepared by the State Health Access Data Assistance Center (SHADAC) at the University of Minnesota. Researchers averaged data from the U.S. Census Bureau from 1999/2000 and 2007/2008 and data from the U.S. Department of Health and Human Services. The report shows:
- More middle-class Americans are uninsured.
Nationwide, the total number of uninsured, middle-class people increased by more than 2 million since 2000, to12.9 million in 2008.
- The average employee’s costs for health insurance rose, while income fell.
Nationwide, the average cost an employee paid for a family insurance policy rose 81 percent from 2000 to 2008. During the same period, median household income fell 2.5 percent (adjusted for inflation).
- Fewer people were offered, eligible for, or accepted insurance coverage through their jobs.
As costs of health insurance premiums rose, some employers stopped offering coverage benefits to employees, or changed the criteria for employees’ eligibility. While most employers still paid the lion’s share of their employees’ insurance premiums, rising costs have been passed on to workers—with some choosing to drop insurance.
Nationwide, the percentage of people who worked for firms that did not offer insurance increased to 12 percent in 2008. The number of workers who were ineligible for ESI—even though their employer offered it—was 22 percent in 2008. That means more than one in five people who work in firms that offer health insurance weren’t eligible for the benefit. And the percentage of employees nationwide who did not accept ESI increased three percentage points since 2000; 21 percent of employees offered ESI in 2008 did not accept.
“The facts show that everyone is suffering right now, regardless of income,” said Lavizzo-Mourey. “For middle-class families, changes in the cost of insurance far outweigh changes in income. That means a bigger piece of the household budget must go to insurance, or families have to go without coverage, delay needed care and face bankruptcy if anyone in the family gets seriously ill. Business owners can’t afford to shoulder more of the burden of health care costs. And states can’t afford the influx of laid-off workers into public programs. It’s a crisis in need of solutions.”
The report is being released during Cover the Uninsured Week (March 14-20), a campaign organized by RWJF to advocate for health coverage for all Americans. Now in its eighth year, it is the largest, nonpartisan mobilization in history seeking solutions for the millions of Americans who are uninsured.