Copyright 1999 Federal News Service, Inc.
Federal News Service
JUNE 15, 1999, TUESDAY
SECTION: IN THE NEWS
LENGTH:
2316 words
HEADLINE: PREPARED STATEMENT BY
PAUL
FRONSTIN, PH.D.
SENIOR RESEARCH ASSOCIATE AND
DIRECTOR,
HEALTH SECURITY AND QUALITY RESEARCH PROGRAM
EMPLOYEE
BENEFIT RESEARCH INSTITUTE
BEFORE THE HOUSE COMMITTEE ON
WAYS AND MEANS
SUBCOMMITTEE ON HEALTH
SUBJECT - HEARING
ON UNINSURED MERICANS
BODY:
The views expressed in this statement are solely those of the author and
should not be attributed to the Employee Benefit Research Institute, or the EBRI
Education and Research Fund, its officers, trustees, sponsors, or other staff,
or to the EBRI-ERF Consumer Health Education Council. The
Employee Benefit Research Institute is a nonprofit, nonpartisan, public policy
research organization which does not lobby or take positions on legislative
proposals.
STATEMENT OF PAUL FRONSTIN SENIOR RESEARCH ASSOCIATE AND
DIRECTOR, HEALTH SECURITY AND QUALITY RESEARCH PROGRAM EMPLOYEE
BENEFIT RESEARCH INSTITUTE BEFORE THE COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE
ON HEALTH U.S. HOUSE OF REPRESENTATIVES JUNE 15, 1999
(NOTE: TABLES AND GRAPHS NOT TRANSMITTABLE)
Mr. Chairman, ranking
member, and members of the Committee, I am pleased to appear before you today to
discuss uninsured Americans. My name is Paul Fronstin. I am a
senior research associate and director of the Health Security
and Quality Research Program at the Employee Benefit Research Institute (EBRI),
a private, nonprofit, nonpartisan, public policy research organization based
here in Washington, DC. EBRI has been committed, since its founding in 1978, to
the accurate statistical analysis of economic security issues. Through our
research we strive to contribute to the formulation of effective and responsible
health and retirement policies. Consistent with our mission, we
do not lobby or advocate specific policy solutions.
Introduction
Between
1987 and 1997, the percentage of Americans without health
insurance coverage increased from 14.8 percent to 18.3 percent, and now
comprises 43.1 million nonelderly Americans (chart I and table 1). However, when
examining this increase it is important to recognize that the determinants
underlying the trend are different in the pre- 1993 period from those in the
post-1993 period. Prior to 1993, the percentage of uninsured
was increasing in large part because the percentage of Americans covered by an
employment-based health plan was declining. In 1987, 69.2
percent of the nonelderly Americans were covered by an employment-based
health plan (chart 2 and table 1). That was down to 63.5
percent by 1993. The erosion of employment-based health
insurance was in large part due to rising health care costs,
resulting in small employers dropping insurance and large employers shilling the
cost of coverage onto workers.1
Between 1993 and 1997,
health insurance costs increased modestly and
health care costs were in line with overall inflation.
According to an annual survey by William M. Mercer, health
insurance costs declined in 1994, increased 2.1 percent in 1995 and 2.5 percent
in 1996, and barely increased in 1997. Low health care cost
increases and the strong economy had an effect on employment-based coverage
levels and the uninsured during this period. Unlike the period
prior to 1993, between 1993 and 1997 the percentage of nonelderly Americans
covered by an employment-based health plans increased from 63.5
percent to 64.2 percent. At the same time, the percentage of Americans without
health insurance coverage continued to increase, though at a
slower rate than experienced between 1987 and 1993.
The period since 1993 is
unique. It is likely the first time in history that the United States population
has experienced an increase in the uninsured population while
the percentage of Americans covered by an employment-based
health plan also increased. Researchers have yet to completely
understand this trend, but speculation has been offered. It appears that
individuals leaving welfare (and Medicaid) because of the strong economy and
welfare reform are contributing to both the increase in the
uninsured and the increase in employment- based coverage. As
former welfare recipients get jobs, some get jobs that offer
health insurance while others get jobs that do not offer
health insurance.
The growth rate in the
uninsured population has slowed since 1993, and may also be
attributable to modest health insurance cost increases. Between
1987 and 1993, health insurance costs increased an average of
13.6 percent per year, according to chart 3. During this period the
uninsured increased an average of 2.6 percent per year. In
contrast, between 1994 and 1997, when health insurance costs
increased an average of 2.9 percent per year, the uninsured
increased an average of 1.4 percent per year. While the
uninsured did not decline, lower health
insurance cost increases did result in a slowing of the growth in the
uninsured.
In formulating public policy for the
uninsured population, it is important to understand the
characteristics of the uninsured population. The remainder of
this testimony presents this information.
Data
The data in this
testimony come from three sources: the Current Population Survey (CPS) and the
Survey of Income and Program Participation (SIPP), both conducted by the U.S.
Bureau of the Census, and the 1996 Medical Expenditure Panel Survey (MEPS),
conducted by the Agency for Health Care Policy and Research.
The CPS is conducted monthly, and health insurance status
is measured by a survey of 145,000 individuals conducted in March of each year.
The CPS has become the most widely used source of data on the
uninsured and is the source of the estimate that 43.1 million
nonelderly Americans were uninsured in 1997. This is the survey
that has been used to track the uninsured since as far back as
1980. While the questionnaire has been changed in various years to improve the
accuracy of the data, many researchers feel comfortable making adjustments to
the data that result in a consistent time series since 1987 (see Fronstin, 1998,
for more details).
The MEPS also contains data on the
uninsured, but is not used as often by researchers as the CPS
because it has been conducted only intermittently since 1977 (previously under
the name National Medical Expenditure Survey), and because of the smaller sample
size. However, data were collected in MEPS that are not collected in CPS. For
example, MEPS asks workers if their employer offers them health
insurance coverage and about health care utilization.
Additional data on premiums, plan design, health care
expenditures, and source of payment are expected to be released later this year.
SIPP contains data on the uninsured, but is not used as
often as CPS for a number of reasons, primarily because of the time lag in
obtaining SIPP data. The strength of using the SIPP data for analysis of
health insurance coverage is that it allows researchers to
track individuals for as long as 36 months. This allows researchers to conduct
comprehensive analyses of the duration of insurance status, some of the results
of which are discussed below.
The Uninsured
When examining the uninsured, it is important to understand
that some uninsured workers are offered health
insurance by their employer while others are not. For example, a 1997 study
found that 24 percent of uninsured workers were offered
health insurance by their own employer, while an additional 5.1
percent could have received coverage through a family member (Cooper and Schone,
1997). With an effective access rate of 29.1 percent, it is likely that over
12.5 million of the 43.1 million uninsured actually have access
to an employment-based health plan.
Access to
Health Insurance--This same study found that between 1987 and
1996 the percentage of workers offered an employment-based
health plan increased, but take-up rates were down. The study
found that while take-up rates declined across all income groups, they were down
the most for low-income workers.
Geographic Region--The proportion of the
nonelderly population with and without health insurance varies
by geographic region. In 14 states, 20 percent or more of the population was
uninsured in 1997 (chart 4). These states are in large part
concentrated in the south central and southwestern parts of the United States.
Many of these states have a higher concentration of minority groups, such as
Hispanics, who are less likely to be covered by health
insurance. The higher uninsured rates may be due in part to the
fact that Hispanics are more likely to be in low-income families than other
races. States with a low percentage of uninsured individuals
include Hawaii, Wisconsin, Minnesota, Vermont, and Pennsylvania.
Age--Young
individuals are typically more likely to be uninsured than
older individuals (chart 5). This is apparent by looking at the data in chart 6,
which shows that the uninsured population is disproportionately
younger than the general population. The high proportion of young adults without
health insurance may occur because they are no longer covered
by a family policy and may not have established themselves as permanent members
of the work force. Some young adults may also have lost access to Medicaid,
which covered them up through age 18 in some states. Many in this group may
think that they do not need health insurance because their
probability of encountering a high-cost medical event is very low.
Income--Income plays an important role in whether or not an individual is
uninsured. The uninsured are concentrated disproportionately in
low-income families. For example, 37 percent of individuals in families with
income just above the poverty line were uninsured in 1997
(chart 7). This compares with 8 percent uninsured among
individuals in families with income at 400 percent or more of the poverty level.
Work Status
Approximately 84 percent of the uninsured
were members of families with a working head of household in 1997 (Fronstin,
1998). As a result, it is just as important to understand the job
characteristics of uninsured workers as it is to understand the
characteristics of the uninsured in general.
Firm
size--Workers employed in small firms are more likely to be
uninsured than workers employed in large firms (chart 8). As a
result, the uninsured population is more likely to be composed
of workers in small firms than the general working population. In 1997, over 60
percent of uninsured workers were employed in firms with fewer
than 100 employees or were self-employed (98 percent of the self- employed
reported a firm size of less than 100 employees). According to chart 9, 12
percent of uninsured workers were self-employed; 22 percent
were in firms with fewer than 10 workers, 13 percent were in firms with 10-24
workers; and 14 percent were in firms with 25-99 workers.
Industry--Workers
employed in the public sector or the manufacturing sector were least likely to
be uninsured (chart 10). Workers were more likely to be
uninsured if they were employed in agriculture, forestry,
fishing, mining, construction, wholesale and retail trade, or the personal
service sector.
Duration of Being Uninsured
Finding
solutions for reducing the level of the uninsured is like
trying to hit a moving target. While the characteristics of the
uninsured population do not vary much from year to year, the
people within that population do change. For example, a recent study by my
colleague Craig Copeland at the Employee Benefit Research Institute found that
most uninsured spells were either very short or very long
(Copeland, 1998). Specifically, 37 percent of all uninsured
spells lasted four months or less, while 33 percent lasted 12 months or longer
(chart 11). Spells were more likely to last longer than four months for the
following groups: - Hispanics. - Individuals ages 25 and older. - The
self-employed. - Workers not employed in manufacturing or the public sector. -
Individuals with long spells of unemployment.
Mr. Chairman, this concludes
my statement. Thank you for the opportunity to testify today. I would be happy
to answer any questions that you or members of the committee may have, and
invite you to call on EBRI in the future for additional information.
References
Copeland, Craig. "Characteristics of the Nonelderly with
Selected Sources of Health Insurance and Lengths of
Uninsured Spells." EBRI Issue Brief no. 198 (Employee Benefit
Research Institute, June 1998).
Cooper, Philip F., and Barbara Steinberg
Schone. "More Offer, Fewer Takers For Employment-Based Health
Insurance: 1987 and 1996." Health Affairs 16(6)
(November-December 1997).
Fronstin, Paul. "Sources of
Health Insurance and Characteristics of the
Uninsured: Analysis of the March 1998 Current Population
Survey." EBRI Issue Brief no. 204 (Employee Benefit Research Institute, December
1998). Fronstin, Paul, and Sarah C. Snider. "An Examination of the Decline in
Employment-Based Health Insurance Between 1988 and 1993."
Inquiry 33 (Winter 1996/97: 317-325).
Table 1 NONELDERLY AMERICANS WITH
SELECTED SOURCES OF HEALTH INSURANCE COVERAGE, 1987-1997
Chart 1 PERCENTAGE OF NONELDERLY AMERICANS WITHOUT HEALTH
INSURANCE, 1987-1997
Chart 2 PERCENTAGE OF NONELDERLY AMERICANS COVERED BY
AN EMPLOYMENT-BASED HEALTH PLAN, 1987-1997
Chart 3 CHANGE
IN HEALTH INSURANCE COSTS AND THE UNINSURED, A
COMPARISON OF 1987-1993 WITH 1994-1997
Chart 4 PERCENTAGE
UNINSURED, BY STATE, 1997
Chart 5 LIKELIHOOD OF BEING
UNINSURED, BY AGE, 1997
Chart 6 DISTRIBUTION OF AMERICANS
AND UNINSURED AMERICANS BY AGE, 1997
Chart 7 LIKELIHOOD OF
BEING UNINSURED, BY FAMILY INCOME, 1997
Chart 8 LIKELIHOOD
OF WORKERS BEING UNINSURED, BY FIRM SIZE, 1997
Chart 9
DISTRIBUTION OF UNINSURED WORKERS, BY FIRM SIZE, 1997
Chart
10 LIKELIHOOD OF BEING UNINSURED, BY INDUSTRY, 1997
Chart
11 DISTRIBUTION OF NONELDERLY AMERICANS WITH AN UNINSURED
SPELL, BY LENGTH OF SPELL, 1994-1995
NOTE:
1 The decline in coverage was
also the result of declining real income and structural changes in the economy,
such as the movement of workers from the manufacturing sector to the service
sector, the increased use of part-time workers, and the decline of unionization
(Fronstin and Snider, 1996/97).
END
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