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News from EPI Public Insurance and Health Reform Provisions Have Shielded Millions from the Erosion of Employer-Sponsored Health Insurance

While the employer-sponsored health insurance system has been crumbling for over a decade, public coverage has provided a vital safety net, covering 25.3 million more people under age 65 in 2012 than in 2000, a new Economic Policy Institute report finds. In Public Insurance Is Increasingly Crucial to American Families Even as Employer-Sponsored Health Insurance Coverage Ends Its Steady Decline, EPI Director of Health Policy Research Elise Gould finds that though the long decline of employer-sponsored health insurance coverage (ESI) ended, Americans increasingly rely on public insurance programs. After falling every year since 2000, the share of non-elderly Americans with ESI essentially held steady between 2011 and 2012, increasing slightly to 58.4 percent. Key components in the Affordable Care Act (ACA) that have already gone into effect, most notably the provision that allows young adults to stay on or join their parents health insurance policies, have also helped stem ESI losses.

“The employer-sponsored health insurance system has been deteriorating for over a decade and is failing millions of our families across the country,” said Gould. “The huge number of American workers who have not been able to access health coverage through their work highlights the value of public insurance programs and the Affordable Care Act in maintaining the health of our families.”

Because most Americans—particularly those under age 65—rely on health insurance offered through their jobs, their health coverage is closely related to the strength of the labor market. The labor market’s slow improvement over the past two years ended the long-standing downward trend in employer-sponsored health coverage, with ESI increasing slightly by 0.1 percentage points in 2012. However, this comes on the heels of eleven years of erosion. 13.7 million fewer non-elderly Americans had insurance through their employers than in 2000, and as many as 29 million more people under age 65 would have had ESI in 2012 if the coverage rate had remained at its 2000 level. The number of uninsured non-elderly Americans was 47.3 million in 2012—11.1 million higher than in 2000.

Public health insurance, primarily in the form of Medicaid and CHIP, helped counteract the erosion in employment-based coverage. While losses in ESI from 2000 to 2012 were greater among children than among non-elderly adults, the share of children without any coverage actually fell 1.8 percentage points. By contrast, the share of uninsured non-elderly adults rose 4.6 percentage points from 2000 to 2012. Given that the share of children and non-elderly adults covered by privately purchased, or non-group, insurance coverage was relatively flat over this period, the differences in the overall coverage rates are primarily due to differences in the incidence of public insurance for these groups.

Among young adults, ESI actually increased, as more young adults were able to get health coverage as dependents through the ACA.  Dependent coverage, generally, is the primary reason why overall ESI coverage rates stopped falling in 2012, even as ESI among workers continued to decline.

“Major elements of the Affordable Care Act that will come into effect in 2014, particularly the establishment of health insurance exchanges and the accompanying subsidies, will further improve the health care system for America’s families, making it easier and more affordable for them to secure and maintain health insurance coverage,” said Gould.

Massachusetts had the highest rate of ESI coverage among the under-65 population, at 70.8 percent in 2011/2012. It is followed by New Hampshire (70.0 percent), Connecticut (69.7 percent), Minnesota (69.0 percent), North Dakota (67.6 percent), Maryland (67.3 percent), and Utah (66.3 percent). In contrast, less than half of New Mexico’s non-elderly population had ESI, at 47.2 percent.