Employment-Based Health Insurance

Nearly two-thirds of Americans under 65--some 150 million people--have employment-based private health insurance. At the same time, the percentage of Americans who are uninsured or rely on Medicaid, particularly children, continues to increase. GAO found that as costs for providing health insurance increase, the percentage of Americans under age 65 with private health insurance coverage decreased from 75 percent in 1989 to about 71 percent in 1995. Of this general decline, about 70 to 90 percent was due to fewer working-age adults and children being covered as dependents. Between 1989 and 1995, the percentage of working-age adults (18 to 64 years old) with private insurance coverage deceased from 76 percent to 73 percent. If the same percentage of working-age adults had been covered in 1995 as in 1989, about 5 million more adults would have had private insurance. However, children experienced the greatest loss of private coverage. Over these 6 years, the percentage of children under 18 with private health insurance decreased from more than 73 percent to 66 percent. If private coverage had not decreased, about 5 million more children would have private insurance.

GAO found that: (1) eroding employer financial support for providing health insurance to employees' families has contributed to the overall decline in private health insurance coverage; (2) each year between the late 1980s and 1994, increases in employers' costs to provide health insurance to their employees and their employees' families outpaced inflation, with cost growth of 18 percent one year; (3) as health insurance reached 10 percent of employees' payroll costs, many employers began to reconsider the amount of support they would provide to employees, particularly for family coverage; (4) acquiring or maintaining health insurance has become more difficult for some families because of changes that some employers made to their firms' health coverage; (5) some employers, particularly smaller employers, dropped coverage altogether; (6) in 1993, over 29 million employees, almost one-fourth of the workforce, were employed by firms that did not offer group health insurance for employees' families; (7) most employers continued to offer coverage, but many raised employees' premium contributions significantly, especially for family coverage; (8) in 1993, 16 percent of employees in large private firms paid $150 or more per month for family health insurance premiums and 36 percent of state and local government employees paid as much in 1992; (9) some employers have used other mechanisms that could discourage employees from two-worker families from purchasing family coverage from them; (10) as these changes occurred, the percentage of Americans under 65 years old with private health insurance coverage decreased from 75 percent in 1989 to about 71 percent in 1995; (11) of this general decline, about 70 to 90 percent was due to fewer working-age adults and children being covered as dependents; (12) between 1989 and 1995, the percentage of working-age adults (18 to 64 years old) with private insurance coverage decreased from 76 percent to 73 percent; (13) over these 6 years, the percentage of children under 18 years old with private health insurance decreased from more than 73 percent to 66 percent; (14) declines in employment-based dependent coverage can increase the number of uninsured Americans and shift a greater burden for health care onto public payers; (15) between 1994 and 1996, health insurance premium costs have been relatively stable, which may help slow the erosion of private coverage; and (16) however, unless the decline in employment-based insurance coverage abates, public payers could face increased costs for health care, either for uncompensated care or for public insurance.