UC Berkeley News
Press Release

UC Berkeley Press Release

Study by UC Berkeley, partners, forecasts continuing slide in job-based health coverage

– A study released today (Thursday, June 2) by researchers at the University of California, Berkeley, and Working Partnerships USA, a consortium devoted to workforce issues, says that just a bare majority of adults likely will have job-based health insurance by 2010, with middle-income adults facing the sharpest coverage decline and lower-income adults being largely priced out of the market.

The researchers from UC Berkeley's Center for Labor Research and Education and the San Jose-based Working Partnerships USA (WPUSA), developed a model that shows that for every 10 percent increase in insurance premiums, 910,000 fewer American adults have job-based coverage. Of that number, three-quarters become uninsured, and one in every five end up on Medicaid.

Their report, "Falling Apart: How Adults are Faring in the Crisis of Job-Based Health Insurance in California and the United States," warns that if insurance premiums continue their double-digit annual increases, the problem will get progressively worse for workers ages 19 to 65 in all income categories over the next six years.

The researchers calculate that the job-sponsored health insurance coverage rate for non-elderly adults in California will fall from 58 percent in 2004 to 53 percent in 2010. That translates into 1.2 million more uninsured adults and 400,000 more enrolled in a tax-payer supported public program. Nationally, 6.2 million more adults are predicted to be uninsured, and 2.9 million more enrolled in a taxpayer supported public program.

The situation will become increasingly acute, the study authors say, for California adults in the bottom and middle of the income spectrum, with only 30 percent of those in the lower half of the income spectrum forecast to have job-based health insurance coverage by 2010. In the United States, the 25 percent of adults who straddle the median income line currently represent a quarter of the uninsured population, but over half of the newly uninsured.

"What used to be a fundamental component of the social contract for American workers across the income spectrum is now becoming a benefit enjoyed primarily by higher-income workers," says the report.

This divergence can be seen over the last four years by comparing workers earning $23 an hour with those earning $9 an hour. Some 86 percent of U.S. employees earning $23 an hour and above reported having job-based health insurance in 2000 and 82 percent of the group had coverage four years later. The percentages in California were 85 and 83 percent, respectively.

For full-time, year-round workers earning $9 to $11 an hour (in 2004 dollars), job-based health coverage fell 6.1 percent nationwide and 13.5 percent in California from 2000 to 2004, in the same period, the study says.

Overall health coverage through private, public and employer plans for American adults dropped from 81 percent to 78 percent in that time span, adding 7 million adults to a total of 39.5 million uninsured adults, the report said. In California, the number of uninsured adults increased by half a million to reach 5.6 million in 2004.

Nationwide, the researchers said, the annual cost of job-based family medical insurance increased 50 percent between 2000 and 2004, with an annual rate of increase of 11 percent. In California, premiums for job-based family coverage grew by an average of 13 percent a year.

As more middle- and lower-income workers lose job-based health coverage, more will turn to public health programs, which will require additional funding, said the researchers. But with continuing efforts on the federal level to implement additional restrictions on Medicaid eligibility and limit federal government responsibility, the report said states and local governments, as well as working families, will experience mounting financial burdens for these services.

"The American health care system today is in grave danger. As employers race to shield themselves from raising costs, more and more families are left without coverage, sending the entire system into a downward spiral," said Phaedra Ellis-Lamkins, executive director of WPUSA.

The researchers relied on health insurance coverage data from the March supplement to the U.S. Census population survey for 2000 to 2004 and premium price information from employer health benefit surveys conducted by the Kaiser Family Foundation and Health Research and Educational Trust. They said they also took into account forecasts for population growth, and controlled for job and demographic characteristics as well as for eligibility for state public programs.

Authors included Arindrajit Dube, a senior economist with the Center for Labor and Education; Ken Jacobs, deputy chair of the center; Sarah Muller, an associate policy director with WPUSA; Bob Brownstein, WPUSA's policy and research director; and Phaedra Ellis-Lamkins, executive director of WPUSA. Working Partnerships is a coalition of labor unions, educators, religious groups and other community-based organizations engaged in economic research and policy development involving workforce issues.

The report was funded by the California Endowment and Blue Shield of California Foundation.

Another report exploring health insurance coverage for California children is due to be released in July by the same researchers who issued the report on health insurance for adults.