Employer-sponsored health coverage protects fewer workers

With even working Americans losing insurance, physicians are likely to feel the impact as their patients struggle to cover the cost of care.

By Emily Berry — Posted Dec. 27, 2010

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The percentage of Americans younger than 65 who receive health insurance through their employer has fallen below 60% not only because of high unemployment. It's also because many of those who remained on the job saw their coverage eliminated or reduced, or dropped it themselves because their plan became too expensive.

The conclusions come from separate reports issued by the Economic Policy Institute and the Commonwealth Fund. The organizations each released a report in November and December on the cost and prevalence of employee coverage.

For physicians, the trends identified in the reports reflect what many already are undertaking with greater frequency: difficult conversations with patients about payment for care. That is, if physicians can get those patients in the door. A third of Americans skip physician visits and other care because of cost, according to the Commonwealth Fund.

When the thriving auto industry kept income levels in Kokomo, Ind., above average, family physician Bill Mohr, MD, hardly ever had conversations about which of a patient's medications would be least harmful to stop taking because the patient couldn't afford them all. Now, after the economic downturn, those talks are routine, he said.

His patients' decisions have affected the bottom line of Dr. Mohr's practice. In December, his office installed an automated check-in system to save money on staffing. That followed other staff cuts that were made necessary by declining income.

"We're trying to redefine how we deliver service at even a lower cost level," he said.

Rising costs, fewer insured

In 2009, 58.9% of Americans younger than 65 received health coverage through their employers -- down nearly 10 percentage points since the start of the decade and down three points since the previous year, according to an Economic Policy Institute report issued Nov. 16.

On Dec. 15, the institute put out another report noting that those who did have insurance were paying more for it. It said family health insurance premiums rose by 131% between 1999 and 2009 -- a rate far outstripping the 38.1% rise in average hourly earnings for nonmanagement employees and the 28.8% overall inflation rate.

A Commonwealth Fund report issued Dec. 2 also highlighted inflation in the cost of medical insurance. The report noted that in 2003, there were three states -- New Mexico, Texas and West Virginia -- where employer premiums represented more than 18% of median income, while 13 states had premiums represent less than 14%. In 2009, no states were below 14%, and 26 were above 18%, running a line from the West Coast through the South and up into the Midwest.

The average annual employer premium of $13,027 in 2009 -- with 20% to 30% usually paid for by the employee -- is going up more than 5% a year, according to the Commonwealth Fund. In addition, the percentage of workers paying deductibles increased from 52% in 2003 to 74% in 2009, with the level of deductible leaping 77% during that period.

On Nov. 18, the Commonwealth Fund reported that many insured were among the one-third of adult Americans who refused to see a physician or fill a prescription because of costs. The organization said 46% of working-age adults with below-average incomes who had insurance coverage went through 2009 without seeking needed care, while 23% of those insured with above-average income did the same.

Compared with people in 10 other countries, the study found that Americans were more likely by very wide margins to lose health benefits when they lost a job and were more likely to skip needed care.

"It's so completely different in the U.S.," said Cathy Schoen, lead author of the study and senior vice president for policy, research and evaluation at the Commonwealth Fund. "People have gotten used to the fact that, 'If I change my job, my insurance may change.' "

The Commonwealth Fund and the Economic Policy Institute noted that those employed at small businesses were most likely to see their benefits cut or eliminated as premiums increased.

"Since health insurance premiums are often shared between workers and their employers, this disproportionate rise in the cost of health insurance helps illustrate why it is increasingly difficult for both employers and their workers to afford," the institute said in its Dec. 15 report.

Spotlighting trends

The Economic Policy Institute, a union-backed think tank, credited the American Recovery and Reinvestment Act of 2009 with keeping more people employed and insured. The Commonwealth Fund's reports made the case why health system reform was necessary, and how it will save patients money. It estimates that the Patient Protection and Affordable Care Act will chop 1 to 1.5 percentage points off the annual rise in premiums.

However, experts say the reports reflect the realities of the trends in employer-sponsored coverage during an economic downturn.

There were 46.3 million Americans uninsured at some point in 2009, according to the Centers for Disease Control and Prevention's National Center for Health Statistics. That was up 2.5 million in one year. The Economic Policy Institute study said the bulk of the uninsured were adults younger than 65. The CDC said 40 million working-age adults -- 21.1% of that population -- were without insurance in 2009, up 2.9 million in a year.

Large health plans were more explicit that their goal was to maximize profit through "pricing discipline" of premiums, rather than maximizing the number of members. All major health insurance companies have watched their commercial insurance membership drop in the last two years.

Though the Commonwealth Fund and the Economic Policy Institute are positive about how health reform can make insurance more accessible by the time it is fully enacted in 2014, they said that in the meantime, they expect the high unemployment rate -- stuck at more than 9% nationwide -- and increasing premiums to reduce the percentage of Americans getting employer-sponsored insurance.

In Indiana, for example, where Dr. Mohr practices, a decline in jobs has meant a steep drop in the percentage of people younger than 65 with health insurance through work. According to the Economic Policy Institute, 75.7% had coverage through an employer in the 2000-01 survey period, but only 64.3% did so in the 2008-09 survey period -- the highest drop in the 50 states and District of Columbia.

Dr. Mohr has noticed that his employed patients are reluctant to leave for other job opportunities for fear of losing their health insurance.

"I still have patients every day that feel locked into an employer and can't even temporarily [leave a job]," he said. "I know some of the health reform bill is trying to address it, but the way it rolls out, it hasn't had the impact yet."

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External links

"Employer-Sponsored Health Insurance Erosion Accelerates in the Recession," Economic Policy Institute, Nov. 16 (link)

"State of Working America preview: A staggering rise in health insurance costs," Economic Policy Institute, Dec. 15 (link)

"How Health Insurance Design Affects Access to Care and Costs, by Income, in Eleven Countries," Commonwealth Fund, Nov. 18 (link)

"State Trends in Premiums and Deductibles, 2003-2009: How Building on the Affordable Care Act Will Help Stem the Tide of Rising Costs and Eroding Benefits," Commonwealth Fund, Dec. 2 (link)

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