US Health Coverage Rebounds—For Now

After two decades of mostly declines, the percentage of Americans with health insurance inched up between 2011 and 2012, according to a new study. But with the advent of health insurance exchanges, the future level of insured people is impossible to know.

After two decades of mostly declines, the percentage of Americans with health insurance inched up between 2011 and 2012, according to a new study from the nonpartisan Employee Benefit Research Institute. The study also found that a downward trend in employer-based coverage since 2000 leveled off between 2011 and 2012. But with the advent of health insurance exchanges, the future level of insured people is impossible to know.

Paul Fronstin, director of EBRI's Health Research and Education Program and author of the report, attributed the improved coverage trends to a combination of factors. "Premium growth has been moderate compared with past years, and you have more people working with access to coverage, and the unemployment rate is falling, which means that employers aren't cutting back as much," Fronstin says. "We aren't looking at a V shape. We are talking about a fall all of these years and then it stopped."

The numbers in the study are gleaned from the U.S. Census Bureau's March 2013 Current Population Survey and reflect 2012 results, which is the latest available data. As a result, Fronstin says the study does not necessarily reflect any workplace coverage trends that may be shifting with the six-month open enrollment period for the individual plans that will be sold on the health insurance exchanges beginning October 1.

Even with the overall declines over the past 18 years, employer-based coverage remains the dominant source of healthcare coverage for most working non-elderly adults, ages 18–64. In 2012, 58.5% of the nonelderly population had employment-based health benefits, down from the peak of 69.3% in 2000 from 1994–2012. The 2011 level was 58.4%, essentially the same as 2012. The working-age population with health insurance coverage increased to 82.3% in 2012, up from 82% in 2011 and 81.5% in 2010. The uninsured rate for that group was 17.7% in 2012, down from 18% in 2011, the report says.

Fronstin says it's all but impossible to predict how the exchanges and the individual market will affect employer-based coverage in the coming years because estimates have been all over the map.

"When you look at [Congressional Budget Office] estimates on what is going to happen, they show a lot of people losing coverage but a lot of people gaining coverage," he says. "You are going to have some small businesses that will go to these exchanges that never offered coverage before because they never had a vehicle. They don't have to worry about that one sick person making coverage unaffordable for them. There could be a lot of dynamics here."

"CBO did some scenario modeling about 18 months ago and basically they came up with four scenarios," he says. "The worst scenario was 20 million fewer people with employer-based coverage as of 2019, and the best scenario was something like 5 million more covered by employer-based coverage. I throw up my hands; I can't make a prediction. What ultimately happens in terms of the number of people covered by employer-based coverage depends upon our assumptions."

The Census data from 2012 found that those most likely to get their coverage from employers include full-time, year-round workers; public-sector workers; workers in manufacturing; managerial and professional workers; and people in wealthy families. Poor families are most likely to be covered by Medicaid or the Children's Health Insurance Program.

The EBRI study found that the overall percentage of people with public-program health coverage was unchanged in 2012, accounting for 22.6% of the nonelderly population. The percentage with individually purchased health coverage was slightly higher in 2012 but has basically hovered around 7% since 1994.

Fronstin says it's not clear if the exchanges and a move to the individual market will eventually replace employer-based coverage as the dominant access point for health insurance.

"The Affordable Care Act has changed the playing field like it has never been changed before. Even employers who are offering health benefits are thinking about moving in the direction of creating more of a shopping experience," he says. But he notes that "the federal employees program has been doing this for 50 years, so it's not like this is something new and out of the blue."

Technology is propelling a shift toward a consumer marketplace for insurance. "We are doing this on the Internet with everything else we shop for. You look at Amazon. You look at Travelocity," he says. "There are different websites for different things and people are getting used to shopping with resources and the information that they need to make informed decisions; bar coding things in stores and looking up a review on the Internet. I am not surprised that health insurance seems to be catching up to it."

"It seems daunting now but a couple of years from now it may not. Medicare went through this on a more micro level with the drug benefits in 2006. It was pretty disruptive at first but it settled down."