Health Insurance Coverage in the Recent Recession

The most recent economic recession (2007-2009) saw an increase of 5 million Americans in the population of those without employment-based health insurance. The decrease in the number of adults with employer-sponsored insurance was offset in part by expansions of existing Medicaid programs; for children, the declines were wholly offset by expansions in Medicaid and the Children’s Health Insurance Program (CHIP). In fact, while the number of adults who were uninsured increased over the period, the number of children who were uninsured declined. John Holahan, director of the Urban Institute Health Policy Center in Washington, DC, in partnership with the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured, presented a paper titled “The 2007-09 Recession and Health Insurance Coverage” online in Health Affairs [doi:10.1377/hlthaff.2010.1003]. To analyze trends in coverage, the paper used data from several years of the Census Bureau’s Current Population Survey. The health insurance unit was used for determination of income and family work status; a health insurance unit includes members of a nuclear family who can be covered under one health insurance policy (policyholder, spouse, all children <19 years of age, and children <23 years of age who are full-time students). The paper presented data on Americans whose health insurance unit incomes were >200% of the federal poverty level, at 200% to 399% of the poverty level, and at ≥400% of the poverty level. From 2000 to 2009, the number of Americans with incomes <200% of the federal poverty level increased by approximately 25%; the number of people with incomes >200% of the federal poverty level remained essentially unchanged. Changes in insurance coverage tended to follow the pattern of economic activity: between 2000 and 2004, the share of the nonelderly population with employer-based insurance fell by 4.3 percentage points (a drop partially offset by expansions of Medicaid and CHIP programs). As the US economy improved from 2004 to 2007, the percentage of Americans with employer-sponsored insurance declined. The decline was not wholly offset by increases in Medicaid coverage, and the number of uninsured Americans continued to increase. The recession of 2000-2004 had left states with tight budgets, and they were reluctant to expand public coverage. Premiums for health insurance increased faster than wages and salaries throughout 2004-2007. After 2007, the US economy entered a period of serious recession, the most serious since the Great Depression, creating another decline in the number of people insured through their employers. As was the case in the years preceding the recession, expansion in Medicaid programs did not offset the decline. Although the majority of Americans who became uninsured during 2007-2009 had incomes <200% of the federal poverty level, those with middle and higher incomes were affected as well. The number of adults with middle and higher incomes fell by 5.2 million. Those who left those income categories took jobs paying lower wages or became unemployed; fewer Americans with low income had employer-based coverage and many more became uninsured. For Americans with incomes ≥400% of the federal poverty level, there was a decline in private nongroup insurance with a corresponding increase in the proportion who were uninsured. More than 60% of the increase in the number of uninsured nonelderly adults occurred among white Americans. During 2007-2009, the number of middle-income white Americans fell by 1.9 million and the number of low-income white Americans increased by 5.2 million. Large numbers of white Americans became unemployed and fell into the group least likely to have private health insurance coverage and most likely to be uninsured; despite expansion of Medicaid programs, there was a 15% increase in the uninsurance rate for white Americans during this period. Blacks and Hispanics were also negatively affected by the recession, but reductions in income in those groups were not as dramatic as those of whites. However, rates of employer-sponsored insurance fell more steeply among blacks and Hispanics, largely because higher proportions of those groups had low incomes. In conclusion, the paper’s author said that “provisions to expand coverage under the Affordable Care Act will help solve a number of these problems, but they will not affect large numbers of Americans until 2014. In the interim, it is likely that employer-sponsored insurance will continue to decline because premiums will almost certainly grow faster than wages and salaries, and the number of uninsured people is likely to increase.”