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Employer Health Insurance in Rapid Decline Across U.S. -- and Not in MA

Posted by John McDonough  April 14, 2013 05:52 PM

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A new report on state-by-state trends in employer-sponsored health insurance (ESI) caught my eye both for the national and Massachusetts trends, comparing 1999/2000 with 2010/2011. Bottom line from the Robert Wood Johnson Foundation-funded State Health Access Data Assistance Center: big changes nationally and in most states, and not so in Massachusetts. Some key findings:

The percent of non-elderly who obtain health insurance from their employers declined from 69.7 to 59.5 percent over the decade, a stunning 10.2% drop -- public coverage increased by 3.1% in the same period.

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The share of private firms offering health insurance dropped from 58.9 to 52.4%, and the "take up rate" (the percent of workers accepting employer offers) fell from 81.8 to 76.3%.

Most, not all, states saw sizable drops in employer coverage, and the range of individuals covered by employers varied from New Hampshire (#1) at 73.8% to New Mexico (48.0%).

The proportion of firms offering coverage was in rapid decline going back to 2000, well before the passage of the Affordable Care Act/ACA/ObamaCare. The decline did not stop in 2010 nor did it accelerate. It's a long-term trend.

Only three states had little or no drop in employers offering health insurance -- Alaska, Massachusetts, and North Dakota. Part of the explanation for these three is that ESI dropped much more for lower income workers (10.1% for workers in families with incomes below 200% of the federal poverty line: ~$44.700) than it did for higher income workers (2.8% drop for workers in families with incomes above 400% fpl: ~$89,000). Regarding per capita income, Massachusetts, North Dakota, and Alaska were #s 2, 6, and 10 highest respectively in 2012, though the dropping rates in the other top ten states lessens the power of this explanation.

I still recall the numerous confident predictions of naysayers that the 2006 Massachusetts health reform law would spell the end of employer health insurance in Massachusetts. Didn't happen. Instead, look at these data points from the report:

Best Employer-Sponsored Insurance Overall Rate

  1. NH: 73.8%
  2. MA: 72.9%
  3. UT: 71.7%

Best Rate: Dependents on ESI

  1. UT: 44.2%
  2. MA: 40.5%
  3. NH: 40.5%

Best Rate: Percentage of All Workers in Firms Offering ESI

  1. HI: 84.1%
  2. DC: 69.9%
  3. MA: 65.2%

Best Rate: Percent of Small Firms Offering Coverage

  1. HI: 78.4
  2. DC: 54.1
  3. MA: 53.6

Worthy of note -- since 1974, Hawaii has been the only one of the 50 states to have a law requiring employers to offer health insurance to their workers, aka, an employer mandate. Dependent coverage is not mandated under the law.

What does this report tell us?

The rapid decline of employer-based health insurance in the U.S. continues. The ACA may slow or accelerate the trend, but it's a trend far older than the ACA. Instead, the ACA is providing an option for workers in those firms without other ways to find health insurance coverage.

This time, Massachusetts is a national laggard -- in a good way.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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About the author

John E. McDonough is a professor of practice at the Harvard School of Public Health. He is the author of the book “Inside National Health Reform”, published in 2011 by More »

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