State Health Lawmakers' Digest: New Uninsured (Vol. 1, No. 3), Cover Story

INTRODUCTION

The Changing Face of the Uninsured

About 42.5 million people, or 15.5 percent of the national population (17.5 percent of the non-elderly population) were uninsured in 1999, according to the Census Bureau's most recent Current Population Survey (CPS). This halts a steady upward trend for the first time since 1987. The uninsured represent a varied group, including extremes of health, age and income, but predominantly are employed or are in families headed by workers. According to a Kaiser Commission analysis of 1998 census data, 74 percent are in families with at least one full-time worker and 56 percent are low-income.

A close look at who is uninsured reveals changes that reflect demographic, economic, policy and insurance and labor marketplace changes. Although the age group that is likeliest to be uninsured is still the youngest group of workers--sometimes referred to as "young immortals" for their belief that they don't need coverage--the age profile has shifted even as America grays (see chart). Older Americans are much less likely to be uninsured than are other age groups. Those who are insured, however, are particularly likely to face high premiums, making the slight increase in the 55- to 64-year-old group especially troubling. Changes in the structure of retirement health coverage, following changed accounting standards, resulted in an 8 percent to 9 percent decrease in coverage offered to early retirees from 1991 to 1997. The full effects of this change likely are still ahead and will be exacerbated by the impending retirement of the first baby boomers.

In a survey of uninsured adults in 2000, almost 75 percent cited cost as a major reason for being uninsured. Indeed, for 47 percent that was the single most important reason, followed by not being offered it on the job (15 percent), or being between jobs or unemployed (15 percent). Although just under half (47 percent) of workers (below the poverty line) continue to lack coverage, rates of uninsurance have grown slowly for the near poor. Meanwhile, higher premiums due to inflation and cost sharing have made coverage unaffordable to a growing number of middle-income employees. 22 percent of uninsured workers earned more than 400 percent of the federal poverty level (FPL) in 1998, compared to 15 percent in 1987. Businesses are less likely to offer dependent coverage or require greater cost-sharing, a change reflected in a 36 percent increase in the (still-low) likelihood that a married worker will be uninsured.

Researchers recently have focused on how poverty and minority status interact. Compared with 1994 (the last time fewer than 15.5 percent of the population were uninsured) poor minorities are likelier to lack coverage (28.1 percent vs. 23.3 percent for blacks, 43.7 percent vs. 39.8 percent for Hispanic), and make up a greater proportion of the uninsured. Like the nation as a whole, the uninsured are increasingly Hispanic: 19.2 percent of all uninsured in 1987 were Hispanic; in 1999 they represented more than 25 percent.

A more skilled work force is being sought, and the likelihood of being uninsured--always high for people with less than a high school education--also grew 31 percent for workers with only a high school education. Nearly 90 percent of uninsured workers lack a college diploma, a number that has remained constant.

Self-employed workers and employees of small firms (fewer than 25 employees) have always been less likely to offer coverage, but they employ a dwindling share of the uninsured work force (down from 50 percent to 47 percent). The greatest change in coverage since 1987 occurred among workers in large firms (more than 1000 employees), which experienced a 53 percent increase in the likelihood of being uninsured. Although smaller firms are much less likely to offer coverage, the sheer number of workers in large firms translates to an important percentage of uninsured in those companies (28 percent in firms with more than 500 workers).

Some coverage changes may reflect state policy changes. Welfare reform and state child health insurance have moved coverage for low-income families in opposite directions, with declines in Medicaid coverage early on, followed by more recent improvements as the gap has been filled by both the public and the private sectors. Between 1998 and 1999, as states successfully implemented their SCHIP programs and the generosity of employer coverage grew, the percentage of uninsured children in families just above the FPL fell from 27.2 percent to 19.7 percent. Health cost inflation, however, threatens to put a damper on these expansions as well.

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