Private Health Coverage Unstable for Middle Class

Image

In about one-quarter of middle-income families with private health coverage, a family member lost coverage at some point between 2004 and 2007, analysis of Census Bureau survey data reveals. Nearly all of these family members ended up uninsured, often for several months. While the survey only extends through 2007, these problems have almost certainly worsened due to the recession. Enactment of comprehensive health reform that provides affordable, meaningful insurance options, particularly for those losing access to employer-based coverage, would help protect many such families in the future from the financial and health consequences of being uninsured.

Analysis of data from the Census Bureau’s 2004-2007 Survey of Income and Program Participation (SIPP) shows: ^[1]

• Twenty-three percent of families with children who had monthly cash income in the middle third of the income spectrum (between about $32,000 and $68,000 a year) and had all family members covered by private insurance in 2004 reported that one or more family members had no private insurance for at least one month during the four-year survey.
• In the vast majority of these families — 92 percent — a family member became uninsured as a result. (The remaining 8 percent were able to get publicly funded coverage through Medicaid.)
• These periods without insurance often lasted several months. In more than half (58 percent) of families where at least one member became uninsured, that family member went without insurance for five months or more. Nearly one-third (31 percent) of these individuals were uninsured for at least nine months.
• Families in which a member lost private coverage and became uninsured come from across the income spectrum. Some 42 percent of families in the bottom third of the income spectrum (with incomes up to about $31,800 a year) that had private insurance at the start of the survey included at least one member who subsequently lost coverage, as did 15 percent of those in the top third (with incomes over about $68,000). Overall, 21 percent of all families with private insurance at the start of the survey included at least one member who lost coverage between 2004 and 2007. ^[2]

This analysis is the first to examine patterns of insurance loss for families, rather than individuals. Earlier studies confirm, however, that a large share of individuals lack insurance over time.^[3] Other data sources also show patterns of lost coverage for 2006-2007 that are similar to those in the SIPP data.^[4]

Image

Private Coverage Likely Even More Precarious Now Due to Recession

Most working-age Americans who have health insurance rely on private insurance — the vast majority through their employers — to cover themselves and their families. This coverage is becoming increasingly unreliable, however. Since 2001, the proportion of firms that offer coverage to their employees has declined from 68 percent to 60 percent, and average annual premiums for employer-based insurance have more than doubled over the last decade.^[5]

Moreover, the 2004-2007 SIPP data likely paint a rosier picture than what is actually happening today. The number of families losing private coverage and becoming uninsured has almost certainly increased as the economy and unemployment have worsened.^[6] Since the recession started, the unemployment rate has nearly doubled (from 5.0 percent in December 2007 to 9.7 percent in February 2010), and more than 8 million jobs have been lost.^[7] Urban Institute researchers estimate that with every percentage-point increase in the national unemployment rate, 1.1 million people become uninsured (and another 1 million people enroll in Medicaid or the Children’s Health Insurance Program).^[8]

Findings Underscore Need for Comprehensive Health Reform

Gaps in insurance coverage can have serious impacts on families’ health. Studies have shown that people who are uninsured for even short periods of time often forgo needed care.^[9] This can result in poor health outcomes, such as by delaying a diagnosis until the disease is more serious and requires more drastic treatments.^[10]

The finding that many families with private coverage are unable to count on it over time underscores the need for comprehensive health reform. In addition to covering more than 30 million uninsured Americans, the health reform legislation that Congress is now considering would help families that lose private coverage in the future by providing new coverage options through a new insurance exchange, instituting substantial health insurance market reforms, and furnishing many families with help affording coverage.^[11]