Insurance—Those With and Those Without - Sources Of Health Insurance

Persons under Age Sixty-five

For persons under age sixty-five, there are two principal sources of health insurance coverage: private insurance (from employers or private policies) and Medicaid (the government program for low-income or disabled persons). From 1989 to 1999 the proportion of those covered by private insurance declined from 75.9 to 72.8%. (See Table 6.3.) During this time the percentage covered by Medicaid increased (from 7.2% in 1989 to 9.1% in 1999) and the proportion of uninsured increased (from 15.6% in 1989 to 16.1% in 1999). (See Table 6.4 and Table 6.5.) The percentage of those privately insured remained between 70.7 and 71.5% in the years from 1997 to 2001, while those on Medicaid increased (from 9.7% in 1997 to 10.4% in 2001). Persons under age sixty-five without health insurance accounted for 16.1% of the population in 2001, down from 17.5% in 1997. (See Table 6.5.)

In 2001 the National Center for Health Statistics estimated that about 71.5% of the under-sixty-five population had private health insurance policies, with 67% covered through the workplace, a decrease from the 68% covered by employers in 1999. (See Table 6.3.) Although the percentage of persons who received health insurance coverage through the workplace rose slowly from 1995 to 1999, it did not rise to levels observed during the 1980s when close to 70% of workers obtained private insurance through their employers. Considerable variation by geographic region persists, with workers in the Northeast (73%) more likely to receive private insurance at the workplace than those in the South (61.8%) in 2001.

Three major factors contributed to the long-term decline in private health insurance. The first is the rising cost of health care, which frequently leads to greater cost sharing between employers and employees. Some workers simply cannot afford the higher premiums and co-payments (the share of medical bills the employee pays for each health service). A second factor is the shift in American commerce from the goods-producing sector, where health benefits have traditionally been provided, to the service sector, where many employers do not offer health insurance.

A third factor is the changing nature of the relationship between employers and employees. In the past many companies took a paternalistic (fatherly) approach to employee welfare to promote a healthy workforce and foster employee loyalty. Since the mid- 1990s many companies have assumed less responsibility for their workers' health and have found that measures to cut health care costs effectively reduce business expenditures ("Sources of Health Insurance and Characteristics of the Uninsured," EBRI Issue Brief, no. 170, February 1996).

RACE AND ETHNICITY. In the under-sixty-five age group, more than three-fourths of non-Hispanic whites (79.2%) had private health insurance in 2001, down from 82.4% in 1984. More than half (57.6%) of non-Hispanic African-Americans had private health insurance policies in 2001, while 59.4% were insured in 1984. In 2001 more than two-thirds (72.1%) of Asians had private policies, an increase from the 70.9% covered in 1984.

The most dramatic drop in private coverage was among Hispanics. In 2001 less than half (47.6%) of Hispanic-Americans had private health insurance coverage, down from 57.1% in 1984. (See Table 6.3.)

INCOME AND LOCATION. Persons under sixty-five with higher incomes in 2001 were more likely to have private health insurance. All income levels, however, were less likely to have private insurance than in 1984. In 1984 more than half (61.8%) of individuals living at 100–149% of the poverty level had private insurance; by 2001 the proportion sank to 39.6%. For people earning 200% or more above the poverty line, 92.3% were covered by private insurance in 1984, compared to 88.4% in 2001. (See Table 6.3.)

From 1984 to 2001 all geographic regions showed overall decreases in the percentage of persons under sixty-five covered by private health insurance, along with corresponding increases in the percentages of uninsured

TABLE 6.3

and Medicaid recipients. In 2001 persons in the South and West were least likely to have private insurance and the most likely to be uninsured. In 1984 and in 2001 more people living within metropolitan statistical areas (large cities and their surrounding suburbs) had private insurance than did those living in rural areas. (See Table 6.3.)

Accompanying the declines in private health insurance for those under sixty-five from 1984 to 2001 was the significant increase in the proportion of individuals receiving Medicaid health benefits at all income levels. Most surprising was the sharp increase in Medicaid participation by people living above the poverty level—persons who qualify for the federal program as a result of their disabilities. (See Table 6.4.)

Persons Age Sixty-five and Over

There are three sources of health insurance for persons age sixty-five and over: private insurance, Medicare, and Medicaid. Medicare is the federal government's primary health program for those sixty-five years old and older, and all persons in this age group are eligible for certain basic benefits under Medicare. Medicaid is the government's program for the poor and persons with disabilities. In 2002 a scant 0.8% of adults age sixty-five or older went without some type of health insurance. (See Table 6.1.)

Older adults may be covered by a combination of private health insurance and Medicare, or Medicare and Medicaid, depending on their incomes and levels of disability. Almost all of those over sixty-five are covered by Medicare. Thus, in 2001, the 62.7% of all adults age sixty-five or older who had private insurance were covered by a combination of their private insurance and Medicare. Nearly 13% were enrolled in a Medicare health maintenance organization (HMO), 8.1% had Medicaid, and 17.9% had Medicare only. (See Table 6.6.)

Whites were far more likely to have both Medicare and private insurance (66.4%) than any other ethnic or racial group. Only 24% of Hispanics and 37.6% of African-Americans had both Medicare and private coverage. (See Table 6.6.)