Level of Uninsured in Big Companies Skyrockets

October 22, 2003 (PLANSPONSOR.com) - The rate of uninsured workers in larger companies has jumped by more than 50% since 1987, to the point in 2001 that 26% of the nation's uninsured were at firms with 500 or more employees.

These statistics become alarming considering that larger firms are traditionally more likely to offer health benefits than their smaller counterparts. In fact, a disproportionate amount of the total uninsured workforce (41%) was concentrated in companies with fewer than 25 employees, according to The Commonwealth Fund’s The Growing Share of Uninsured Workers Employed by Large Firms report .

With nearly all large firms offering coverage to at least some employees, the erosion in coverage is likely linked to practices that exclude employees,. The proportion of private sector workers in large firms with coverage through their job declined from 71% to 66% from 1987 to 2001. By 2001, more than 70% of uninsured workers in large firms reported they lacked access to job-based health coverage.

“The number of uninsured is up by nearly 4 million people in the past two years – a 10% jump between 2000 and 2002. The report’s finding of a sharp increase in uninsured workers in large firms points to a critical need for new national policies that target large as well as small firms to safeguard the health security of the nation’s workforce,” said Karen Davis, president of The Commonwealth Fund.

This is due in large part to the low wage segment of the workforce being unable to either participate in or afford, their company’s health-care plan. As evidence of this, the study found nearly half (46%) of all low-income workers in large firms, those earning less than 200% of the Federal Poverty Level, go without insurance for at least part of the year. That includes part-time workers and new employees who may still be waiting to become eligible for a company’s health plan.

Probing deeper into the trend is a broader, longer-term shift in the labor market. The share of workers in manufacturing jobs, which traditionally have come with relatively generous benefits, has dropped 11% at larger companies since 1987, making room for jobs at retailers and other large service-industry companies. The labor forces at those companies tend to experience higher turnover, earn lower wages, and consist of more part-time workers.

Solution Oriented

To combat the problem of the uninsured in large businesses, the report offered a number of solutions. Looking at a broad scale, the report suggested encouraging employers to offer health insurance to their workforce by creating an alternative source of health coverage or requiring large firms to offer coverage.

On an incremental level, the report suggested policies should be designed to limit gaps in coverage that occur when uninsured workers have to wait before health benefits are available to them. To support this contention, the report points to data that found even workers experiencing a relatively minor gap in coverage often have problems accessing health care and paying medical bills.

Additionally, the report points to the recent passing of legislation in California requiring all employers with 200 or more employees to offer insurance for employees and their families starting in 2005 or pay fees to support a statewide insurance program. Firms with between 20 and 199 employees will have to give workers, but not their families, insurance by 2006 or pay similar fees to the state. In most cases, companies will pay at least 80% of the monthly insurance premium, leaving workers to pay no more than 20% of the tab.

Copies of this report are available from The Commonwealth Fund by calling the publications line at (888) 777-2744 and requesting publication number 672. The report can also be found on the Fund’s Web site at www.cmwf.org .