Studies Suggest $45B Taxpayer Cost from Dropoff of Employer Health Coverage

May 2, 2008 ( - Two new studies presented by the Commonwealth Fund suggest that falling rates of employer-sponsored coverage are placing an increasing burden on taxpayers, public health insurance programs, and workers themselves - particularly low-wage earners.

The report “Who Pays for Health Care When Workers are Uninsured” states that ultimately, the lack of employer-based coverage generates public costs in the form of taxpayer bills to fund public insurance programs or uncompensated care. According to the report, the share of costs paid by public sources has remained roughly constant, but the total cost to taxpayers has increased substantially since 1999 to a total of $45 billion for publicly paid care.

Uncompensated care costs increased from $9.4 billion in 1999 to $12 billion in 2004, the report said. The costs associated with public insurance programs increased from $21.2 billion in 1999 to $32.5 in 2004. In total public costs associated with workers and their families rose by 45%, from $30.5 billion in 1999 to $44.5 billion in 2004.

The rising costs of private health insurance have made it less accessible for many workers, and expansions in public programs, especially for children, have offered a new source for the needed coverage. The report authors suggest policymakers consider further reforms that combine public program expansions with efforts to maintain or expand employer-sponsored coverage.

In the second report, “The Widening Health Care Gap Between High- and Low-Wage Workers,” the authors say increasingly fewer low-wage workers are eligible for public insurance programs or can afford to purchase private insurance. The report also says low-wage workers are less likely than high-wage workers to work for companies offering health coverage.

The report finds that, between 1996 and 2003, low-wage workers were more likely than high-wage workers to be uninsured and to spend a proportionally higher share of family income on out-of-pocket health care costs. They were also less likely to have a usual source of care, less likely to have received preventive services, used fewer health care services overall, and were less likely to use the latest generation of medical technologies, the report suggests.