EXAMINATION OF MOVEMENTS IN AND OUT OF EMPLOYER-SPONSORED INSURANCE NIHCM Foundation in collaboration with Pennsylvania State University September 2009
TABLE OF CONTENTS COVERAGE OVERVIEW...1 Figure 1: Number of People <65 by Insurance Status, 1996-2006 Figure 2: Distribution of Population < 65 by Insurance Status, 1996-2006 Figure 3: Number of Children <19 by Insurance Status, 1996-2006 Figure 4: Distribution of Children <19 by Insurance Status, 1996-2006 Figure 5: Number of Working-Age Adults by Insurance Status, 1996-2006 Figure 6: Distribution of Working-Age Adults by Insurance Status, 1996-2006 Figure 7: Trends in ESI Coverage, Population <65, 1996-2006 Figure 8: Trends in Public Coverage, Population <65, 1996-2006 PROBABILITY OF LOSING COVERAGE...6 Figure 9: Probability of Changing Coverage Within Year, Population<65 INSURANCE TRAJECTORIES IN THE YEAR AFTER LOSS OF ESI...7 Figure 10: Type and Timing of First Coverage Gained After ESI Loss, <65 Figure 11: Monthly Coverage Following Loss of ESI, <65 Figure 12: Transitions Into and Out of ESI After Initial ESI Loss, <65 Figure 13: Transitions Into and Out of Uninsurance After Loss of ESI, <65 Table 1: Monthly Flows of People Changing Insurance States in the Year Following ESI loss GAINING INSURANCE...12 Figure 14: Transitions Out of Uninsurance, by Type of Coverage Held, <65
COVERAGE OVERVIEW Key Points:! ESI continues to be the dominant source of health insurance coverage for the population under age 65, but the proportion of the non-elderly population with ESI has been falling.! The decline in ESI coverage was due to decreases in coverage for dependents (adults as well as children).! The advent of the Children s Health Insurance Program and other expansions of public coverage options have led to an increase in the number and percent of children under 19 who are covered through public programs and a decrease in ESI dependent coverage for children. The Details: Using data from January of each year, we examined trends from 1996 through 2006 in the number and distribution of people by insurance status. Separate analyses were conducted for all persons under age 65, for children under age 19, and for working-age adults ages 19 to 64. Figure 1 shows that the number of non-elderly people who held employer-sponsored insurance (ESI) and the number who were uninsured grew at approximately the same rate as the U.S. nonelderly population over this period, with slightly slower growth among those having ESI as a dependent. In contrast, the number of people covered by private non-group (individual) policies fell during this period, and the number covered by public programs grew more rapidly than population. 1
When examined as a percent of the population (Figure 2), we see a small increase from 1996 to 2006 in the proportion of the population having ESI coverage as a policyholder and an almost 3 percentage point increase in the share of the population with public coverage. These coverage increases offset the declines in coverage through ESI dependent and individual policies, resulting in approximately the same share of the non-elderly population being uninsured in 2006 as in 1996. 2
A closer look by age reveals the importance of public coverage for children, especially in the second half of the study period when children were transitioning away from ESI (nearly all from dependent coverage), individual policies, and uninsurance, and moving into the newly-created Children s Health Insurance Program and other forms of public coverage (Figures 3 and 4). In contrast, working age adults were slightly less likely over time to have ESI or other private coverage, and despite some growth in the number and share of adults with public coverage, the ranks of the uninsured also grew more quickly than the population over this time (Figures 5 and 6). Medical Expenditure Panel Survey. Source: 3
Figures 7 and 8 highlight the trends in ESI and public coverage over the study period for the nonelderly population. In both cases, consistent with growth in the underlying population base, the number of people covered through ESI and through public programs increased (as seen in Figure 1). However, ESI coverage was fairly stagnant after 1999 while population growth continued, resulting in a decrease in the proportion of the non-elderly population with ESI from 67 percent in 1999 to just over 62 percent in 2006. In contrast, public program enrollment was strong throughout the period, particularly after 2000, and the proportion of the non-elderly population with public coverage grew from 12 percent in 1996 to nearly 15 percent in 2006. As discussed earlier, much of this growth was associated with enrollment of children in CHIP. 4
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PROBABILITY OF LOSING COVERAGE Key Points:! People who started the year with ESI were much less likely to lose that coverage within the year than were people who began with public or individual coverage.! Regardless of the type of coverage initially held, the majority of people who lost coverage had a period of uninsurance immediately following their loss of coverage.! A relatively high proportion of those covered by individual policies transitioned immediately to ESI upon leaving the non-group coverage, presumably reflecting voluntary departures from individual coverage when ESI coverage became available. The Details: For this analysis, all people reporting insurance coverage in January 2006 were grouped according to their type of coverage. This study population was then followed for the remainder of 2006 to determine the probability of a change in coverage and the type of new coverage obtained, if any, following a transition from the initial insurance state. From Figure 9 we see that someone starting 2006 with ESI had about an 8 percent chance (1.0+0.8+6.5=8.3) of losing that coverage within the year. A small proportion of those who lost ESI transitioned directly to a non-group policy or to public coverage (mostly children who had been dependents on an ESI policy). However, the majority of those who experienced an ESI loss 6
found themselves without any type of coverage immediately following the loss of their employment-related coverage. More than one of every five people who began 2006 with private non-group insurance changed coverage before the end of the year (0.7+8.4+12.1=21.2), with the majority becoming uninsured. However, nearly 40 percent of people losing individual coverage moved immediately to ESI as either a policyholder or a dependent. Presumably, these were voluntary terminations of individual coverage when an ESI option became available, explaining the relatively high probability of leaving individual coverage over the year. Of those who began 2006 with public coverage, approximately18 percent lost the coverage within the year (0.1+2.3+15.7), and the vast majority of those people became uninsured. A relatively small proportion of those who lost public coverage transitioned to an ESI policy or individual coverage immediately upon leaving the public program. INSURANCE TRAJECTORIES IN THE YEAR AFTER LOSS OF ESI Key Points:! Most people who lost ESI were uninsured immediately following the ESI loss. Smaller proportions transitioned immediately to public coverage or a private nongroup policy.! After the initial transition month, people who lost employer coverage began regaining it. Most of those regaining ESI came from the ranks of the uninsured. Over the year, 33 percent of those who lost ESI obtained new employer coverage immediately following a single period without insurance. Smaller numbers of people moved back into ESI after an initial period of other coverage (most often a public program).! While most people who regained ESI retained that coverage through the end of the year, some subsequently lost ESI again. One-third of those who initially lost ESI were again covered by ESI a year later, reflecting the net impact of all movements into and out of ESI over the year.! One year after losing ESI, 36 percent of people were uninsured. Thirty percent had never regained any type of insurance during the year, while another 6 percent had found new coverage but subsequently lost it and were uninsured at the end of the year. 7
The Details: In this analysis, we began with all non-elderly people who had ESI coverage in January 2005 but who lost it at some time during 2005. We then followed them for 12 months following ESI loss to learn whether and when new coverage was obtained. We produced two distinct pictures of insurance status after ESI loss. The first graph (Figure 10) shows the timing and source of the first new insurance coverage (if any) obtained during the 12-month period after ESI loss. Once new coverage was obtained, no further insurance transitions were captured. As such, this graph answers the question, By month X after ESI loss, what proportion of people had regained coverage and what type of coverage did they obtain? This graph captures only the first move into new coverage; a person who, for example, obtained public coverage in month 2 but became uninsured again in month 8 was still counted in the public coverage pool at month 8 since s/he had initially transitioned to public coverage by month 8. The second graph (Figure 11) presents snapshots of coverage status in each of the 12 months after ESI loss and reflects all transitions between states throughout the year. Thus, this graph answers the question, One year (or 4, 6, 9 months, etc.) after ESI loss, what types of coverage do people have? Here a person who obtained public coverage in month 2 but became uninsured again in month 8 would be counted as uninsured in the latter month. Figure 10 shows that 71 percent of the non-elderly who lost ESI coverage found themselves without insurance in the month after ESI loss, while 22 percent transitioned to public coverage within that first month after ESI loss and another 7 percent obtained non-group private coverage. 1 By month 2, another 1 percent (each) of the uninsured had transitioned to public and to non-group coverage and 6 percent of the uninsured had picked up new ESI coverage. By month 3, another 4 percent of those who had initially been uninsured after ESI loss returned to ESI coverage. Cumulatively, by the end of the year, one-third of those who lost ESI had at some time during the year regained ESI coverage after a period of being uninsured, 10 percent had accessed non-group coverage as their first source of new coverage after ESI loss (7 percent immediately after ESI loss plus another 3 percent who had an intervening period without insurance), and 27 percent had first enrolled in public coverage after ESI loss (22 percent immediately and 5 percent after some time without insurance). Thirty percent, however, had obtained no coverage of any type during this year and were still uninsured at the end of this period. 1 Whereas the analysis underlying Figure 9 is based on a sample of data for the 12 months of 2006, the analyses discussed in this section are based on a sample of 12-month periods that began some time in 2005 and continued into 2006. Because of these sampling differences and the margin of error surrounding any survey estimate, the numbers in Figure 9 (which imply, for example, that about 78 percent of those who lost ESI were uninsured immediately after ESI loss) would not be expected to correspond exactly to the estimates shown in the figures in this section. 8
Figure 11 shows the same distribution of insurance coverage in the month immediately following ESI loss, but demonstrates that some people who initially gained coverage during the year subsequently became uninsured. Specifically, whereas we know from Figure 10 that 30 percent of those who lost ESI had no insurance contact during the year and were still uninsured at month 12, we now see that 36 percent of ESI losers were uninsured at that time. This additional 6 percent represents people who had at some time during the year found ESI, individual or public coverage (or perhaps even had multiple periods of coverage) only to lose it again by month 12. 9
Figures 12 and 13 provide additional insights into the month-to-month transitions in insurance status that occurred in the year after ESI loss, with full details provided in Table 1. In Figure 12, we see that the progression from the 7 percent of those who lost ESI but again held employer coverage 2 months later (representing the 6 percent who moved to ESI after a month without insurance plus another 1 percent whose first month was on public coverage) to the 33 percent of ESI losers who held ESI at month 12 was the net result of fairly large monthly additions to the ESI pool coupled with small losses as some people who had regained ESI lost it again. Since most of the additions to the ESI pool were coming from people who were uninsured (Table 1), there was a progressive month-to-month reduction in the ranks of the uninsured despite some people becoming (newly) uninsured each month (Figure 13). 10
Table 1. Monthly Flows of People Between Insurance States in the Year Following ESI Loss Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 UNINSURED Total uninsured at start of month 0 9,075,355 8,140,989 7,659,263 7,500,098 7,051,285 6,804,405 6,234,403 5,729,900 5,315,950 5,204,646 4,879,019 Remained uninsured 8,140,990 7,563,399 7,217,730 6,842,138 6,779,106 6,165,296 5,673,769 5,212,615 5,140,622 4,810,947 4,567,637 Transitions out of category -934,366-577,591-441,534-657,961-272,180-639,110-560,635-517,286-175,329-393,700-311,383 uninsured --> public -156,592-20,350-34,088-36,910-31,978-78,237-58,265-57,342-92,231-36,120-33,601 uninsured --> individual -20,476-42,744-58,684 0 0-72,504 0 0-8,754-129,096 0 uninsured --> ESI -757,298-514,497-348,762-621,051-240,202-488,369-502,370-459,944-74,344-228,484-277,782 Transitions into category 0 95,865 282,369 209,148 25,300 69,108 56,132 103,336 64,025 68,073 121,542 public --> uninsured 0 5,029 282,369 55,084 25,300 0 56,132 0 23,175 17,579 24,940 individual --> uninsured 0 0 0 13,962 0 0 0 59,144 0 0 39,570 ESI --> uninsured 9,075,355 0 90,836 0 140,102 0 69,108 0 44,192 40,850 50,494 57,032 Total uninsured at end of month 9,075,355 8,140,989 7,659,263 7,500,098 7,051,285 6,804,405 6,234,403 5,729,900 5,315,950 5,204,646 4,879,019 4,689,178 PUBLIC COVERAGE Total with public coverage at start of month 0 2,840,833 2,918,417 2,901,004 2,641,069 2,611,333 2,602,188 2,690,035 2,685,667 2,743,009 2,788,169 2,803,320 Remained on public coverage 2,761,825 2,880,654 2,606,981 2,562,769 2,570,210 2,602,188 2,627,402 2,685,667 2,695,938 2,767,200 2,778,380 Transitions out of category -79,008-37,763-294,023-78,300-41,123 0-62,633 0-47,071-20,969-24,940 public --> individual 0 0 0 0 0 0 0 0 0 0 0 public --> ESI -79,008-32,734-11,654-23,216-15,823 0-6,501 0-23,896-3,390 0 public --> uninsured 0-5,029-282,369-55,084-25,300 0-56,132 0-23,175-17,579-24,940 Transitions into category 156,592 20,350 34,088 48,564 31,978 87,847 58,265 57,342 92,231 36,120 33,601 individual --> public 0 0 0 0 0 0 0 0 0 0 0 ESI --> public 2,840,833 0 0 0 11,654 0 9,610 0 0 0 0 0 uninsured --> public 156,592 20,350 34,088 36,910 31,978 78,237 58,265 57,342 92,231 36,120 33,601 Total with public coverage at end of month 2,840,833 2,918,417 2,901,004 2,641,069 2,611,333 2,602,188 2,690,035 2,685,667 2,743,009 2,788,169 2,803,320 2,811,981 INDIVIDUAL COVERAGE Total with individual coverage at start of month 0 955,714 976,190 1,018,934 1,077,618 1,063,656 1,063,656 1,048,388 1,048,388 989,244 997,998 1,165,074 Remained on individual coverage 955,714 976,190 1,018,934 1,063,656 1,063,656 975,884 1,048,388 989,244 989,244 997,998 1,125,504 Transitions out of category 0 0 0-13,962 0-87,772 0-59,144 0 0-39,570 individual --> ESI 0 0 0 0 0-87,772 0 0 0 0 0 individual --> public 0 0 0 0 0 0 0 0 0 0 0 individual --> uninsured 0 0 0-13,962 0 0 0-59,144 0 0-39,570 Transitions into category 20,476 42,744 58,684 0 0 72,504 0 0 8,754 167,076 0 ESI --> individual 955,714 0 0 0 0 0 0 0 0 0 37,980 0 public --> individual 0 0 0 0 0 0 0 0 0 0 0 uninsured --> individual 20,476 42,744 58,684 0 0 72,504 0 0 8,754 129,096 0 Total with individual coverage at end of month 955,714 976,190 1,018,934 1,077,618 1,063,656 1,063,656 1,048,388 1,048,388 989,244 997,998 1,165,074 1,125,504 EMPLOYER-SPONSORED INSURANCE Total with ESI at start of month 12,871,902 0 836,306 1,292,701 1,653,117 2,145,628 2,401,653 2,899,076 3,407,947 3,823,699 3,881,089 4,024,489 Remained on ESI 745,470 1,292,701 1,501,361 2,145,628 2,322,935 2,899,076 3,363,755 3,782,849 3,792,615 3,967,457 Transitions out of category -12,871,902 0-90,836 0-151,756 0-78,718 0-44,192-40,850-88,474-57,032 ESI --> individual -955,714 0 0 0 0 0 0 0 0 0-37,980 0 ESI --> public -2,840,833 0 0 0-11,654 0-9,610 0 0 0 0 0 ESI --> uninsured -9,075,355 0-90,836 0-140,102 0-69,108 0-44,192-40,850-50,494-57,032 Transitions into category 836,306 547,231 360,416 644,267 256,025 576,141 508,871 459,944 98,240 231,874 277,782 individual --> ESI 0 0 0 0 0 87,772 0 0 0 0 0 public --> ESI 79,008 32,734 11,654 23,216 15,823 0 6,501 0 23,896 3,390 0 uninsured --> ESI 757,298 514,497 348,762 621,051 240,202 488,369 502,370 459,944 74,344 228,484 277,782 Total with ESI at end of month 0 836,306 1,292,701 1,653,117 2,145,628 2,401,653 2,899,076 3,407,947 3,823,699 3,881,089 4,024,489 4,245,239 11
GAINING INSURANCE Key Points:! Three-quarters of all non-elderly people who started the year without insurance remained uninsured throughout the year.! Of the one-quarter of the uninsured who gained coverage, people were two times more likely to gain private insurance (ESI or non-group coverage) than to enroll in a public program. Nearly all of the private gains were through ESI.! Those who had become uninsured as a result of losing private coverage were more likely than others to regain coverage, with nearly all of the gains being through private policies.! Conversely, those who had become uninsured as a result of losing public coverage were more likely to regain coverage through public programs.! Private coverage was also a means out of uninsurance for a small proportion of those who had last held public coverage or who were chronically uninsured. The Details: This analysis began with all people under age 65 who were uninsured in January 2006 (whether they had previously held ESI or not) and followed them throughout the rest of 2006 to see if they gained coverage and what type of coverage they gained. Uninsured people who turned 65 during 2006 were assumed to gain public coverage through Medicare. The study population was further divided according to whether the person had private (ESI or private non-group) or public coverage in 2005 immediately prior to becoming uninsured or had been uninsured for all of 2005. 12
Overall, we see that a non-elderly person who started the year without health insurance had only a one in four chance of gaining some type of coverage by the end of the year. Among those gaining coverage, people were twice as likely to gain private coverage as to gain public coverage. (Virtually all of the private coverage was through employersponsored plans.) The type of coverage held, if any, immediately prior to becoming uninsured had a big influence on both the likelihood and type of coverage gained. Those who were uninsured as a result of losing private coverage (mainly ESI plans) had a higher probability of regaining coverage in the next year, and the vast majority of their coverage gains occurred through private policies. Private coverage was also the path to insurance for a little more than 10 percent of uninsured people who had either held public coverage within the past year or been chronically uninsured during that time. However, those with a recent history of public coverage were four times more likely than the chronically uninsured to transition to public coverage. People who had been uninsured for a full year (or longer) had the lowest probability of gaining coverage through any means. 13