PA has Second Largest Decline in Health Insurance Coverage in US, Trailing Only California

Harrisburg -- Nearly half a million fewer Pennsylvanians are receiving health insurance through their employer than were getting it just five years ago, according to a report released jointly today by the Economic Policy Institute in Washington, DC, and the Pennsylvania Budget and Policy Center in Harrisburg.

That decrease was the largest of any state in the country, except for California.
Almost 200,000 of those newly non-covered residents were children, the report found.

The study, “The Erosion of Employment-Based Health Insurance: More Working Families Left Uninsured,” found that although employment-based coverage is still the most prevalent form of health insurance in the nation (Sixty percent of Americans have it), the rate of such coverage has fallen every year since 2000. Some 3.1 million fewer Americans – including 491,392 Pennsylvanians – had employment-based coverage in 2006 than in 2001.

“Despite an upturn in the overall economy, the loss of health insurance coverage through employers has continued,” said Sharon Ward, Director of the Pennsylvania Budget and Policy Center (PBPC), a non-partisan policy research project that analyzes state tax and budget matters. “Health insurance, which for a long time came as a basic benefit to a decent, middle-class job, is quickly disappearing for many Pennsylvanians.”

Ward attributed the decline in coverage to the continued loss of manufacturing jobs in the Commonwealth and to the rising cost of health insurance, especially for small businesses. Between 2000 and 2006, she said, insurance premiums increased by 78 percent. 

The report by EPI, a non-partisan economic think tank that works to broaden public debate on the national economy, said the decline in employer coverage in the past five years has been pervasive and felt throughout the country. Thirty-eight states experienced significant losses in employment-based coverage for people under 65 years old, and four states – Utah, South Carolina, Maryland, and Georgia – saw losses of more than seven percentage points. No state had an increase in its employer-provided coverage rate.

Pennsylvania’s downward trend in employer-provided coverage for children – through their parents’ employer -- was also reflected nationally. Some 3.4 million fewer children had employment-based coverage in 2006 than in 2000, and in 2005 the trend of the previous four years – the expansion of public-sector health insurance -- reversed, leaving 940,000 more kids without coverage.

Joan Benso, director of Pennsylvania Partnerships for Children, said parents can no longer count on family health coverage through their job, and without an expansion of the federal SCHIP program, even more kids will lose access to health care. “At a time when employer plans are most desperately needed, we’re seeing them slip away. For children, it’s a real tragedy,” she said.

Small business owners in the state agreed that the cost of providing good health coverage has become exorbitant.

“My premiums increased this year from $450 per month to $600 per month for each employee, and I dropped my coverage,” said Paul Bennett, Director of the Discovery and Learning Center in Upper Darby.

“The best thing the state legislature could do for my small business is to reform the insurance laws,” said Bill Hughes, co-owner of Kathy’s Christmas and Collectibles in Lower Allen Township. “Without laws that restrict medical underwriting and limit rate increases, I am one illness or accident away from dropping or severely downgrading coverage for my employees.”

The state legislature is currently considering Gov. Ed Rendell’s “Prescription for Pennsylvania,” a comprehensive plan to reduce health care costs and make insurance more affordable for small businesses like those of Bennett and Hughes. Specifically, the “Cover All Pennsylvanians program” – modeled after the popular “Healthy New York” – would offer a low-cost insurance option for employers with fewer than 50 employees.

Surveys show that Pennsylvania lags behind other states in insurance reforms that protect consumers and help keep premiums costs down.

Among the study’s other main findings were:

• The number of uninsured nationwide grew in 2006 to 47 million – up by 8.6 million.

• Individuals among the bottom 20 percent of household incomes were the least likely to have employer coverage; 21.9 percent of the bottom income quintile were covered, compared to 86.2 percent for people in the highest income quintile.

• No category of workers was insulated from loss of coverage. Even full-time workers, workers with a college degree, and workers in the highest wage quintile experienced declines in coverage between 2000 and 2006.

###