By Patricia S. Keenan, Paul D. Jacobs, and G. Edward Miller
Health Affairs, October 2018
Obtaining health insurance coverage has historically been challenging for workers at small firms and the self-employed. Using data from the Medical Expenditure Panel Survey, we found that the overall uninsurance rate for these workers and their families declined by 5 percentage points over the past decade, but one-third of those with lower incomes remained uninsured in 2014–15.
From the Introduction
Obtaining health insurance has been a long-standing challenge for many self-employed and small-firm workers. The nature of this challenge has evolved over the past decade, as the Great Recession reduced access to employer-sponsored insurance, and health insurance reforms under the Affordable Care Act (ACA) increased the availability of private and public coverage. While the decline in employer coverage offer rates in small firms is well established, less is known about how recent changes to that coverage, individual insurance, and Medicaid have affected how small-firm and self-employed workers and their families get coverage.
Using data from the Medical Expenditure Panel Survey–Household Component (MEPS-HC), we found that insurance coverage improved at all income levels over the ten-year period from 2004–05 to 2014–15 (we pooled data into two-year pairs to improve precision). Those with family incomes below 200 percent of the federal poverty level showed the largest gains (9.5 percentage points), but one-third remained uninsured in 2014–15.
These trends are particularly important given ongoing policy interest in improving coverage for small-firm and self-employed workers. Compared to large-firm workers, small-firm workers typically face more limited availability of employer-sponsored insurance and higher premiums because of higher administrative costs and a more limited ability to spread risk. Small-firm workers and the self-employed are less likely than workers in larger firms to have an employer coverage offer. They also generally earn less, which makes more of them eligible for Medicaid or the ACA’s Marketplace premium subsidies. Other ACA policies such as the Small Business Health Options Program and Small Business Health Care Tax Credits aimed to enhance coverage, but take-up has been limited. The 21st Century Cures Act of 2016 created an option for small firms to make tax-advantaged contributions to help subsidize individual-market coverage for their workers. The administration of President Donald Trump is implementing policies intended to make it easier for small businesses to buy group insurance coverage for workers through association health plans or contribute to the individual-market coverage that workers purchase.
Recent studies have analyzed changes in coverage for small-firm workers and the self-employed, but little is known about how coverage has changed for these workers and their families. By including family members, we account for the availability of employer coverage through a spouse. We also comprehensively describe the relationship between working in small firms and having insurance coverage for family members.
From the Discussion
Among the subgroups we examined, from 2010–11 to 2014–15 uninsurance rates fell the most among low-income families with small-firm or self-employed workers and in families with only small-firm workers, as Medicaid and other private insurance grew. Despite gains in coverage, these groups still had the highest uninsurance rates in 2014–15, with nearly one-third of people in low-income families uninsured.
A number of factors make small-firm and self-employed workers and their family members more likely to be uninsured than individuals in families with one or more large-firm workers. Compared to larger firms, small firms in the US face significant challenges in providing affordable insurance to their employees. Small firms also have low and declining employer coverage offer rates and provide less continuity of coverage than larger firms do. In addition, small firms are less likely to offer affordable dependent coverage, which may lead families to obtain coverage from multiple sources and could reduce uptake of coverage for children (as shown in studies of Medicaid).
Small-firm workers and their families with lower incomes were more likely to be uninsured and had the lowest employer coverage rates, which suggests that the high and increasing cost of such coverage is likely a major impediment to coverage for lower-income families.
By Don McCanne, M.D.
During the development of the Affordable Care Act (ACA), it was interesting to watch Congress patch together policies to try to fill the voids in health care coverage. Although each patch helped, the patchwork model of reform still inevitably left many holes in the system. This study shows that, for low-income individuals employed by small firms, one-third of family members remain uninsured – obviously an unacceptable deficiency in coverage.
For those who support building on the Affordable Care Act as a means to fill in the gaps in coverage, they are going to have to propose specific policies that will work. Expand Medicaid? The program has already been expanded under ACA, and so how are you going to change it to target these families? An employer mandate? That was rejected for small firms because of their very tight budgets. An individual mandate? These people have low incomes, so the subsidies would have to be even greater and how far would they extend into middle-income families that are also having difficulties with paying for health insurance? Depend on lower premiums through market competition of health plans? Get real.
Not only does the patchwork approach still leave too many holes in the system, it also leaves in place the existing health care financing infrastructure with its profound administrative waste, extreme fragmentation and inefficiency, and very high costs, while leaving in place inequities and deficiencies in coverage.
We seem to be having difficulty explaining to ACA supporters that building on ACA is not only the most expensive model of reform, but it is one of the least effective in that it leaves most of the flawed policies in place. Instead of increasing costs while falling far short, with what we’re already spending we could fill in all the voids while increasing efficiency and equity in the system simply by enacting and implementing a well designed, single payer, improved Medicare for all. That would take care of not only low-income families dependent on small-firm employment, but it would guarantee comprehensive, life-long coverage for everyone else as well.
Adding a public option to this mess would do very little to fill the voids and correct the deficiencies. That is why it is important to call people out who are using the “Medicare for All” label to refer to merely adding a public option or buy-in. We have to demand that the Medicare for All label refers only to the real thing – an improved and expanded Medicare that includes absolutely everyone and is affordable for all. The public option doesn’t even come close.
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