WORKERS WITHOUT HEALTH INSURANCE: WHO ARE THEY AND HOW CAN POLICY REACH THEM? A Series of Community Voices Publications BY Bowen Garrett • Len M. Nichols • Emily K. Greenman www.communityvoices.org Opinions and conclusions expressed in this publication are those of the author(s) and do not necessarily represent those of the W.K. Kellogg Foundation. WORKERS WITHOUT HEALTH INSURANCE: WHO ARE THEY AND HOW CAN POLICY REACH THEM? BY Bowen Garrett • Len M. Nichols • Emily K. Greenman This research was supported by the W.K. Kellogg Foundation. We thank Linda Blumberg and John Holahan for many helpful comments. Any opinions expressed are those of the authors alone, and should not be attributed to the Urban institute, its trustees, or its sponsors. CONTENTS EXECUTIVE SUMMARY .............................................................................................................................................1 I. INTRODUCTION .......................................................................................................................................................2 II. BACKGROUND AND PRIOR RESEARCH ..........................................................................................................3 III. DATA AND METHODS ........................................................................................................................................4 IV. FINDINGS ..............................................................................................................................................................5 Basic Facts About Uninsured Workers ................................................................................................................5 A Closer Look At ESI Sponsorship, Eligibility, Take-Up, and Coverage ........................................................8 Effectiveness and Efficiency of Targeting Health Insurance Subsidies to Uninsured Workers ..................18 V. P OLICY OPTIONS .............................................................................................................................................22 Individual Tax Credits .........................................................................................................................................23 Employer Tax Credits ..........................................................................................................................................25 Public Program Expansions ................................................................................................................................25 VI. IMPLICATIONS OF POLICY OPTIONS AND FINDINGS ................................................................................26 Individual or Employer Subsidies .....................................................................................................................26 Tax Credits vs. Public Program Expansions .....................................................................................................27 VII. CONCLUSION ...................................................................................................................................................28 REFERENCES ...........................................................................................................................................................29 APPENDIX .................................................................................................................................................................31 i LIST OF TABLES AND FIGURES TABLES 1. Insurance coverage rates of workers by firm size 2. Insurance coverage rates of workers by industry 3. Insurance coverage rates of workers by family status 4. Insurance coverage rates of workers by wages 5. Insurance coverage rates of workers by wages and firm size 6. Insurance coverage rates of workers by income 7. Insurance coverage rates of workers by income and family status 8. Insurance coverage rates of workers by hours worked 9. Insurance coverage rates of workers by voluntary/involuntary part-time status 10. (a) Insurance coverage rates of regular workers by job tenure 10. (b) Insurance coverage rates of contingent workers by job tenure 11. Insurance coverage rates of workers by gender 12. Insurance coverage rates of workers by race/ethnicity 13. Target effectiveness and efficiency by wages and firm size 14. Target effectiveness and efficiency by income and firm size 15. Target effectiveness and efficiency by income and wages 16. Target effectiveness and efficiency by family status and income Appendix Table 1. Composition of uninsured workers vs. the overall workforce FIGURES 1. Distribution of uninsured workers by industry 2. Distribution of uninsured workers by firm size 3. Distribution of uninsured workers by hours worked per week 4. Distribution of uninsured workers by job tenure 5. Distribution of uninsured workers by hourly wage 6. Distribution of uninsured workers by family income as percentage of FPL 7. Distribution of uninsured workers by family status 8. Distribution of uninsured workers by gender 9. Distribution of uninsured workers by race/ethnicity 10. Reasons for not having ESI among uninsured workers 11. Relationship between sponsorship and take-up rates across industries ii Income is more important than family type as a determi- XECUTIVE UMMARY E S nant of sponsorship, eligibility, and take-up. Income and wages are highly correlated, though not perfectly, Most of the uninsured are either workers or family mem- and more of either is associated with higher sponsor- bers of workers, and most Americans who are covered ship, eligibility, and take-up. Eligibility is not contin- get their health insurance through the workplace. These gent on race, suggesting that anti-discrimination laws facts motivate our study of two questions: Why do appear to be working in this regard. Hispanics are less some workers have employer-sponsored health insurance likely to have offers of health insurance from their while others do not? What policy initiatives are best suit- employers (due to being less likely to work for a firm ed to the specific conditions of most uninsured workers? that sponsors a health plan), but conditional on offer, all We survey the literature on the working uninsured and races are equally likely to take-up the employer-spon- use 1999 Current Population Survey data to paint a more sored health insurance offer they receive. Blacks are less detailed portrait of the working uninsured that can likely than whites to have spousal coverage, which leads inform policy discussions. We report some relatively them to have lower overall coverage rates than whites familiar findings. Workers in small firms, and those who despite being equally likely to have employer-sponsored work in retail, construction, and service firms, are dispro- insurance from their own employer. portionately likely to be uninsured. Workers who earn We define an effective policy as one that would reach low wages, work part-time, have short job tenure, and many uninsured workers, and an efficient policy as one who live in households with low incomes are also among that would extend eligibility to more uninsured than to the more likely to be uninsured. Single workers and the already insured. Workers who work in small firms, workers married to non-workers are more likely to be for low wages, and who live in households with low uninsured than members of two-earner couples. Men are incomes are the natural targets of coverage expansion slightly more likely to be uninsured than women, and policies for the working uninsured. In general, we show blacks and especially Hispanics are more likely than that targeting subsidy dollars to low-income workers whites to be uninsured. More than half of uninsured would be the most efficient policy, since they are the workers (59 percent) work for an employer that does not most likely to be uninsured. Although targeting low- sponsor health insurance, 21 percent are not eligible for wage workers is the most effective option, it is less effi- their employer’s plan, and 20 percent decline the cover- cient than targeting low-income workers because many age they are offered at work. low-wage workers are married to higher-wage workers, We explore deeper and more policy-relevant charac- live in households with higher incomes, and are already teristics of the working uninsured through a series of insured. Targeting workers in small firms is the least two-dimensional cross-tabulations. The first important efficient of the three options, since many high-wage, finding is that workers in larger firms have higher spon- high-income, and already insured workers also work in sorship, eligibility, and take-up rates in every industry. small firms. Among low-income workers, all family Thus, even though there is considerable inter-industry types are similarly efficient to target, because low- variation, firm size is more important than industry as a income workers are much less likely to have coverage determinant of coverage possibilities for workers. for all family types. Because nearly half of uninsured Across industries, sponsorship rates vary more than workers are single and without children, the most effec- take-up rates, which vary more than eligibility rates. tive policies will need to include these workers. Sponsorship and take-up are correlated, which implies Employer or individual subsidies could expand cover- that underlying worker demand—and willingness to age considerably if designed and implemented properly, pay—for