Job-Based Health Insurance, 1977–1998: The Accidental System Under Scrutiny

Abstract

PROLOGUE: In Don Quixote, Miguel de Cervantes wrote that “[t]here are only two families in the world: the Haves and the Have-Nots.” Nearly four hundred years have passed since Cervantes coined this popular phrase, yet it is a remarkably accurate depiction of the world's population on the eve of the twenty-first century. In the United States the disparity between those who have access to the economic pie and those who do not is partially obscured by our large, working middle class. But in recent years the gap in incomes between the high end and the low end of the earnings scale has increased, and as this paper by Jon Gabel shows, so has the gap in health benefits. A two-tier system of access to job-based insurance has developed, one in which low-skill workers, often those without a college education, are not able to afford their employer's coverage. These health care “have-nots” face bleak prospects as the world's information-based economy expands, while the health care “haves” are becoming an elite segment of the U.S. workforce. Jon Gabel is vice-president of health systems studies at the Health Research and Educational Trust (HRET), a nonprofit organization affiliated with the American Hospital Association, in Washington, D.C. Previously he was director of the Center for Survey Research at KPMG Peat Marwick, in Arlington, Virginia. ABSTRACT: This paper highlights changes in employer-based health insurance from 1977 to 1998, based on national household surveys conducted by the Agency for Health Care Policy and Research (AHCPR) in 1977, 1987, and 1996; and surveys of employers by the AHCPR in 1977, by the Health Insurance Association of America in 1988, and by KPMG Peat Marwick/Kaiser Family Foundation in 1998. During the study years, in 1998 dollars, the cost of job-based insurance increased 2.6-fold, and employees' contributions for coverage increased 3.5-fold. The percentage of nonelderly Americans covered by job-based insurance plummeted from 71 percent to 64 percent. This decline occurred exclusively among non-college-educated Americans. An information-based global economy is likely to produce not only greater future wealth but also greater inequalities in income and health benefits.

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