As the U.S. economy struggled during the 2001 economic recession and less-than-robust job growth during the recovery, concerns escalated about the potential for a significant increase in the number of Americans without health insurance.
Rapidly rising health care costs and soaring insurance premiums - which make health insurance increasingly unaffordable - compounded these concerns.
The economic downturn did spark a significant decline in employer coverage—the primary way people under age 65 obtain health insurance. After increasing during the last few years of the 1990s, the proportion of the under-65 population with employer coverage fell from 67 percent in 2001 to 63.4 percent in 2003 (see Table 1). After adjusting for the effect of population growth, this translates into 8.9 million fewer people covered by employer-sponsored insurance than would have been the case if coverage rates remained unchanged.
The decline in employer coverage, however, was not accompanied by a large increase in the overall proportion of Americans who are uninsured. The proportion of Americans under age 65 that lack health insurance increased slightly between 2001 and 2003—from 14.1 percent to 15 percent—but the change was not quite statistically significant. Instead, many of the people who lost employer coverage appear to have moved to public coverage, as the proportion of the under-65 population with Medicaid, SCHIP and other state coverage increased significantly from 8.9 percent in 2001 to 11.9 percent in 2003.
Declines in employer coverage and offsetting growth in public insurance enrollment were widespread across the nonelderly population. But various groups experienced extremely different trends in health coverage (see Supplementary Table 1).
Age. All age groups saw a decline in employer coverage, but changes were particularly pronounced for young adults 19 to 39 and children 18 and under. Between 2001 and 2003, the proportion of young adults with employer coverage declined from 64.9 percent to 59.4 percent (see Figure 1). About half of the decline in employer coverage among young adults was offset by growth in public insurance enrollment from 5.5 percent to 8.3 percent between 2001 and 2003. At the same time, however, the rate of uninsured young adults increased from 21.2 percent to 23.8 percent.
Among children, employer coverage declined from 63.4 percent to 59.5 percent. But children saw a large increase in public insurance enrollment, which grew from 17.6 percent in 2001 to 24.1 percent in 2003. Employer coverage of adults 40 to 64 declined from 72.5 percent in 2001 to 70.3 percent in 2003, almost mirroring the increase in the proportion of uninsured in this age group from 11.4 percent in 2001 to 13.2 percent in 2003.