WASHINGTON, Oct. 23 (UPI) -- The shifting nature of the U.S. economy could be the key to why employment is up -- but the number of people lacking health insurance has not gone down.
"It appears that a rising tide can swamp some boats," Ed Howard of the Alliance for Health Reform told congressional staffers at a recent briefing.
Typically, when the economy improves, so does the problem of uninsurance. But since 2003 -- despite the fact that there are 4.2 million fewer households with no one employed -- the number of uninsured increased by 2.1 million, and there are now 46.1 million people with no health insurance living in the United States.
The explanation: Job growth is occurring in economic sectors and regions of the country where employers are less likely to offer health insurance.
Large firms in traditional industries like manufacturing are more likely to offer their workers health insurance. But those jobs are becoming increasingly rare.
Between 2000 and 2005, 2 million jobs were eliminated in industries with high rates of employer-sponsored insurance, while 5.6 million were created in low-rate industries, according to a report by the Urban Institute for the Kaiser Family Foundation.
Similarly, 600,000 jobs at large firms were eliminated, while 4 million people joined small firms, which are less likely to offer insurance, or became self-employed.
The result: Employer-sponsored insurance rates among employees fell from 81 percent in 2001 to 77 percent in 2005.
"Underlying this change in health insurance were significant changes in the country's workforce," said A. Bowen Garrett, a senior research associate in the Health Policy Center at the Urban Institute.
Jobs are also being lost in the northeast, where employers are more likely to offer insurance coverage, and moving west, where job-based insurance is more rare.
Medicaid and other public safety-net programs have taken up some of the slack. During the same period the portion of Americans getting their coverage from such programs has increased from 3.1 percent to 3.6 percent.
But those programs already strain state budgets, and many states have enacted or are contemplating benefit limits and eligibility restrictions. In addition, adults without children are not eligible for the program, no matter how low their income level is.
"Medicaid has not offset the loss in employer-based coverage," Garrett said, and as a result, more and more low-income workers are forced to cope without health insurance. The decline in coverage has been most pronounced among workers below 200 percent of the federal poverty line.
Over the long term, this erosion is likely to continue, no matter how well the economy performs, said Chip Kahn, president of the Federation of American Hospitals.
"Even with some upticks over time of employer-based coverage, we can conclude that we're not going to solve the problem by moving the economy," he said. "Employers are not going to solve the problem for us."
There are a certain core of businesses that will likely continue to offer health insurance to their employees, especially upper-level workers, John Holohan, director of the Health Policy Research Center at the Urban Institute, told United Press International.
But it is impossible to tell where the breaking point will be, he said, and it could be at a level where many fewer Americans get their insurance through their jobs.
One thing that has helped to slow the decline, however, is the tax incentive businesses and workers receive when insurance is purchased through work, he said. Businesses do not pay taxes on money they spend on health insurance, and workers do not pay payroll tax on the value of their insurance.
"Unless the (tax incentive) is changed, it will buttress the system for people at high income levels," Holahan said.
"Employers have a tremendous incentive to provide coverage," agreed Kahn of the Federation of American Hospitals.
