Employers offering health coverage in California declining

California has the most number of people without insurance coverage compared to any other state — and the number of employers offering health insurance plans is declining.

According to a recent “Snapshot of California’s Uninsured” by the California HealthCare Foundation, more than 20 percent of Californians, or 6.6 million people, are without health insurance. Meanwhile, only 54.7 percent of the state’s employers offer sponsored health plans.

The annual California HealthCare Foundation report examined health coverage sources and trends; employer size and type; likelihood of coverage by ethnicity, age and income; and uninsured rates for non-citizens for its study. The Employee Benefit Research Institute also analyzed the current population survey to contribute to the report.

Key findings
Among the findings from the study are:

• Workers at small businesses continue to be the most uninsured, but those in mid-sized firms are growing.
• Nearly three-quarters of uninsured children live in families where the head of the household works a full-time job.
• More than 30 percent of the uninsured have family incomes of more than $50,000 per year.
• Around 60 percent of the state’s uninsured are Latino.

The study showed California had the seventh largest proportion of uninsureds in the nation.

The states with the lowest proportion of uninsured included Minnesota with only 9.7 percent of its population uninsured, followed by Hawaii, Iowa, New Hampshire and Wisconsin. Other states with high uninsured populations included Texas, New Mexico, Florida, Oklahoma and Montana.

During the past half-decade, Medicaid and individually purchased coverage helped to partially offset declining employer-sponsored insurance, the report indicated. Yet those resources couldn’t prevent the growth in the proportion of California’s uninsured population. Employees of small businesses with three to nine employees, in particular, were most likely to be uninsured. Almost 40 percent of California’s uninsured work for employers with fewer than 25 workers, although the number of uninsured employees in mid-sized businesses rose during the past five years, the report stated.

Furthermore, the report noted that families with yearly incomes below $25,000 are the most likely group to be uninsured. However, a notable rise in the likelihood of those with incomes between $50,000 and $74,999 appeared in the study results. Almost one-third of California’s uninsureds have family incomes of $50,000 or more. A quarter of California’s uninsured have family incomes below the federal poverty level.

Many of those uninsured individuals are childless adults, who are ineligible for public health insurance. While more than half of California’s uninsured children retain eligibility for public health insurance, less than 10 percent of adults are eligible. The likelihood of being uninsured increased for all but children and the near-elderly. The largest increase was among 25- to 34-year-olds.

The study showed Latinos were more likely to be uninsured than other ethnic groups, about 2.5 times as likely as Whites. However, rates for uninsured Whites and Asians are on the rise. The report noted African Americans and Latinos have similar median family incomes, yet a much larger percentage of Latinos (57 percent) are uninsured compared to African Americans (5 percent).

In a subsequent report, the Foundation noted that Golden State residents are paying about the same rates as the rest of the country for health maintenance organization premiums. “Historically, California’s large, multi-specialty medical groups have been able to provide services to HMO members at a lower cost than the national average,” the report stated. “However, the constant upward pressure on premiums has eroded the California price advantage for HMOs.”

Cost rising faster than inflation
The report indicated health insurance premiums rose 8.7 percent in 2006, more than twice the rate of inflation in California, which was 4.2 percent. Twenty-five percent of workers in small firms with three to 199 workers witnessed premium increases greater than 15 percent, the report stated.

To offset the cost of premiums, 41 percent of large employers with 200-plus workers said they were “very likely” to increase the amount employees pay for health coverage in 2007, the report noted.

Other survey findings included:

• California workers paid $547 annually for single coverage and $2,824 for family coverage. Workers in small firms paid significantly more out of pocket for family coverage than did those in large firms.
• Sixteen percent of Golden State employers offered a high-deductible health plan in 2006; 6 percent offered a health savings account-eligible high-deductible health plan.
• Despite increasing concern about the affordability of coverage, 6 percent of employees worked for firms that used employee wage level as a basis for varying worker premium contributions.

To full results of both studies can be found at www.chcf.org.

Topics California Commercial Lines Business Insurance