Summary: Private health insurance coverage has slowly but steadily declined. Between 1980 and 1995, the population under age 65 covered by private health insurance declined from 79.5 to 70.5 percent. This trend has continued even though the U.S. economy is strong and employment has grown. Coverage for children, early retirees, and near-poor families has declined faster than for the overall population. The decline in private health care coverage has been accompanied by growing Medicaid enrollment, which in turn has increased government health expenditures. Factors behind the decline in private health coverage include the rising cost of health insurance, shifts in employment patterns, low growth in real family income, and the indirect effects of expanded Medicaid coverage. The high cost of health insurance and uncertainty about future increases remain concerns for employers and individuals purchasing coverage. As employers have tried to control the cost of health benefits, the expenses borne by consumers have increased. Since 1980, employees have been more likely to be required to pay a share of their health plans' premiums. In addition, most Americans are now enrolled in network-based plans, which encourage enrollees to use doctors and hospitals affiliated with the plans. Finally, nearly 40 percent of people with private employer-based health insurance participated in self-funded plans, under which the employers assume the risk for health claims and the plans are exempt from state insurance regulation. If health insurance costs start rising again, employers and insurers will face pressure to contain costs. This may lead to increased cost shifting from employers to employees, reduced benefits in employer-based health plans, and faster declines in the number of employers offering health benefits.
