Children Who Lose Employer-Based Health Insurance Risk Remaining Uninsured

Newswise — For more than 2 million children each year, their parents losing employer-based health insurance means becoming uninsured. Among an estimated 3 million children who lose employer-based health insurance annually, 75 percent subsequently become uninsured, and almost a million remain uninsured for a year or longer, according to the presentation "When Children Lose Employer-based Health Insurance Coverage."

The presentation, which is scheduled for the May 15th 2005 Pediatric Academic Societies' meeting in Washington, DC, is based on results of a study of more than 18,000 records of children obtained from 6 years of Medical Expenditure Panel Survey data, from 1996 to 2001.

Health care for the majority of adults and children in the US is financed by health insurance provided by employers. According to the Census Bureau's latest report, 60 percent got their health care coverage via this source in 2003. But the percentage has been declining, shrinking at an average rate of one percentage point a year since 2000

What happens to children when their working parents lose employer-based coverage? In theory, families have several options: COBRA coverage (purchased at cost from the ex-employer), individually purchased private insurance and Medicaid or State Children's Health Insurance Program (SCHIP) enrollment for many children in low income families. But the reality is that COBRA and private coverage are mostly unaffordable to low and moderate-income families. Parents may not know about the Medicaid and SCHIP programs or may face enrollment barriers, such as cumbersome applications and waiting periods.

What really happens, as researchers at the American Academy of Pediatrics found, is that when employment-based coverage ends, 3 out of 4 children will become uninsured. Among those who become uninsured, 4 out of 10 will regain employer coverage at some point during the next 12 months. Only 1 in 8 will enroll in Medicaid or SCHIP, 1 in 30 (or 3 out of 100) would obtain non-employer based private coverage, and 4 out of 10 will remain uninsured for a year or longer. The researchers also observed that 12 percent of children losing employer coverage, many of whom have chronic illnesses and special health care needs, are able to stay insured by maintaining Medicaid coverage they had prior to employer coverage termination. This coverage, however, is being threatened by recent proposals to cut Medicaid spending by the federal government.

"In addition to unaffordable COBRA, prohibitively expensive private insurance and Medicaid or SCHIP enrollment barriers, an additional reason why so many went uninsured may be the fact that more workers, while retaining their jobs, are dropping coverage when they can no longer afford their share of the fast-rising premiums," according to Suk-fong Tang lead author of the study. Family coverage premiums rose 91 percent from 1996 to 2004, according to the Employer Health Benefits Survey published by the Health Research and Educational Trust, averaging $9,945 annually in 2004. Worker contribution for that coverage averaged more than $2,600, and the cost was $700 more for small firm employees.

The American Academy of Pediatrics is an organization of 60,000 primary care pediatricians, pediatric medical subspecialists and pediatric specialists dedicated to the health, safety and well-being of infants, children, adolescents and young adults.