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As the Economy Improves, the Number of Uninsured Is Falling But Not Because of a Rebound in Employer Sponsored Insurance

The “Great Recession” that started roughly in 2007 and peaked in 2010 affected many individuals, indicated by steep rises in unemployment and accompanying declines in incomes and increases in poverty rates. These economic changes were accompanied by changes in health insurance coverage. Coverage trends since the start of the recession and in the post-2010 recovery are associated not only with these direct economic effects, but also with broader demographic trends, existing underlying coverage trends, changes in workforce, and regional population shifts. This brief examines changes in insurance coverage in light of all these factors.

The recession was marked by an increase of almost 6 million uninsured individuals between 2007 and 2010. The losses in coverage were mostly driven by large numbers of individuals losing employer-sponsored insurance, although gains in Medicaid coverage partly offset these losses. The recession caused an increase in the low-income population, a group that tends to have lower employer coverage rates, higher Medicaid coverage rates, and higher uninsured rates than other groups. Increased economic opportunities after the recession between 2010 and 2012 saw this population decrease, and correspondingly saw a decrease in national uninsured rates.

The main contributor to increasing post-recession coverage rates, even with increased employment, was Medicaid, not employer coverage. Employer coverage rates did stabilize after 2010 after long trends of decline predating the recession, but this change was likely caused by provisions in the Affordable Care Act (ACA) that allowed young adults to continue as dependents on parents’ private plans until age 26. Although full-time work increased and joblessness decreased after the recession, employer coverage rates continue to decline for many. This is especially true in small-to-medium firms and in firms that have historically low coverage rates. These firms grew the most among all firms in terms of employment after the recession.

Population shifts also contributed to coverage trends. The Northeast and Midwest, despite having the largest gains in coverage post-recession (partly because of Medicaid policies), also saw decreases in overall population. The West had slightly lower gains in coverage while the South did not experience significant gains in coverage. However, these regions experienced population growth. This dynamic will be important in considering the ACA’s impact, since most states that are not currently expanding Medicaid are in these two regions.

Introduction