PRB

(April 2009) One in every 10 children in the United States had no health insurance in 2007, and the cost of insurance to families and employers is rising, according to a new report by the Institute of Medicine. America’s Uninsured Crisis: Consequences for Health and Health Care is an independent assessment of published studies and surveys and provides new research on how lack of coverage affects U.S. children and families.

Written by experts from the medical, public health, and business fields, the report documents an increasing burden on families with children. The average amount employees paid per year in employer-sponsored health care plans rose from $1,543 in 1999 to $3,354 in 2008.¹ The economic recession further strains families’ resources to provide care for their children. As costs and unemployment rise, employer-sponsored health care is becoming less of a guarantee for families.

Who Is Affected and Why

The Institute of Medicine report notes that health insurance provides significant benefits for children that can have life-long effects. With health insurance, children are more likely to have access to regular immunizations, checkups, medications, asthma treatments, and dental care. Serious illnesses are more likely to be identified early, thereby increasing the chances for successful treatment and lessening family costs. Insured children have fewer hospitalizations and miss fewer days of school because illnesses can be treated early. Unfortunately, with the combined effects of rising health care costs, state budget shortfalls, increasing unemployment, and reductions in employer-provided health care, too many children in the United States continue to be denied full health insurance coverage.

“Economic status, or more precisely parental employment, is the driving force regarding whether or not a child has health insurance. Marginally employed parents are more likely to be racial and ethnic minorities and they are concentrated in urban and distressed rural areas,” says William O’Hare, a senior fellow at the Annie E. Casey Foundation.

Although parental employment can determine whether or not a child has health insurance, it is far from a guarantee. According to a report by the advocacy organization Families USA, data from the 2007 Current Population Survey show that two-thirds of uninsured children have at least one parent who works full-time, year-round.²

Percentage of U.S. Children Without Health Insurance, 1999-2007

Source: National Health Interview Survey.

Why are so many children in the United States without health insurance? “Unlike many other developed countries, most health insurance in the U.S. is based on employer-provided health insurance. Consequently, if a child’s parent loses a job, the child loses health insurance,” says O’Hare. “In addition, more and more jobs, particularly low-paying jobs, do not offer health insurance at all.” With health care costs rising and revenues declining, fewer employers can afford to offer health insurance. In addition, according to the Institute of Medicine, manufacturing jobs that traditionally provided health insurance have declined while service industry jobs that are typically less likely to provide full coverage are on the rise. Recent data from the Henry J. Kaiser Family Foundation illustrate the combined effects of rising unemployment and falling employer-sponsored health coverage: The number of people covered by employer-sponsored insurance decreased by 8.9 million from 2007 to 2009, often leaving their children and spouses without coverage.³

Economic Strains on Public Health Care

State governments, businesses, and families are all under financial strain and affected by the economic recession. As unemployment continues to rise, so too does the demand for the protections offered by the social safety net. But state-sponsored public services including health care have already been strained by budget shortfalls occurring before the economic crisis. The number of children covered by Medicaid and the State Children’s Health Insurance Program (SCHIP), the two major public health care systems in the United States, increased by 954,000 between 2006 and 2007. As of 2008, SCHIP alone provided coverage to 7 million children. Between 2007 and 2009, the number of people enrolled in Medicaid and SCHIP increased by 3.6 million.

Recently, President Obama reauthorized SCHIP to provide more funding to states and expanded the reach of SCHIP to reach an additional 4 million children in need. He also lifted the ban prohibiting states from providing insurance to legal immigrant children. Previously, the program was only eligible to legal immigrants after living in the United States for five years. According to the Congressional Budget Office, 1.8 million children currently enrolled in SCHIP would have lost coverage without the new funding. The additional federal SCHIP funding will allow states to cover children in families earning up to 300 percent of the federal poverty level. But social safety-net programs are not enough to ensure good health and provide the full range of needed care, according to the Institute of Medicine. Although the expanded coverage is welcome and needed, it will not be enough to meet the needs of uninsured U.S. children. According to O’Hare, “[It] will help, but there are still millions of children without health insurance, and millions more without adequate health insurance.”

Eric Zuehlke is an editor at the Population Reference Bureau.

References

1. Institute of Medicine, America’s Uninsured Crisis: Consequences for Health and Health Care, accessed online at www.iom.edu/?ID=63118, on March 23, 2009.
2. Families USA, Left Behind: America’s Uninsured Children, accessed online at www.familiesusa.org, on March 25, 2009.
3. Henry J. Kaiser Family Foundation, “Impact of the Rise in Unemployment on Health Coverage, 2007 to 2009,” accessed online at http://slides.kff.org/chart.aspx?ch=878, on April 10, 2009.