Number of uninsured workers at large employers growing

March 9th, 2004 by Julie Ferguson

Human Resource Executive’s Workindex reports that the ranks of uninsured workers at large firms – companies with 500+ workers – have been growing at a rapid rate. According to a recent report – The Growing Share of Uninsured Workers Employed by Large Firms – issued by the Commonwealth Fund, the proportion of uninsured workers at large firms increased from 25 percent to 32 percent in recent years, while the proportion of uninsured workers in small and mid-sized firms declined.

The study calls the rising rate of uninsured workers in large firms an “unreported phenomenon.” While there is widespread awareness that smaller firms have high numbers of uninsured workers, the report states that:

” … features other than size also affect whether an employer offers coverage; in fact, recent research suggests that workers’ income is a better predictor of lack of health benefits than firm size … In addition, the likelihood of an establishment offering health coverage is 20 percent higher in manufacturing than in service jobs, and 60 percent higher if some workers are union members, according to the National Center for Health Statistics (1997).”

The report elaborates on the relation of income to insurance:

“Indeed, the problem of uninsurance in large firms is concentrated among low income workers. While 46 percent of low-income workers in large firms are uninsured for some time during the year, only 14 percent of middle- and 8 percent of high-income workers in large firms are uninsured at any point during the year.”

Meanwhile, as the ranks of the uninsured swell, Maine is experimenting with universal access to affordable healthcare in a program called Dirigo. “The goal is to insure 31,000 people this summer and cover the state’s remaining 130,000 uninsured by 2009.” It’s a laudable effort that bears watching, although other state initiatives such as “pay or play” programs have met with limited success.

The issue of uninsured workers should be of great interest to risk managers and human resource practitioners, particularly in relation to workers comp. While there are few studies documenting the practice, conventional wisdom holds that medical cost shifting often occurs when workers lack insurance – the so-called “Monday morning” claims. The Workindex article suggests:

“Low employee morale and absenteeism could become issues … as well as false workers’ comp claims resulting from injuries an uninsured employee actually sustained outside the workplace, but didn’t have the health-care insurance to cover it.”

The healthcare situation is likely to get worse before it gets better. Recent reports indicate that healthcare costs continue to grow, but at a slower rate.

“Healthcare spending in the United States is projected to grow 7.8 percent in 2003, down from the 9.3 percent growth experienced in 2002, according to a report issued by the Centers for Medicare & Medicaid Services (CMS). A slowdown in health care spending growth in 2003 would follow six consecutive years of acceleration. As a percentage of Gross Domestic Product (GDP), healthcare spending is expected to continue to grow, reaching 15.3 percent in 2003, up from 14.9 percent in 2002, according to the report.”

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