Health insurance, 1979-1989: the frayed connection between employment and insurance.

Using data from the Current Population Survey, this article shows that low-income workers were much less likely to have employer-sponsored insurance in 1989 than they were in 1979. For example, workers earning $6.00 per hour in 1989 were over 10 percentage points less likely to have employer sponsored health insurance than were workers earning $3.51 per hour in 1979 (the constant dollar equivalent of $6.00 per hour in 1989). The decline in employer sponsored coverage was confined to low income workers; coverage levels did not decline for workers earning $30,000 per year and more. The paper explores two types of explanations for the decline in coverage among low-income workers. First, the decline might have resulted from increases in the price of medical care, the cost of administering health insurance, and from a breakdown in the small group insurance market. Second, the decline might have resulted from changes in the structure of the economy that changed the types of jobs available to low-income workers. Since coverage declines among the self-employed parallel coverage declines among the employed, it seems likely that increases in the price of health insurance are a larger part of the cause for coverage declines than are changes in the structure of the economy, but further research on this question is needed.