For Immediate Release

Employer-Based Health Care Coverage Eroding For Working Families And Their Children, Two Independent Studies Conclude

Reports Analyze Children's Health Insurance Trends and Efforts to Expand Employer-Based Health Coverage to U.S. and California Workers and Their Children

LOS ANGELES (September 22, 2005) - Employer-based health care coverage for dependent children has eroded significantly over the past five years and without immediate action, the trend will likely continue well into the future, according to a report released today by the UC Berkeley Center for Labor Research and Education and Working Partnerships USA. A second report, released by The Economic and Social Research Institute, issues a similar warning, particularly for lower-income households and examines strategies to expand job-based coverage.

According to the reports, compiled separately over different periods of time, increasing health premiums are eroding dependent coverage nationwide, with projections of less than 50 percent job-based coverage in California for children in five years. While job-based dependent coverage is falling for all income levels, the sharpest drops are in low and moderate-income families.

"Up to now, the sharp decline in employer based coverage for dependent children has been offset by increased enrollment in public programs," said UC Berkeley researcher Arindrajit Dube. "The unraveling of employer-based coverage for dependent care threatens to reverse the recent gains in children's health care coverage."

The first study, Kids at Risk, compiled by researchers from the UC Berkeley Center for Labor Research and Education and Working Partnerships USA, found that job-based health coverage has eroded significantly in recent years due to increasing premium rates. Without immediate action the trend will continue, and by 2010 less than half of California's children will be insured through a parent's employer. For families in the lower half of the income spectrum, only slightly more than one-quarter of children will be covered through a job. As a result, in a six-year span, 280,000 fewer California kids will have health coverage and 470,000 more will be enrolled in a public program (Medi-Cal or the state's children health insurance program Healthy Families).

"The threats to the American health care system are quickly moving from a tropical storm to a Category 4 hurricane. Some children are being rescued by enrolling in public programs but many are still awaiting help" said Phaedra Ellis-Lamkins, Executive Director of Working Partnerships USA.

Authors of Kids at Risk note that this represents a significant shift of health care costs from employers to working families and the public sector, and that new state funding will be required to cover the cost of increased enrollment into public health programs.

The second report, Current Strategies to Expand Dependent Health Coverage by researchers at The Economic and Social Research Institute, examined federal, state, private sector and community-based strategies to expand job-based coverage for workers and their children. The report cites that the decline in employer-sponsored health coverage is highly linked with the rising cost of health coverage ­ which has substantially outpaced the rise in wages. As a result, workers are increasingly opting out of their employer's coverage program because they simply cannot afford their share of the cost of rising premiums.

While the report finds no one option offers a "magic bullet" to solve the problem of uninsured children, it does provide a number of "lessons learned" to help shape future efforts, including (1) premium subsidies, such as tax credits or other forms for lower-income workers must be sufficient to make health coverage affordable; and (2) the health benefits offered to employees must be considered worthwhile because enrollment in "bare bones" health plans has been disappointing.

Researchers found that the drop in job-based coverage is mostly attributed to low-income families opting out of their employer's coverage program because they can't afford their share of the cost of the rising premiums. The number of uninsured, the report forecasted, will rise nationwide from 45 million to 56 million by 2013.

"Despite the best efforts on the part of many employers, health care coverage for their employees continue to decline, due in large part to the skyrocketing costs of providing health care coverage," said Scott Hauge, President of Small Business California. "Each of these reports confirms that employers and employees are struggling along side each other to keep up with the rising costs of health insurance premiums. California, like the rest of the country, has a lot of work ahead if it intends to make sure that residents have affordable health care coverage, particularly for our children and those most vulnerable among us."

Each of the reports pointed to significant gains made during the late 1990's through 2004. In California's case, for example, the UC Berkeley/Working Partnerships USA report found that health care coverage for children jumped from 83 percent to 88 percent, besting the national average by 4 percent during the same period (88 percent to 89 percent). For children in families below 100 percent of the Federal Poverty Level, coverage increased by 10 percentage points, 4 percentage points for children in households falling between 100 and 200 percent FPL, and 5 percent for children between 200 and 300 percent FPL. Both reports point to an expansion of public coverage, namely states' Children's Health Insurance Programs (SCHIP), known as the Healthy Families Program in California, as one of the principle reasons to help offset the decline in employer-based health care coverage.

"These reports are eye-opening, and represent a clarion call for action to ensure health care coverage for all of our children," said Robert K. Ross, M.D., a pediatrician and President and CEO of The California Endowment. "While there is no doubt that much progress has been made, working parents deserve the peace of mind to know that their children have health care coverage when they need it. We must find a way to cover California's kids."

Date from the two studies support serious concerns expressed by business leaders in a series of meetings hosted by The California Endowment and United Ways' Covering California's Children Initiative, a project of seventeen local United Ways. In all, more than 60 business leaders, ranging from sole proprietors to Fortune 500 companies participated in meetings held throughout the state in June and July of 2005. Based on a recently-released summary of the meetings, business leaders concluded that providing health care for all children is the right thing to do and they want to be a part of the solution. And business leaders aren't alone.

A recent survey conducted by Fairbanks, Maslin, Maullin and Associates for The California Endowment concluded that 78 percent of Californians support finishing the job to cover California's kids. And a broad based coalition of business groups, educators, health care professionals and faith-based organizations have come together to push for covering California's children.

A complete copy of both the UC Berkeley/Working Partnerships USA Report and ESRI Study, in addition to the employer report and polling information can be downloaded in PDF format at www.covercaliforniaskids.org.

The California Endowment was established in 1996 to expand access to affordable, quality health care for underserved individuals and communities, and to promote fundamental improvements in the health status of all Californians. The Endowment makes grants to organizations and institutions that directly benefit the health and well-being of the people of California. For more information, visit The Endowment's Web site at www.calendow.org.

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