September 25, 2013

Private Health Insurance in Michigan, 2008 to 2011

Cover Michigan 2013

[Revised with minor corrections in the appendix to reflect ties in the rankings, on October 1, 2013.]

Introduction

More than 500,000 people in Michigan lost their private health insurance from 2008 to 2011. The primary reason for the decline in private insurance in Michigan and in the nation was the erosion of employer-sponsored insurance (ESI), the most common way that Americans get private coverage.

From 1999 to 2011, the proportion of individuals covered by ESI decreased by approximately 15 percent nationwide.1 In Michigan during that time, the percentage of people with ESI fell by 20 percent, the second greatest reduction among all states, exceeded only by South Carolina.2 In spite of these declines, in 2011 the proportion of people covered by employer-sponsored plans in Michigan remained 4.5 percentage points higher than the national average, in part because a larger percentage of employers in Michigan have historically offered health insurance.

This issue brief describes trends in private health insurance coverage in Michigan and the U.S., and focuses on coverage both by industry type and by income level. Key findings include:

  • The percentage of people with private coverage declined by more than 4 percentage points in both Michigan and the nation from 2008 to 2011. Reductions in the proportion of people with employer-based plans drove the overall decline in private coverage nationally and in Michigan, while the proportion of people with individually purchased coverage fell more slowly.
  • The percentage of employers offering health benefits fell by approximately 5 percentage points from 2008 to 2011 in Michigan and the U.S. However, a larger proportion of employers in several industries in Michigan offered benefits in 2011, compared to the national average, including manufacturing, agriculture, and construction.
  • In Michigan from 2010 to 2011, approximately 55,000 low-income people aged 18 to 25 years gained or retained private insurance as a result of the Affordable Care Act (ACA).

1 State Health Access Data Assistance Center (SHADAC). 2013. State-Level Trends in Employer-Sponsored Health Insurance. SHADAC Report. (Minneapolis, MN: University of Minnesota). http://www.shadac.org/files/shadac/publications/ESI_Report_2013.pdf (accessed 6/1/2013).

2 Ibid.

Trends in Private Insurance Coverage

From 2008 to 2011, Michigan had consistently higher rates of private insurance coverage than the United States overall. However, the proportion of people with private coverage declined during that time by 4.7 percent in Michigan and by 4.4 percent nationally. By 2011, 68.5 percent of people in Michigan had private coverage, down from 73.2 percent in 2008. Nationally, the proportion of people with private coverage fell from 69.8 percent in 2008 to 65.4 percent in 2011. Figure 1

The economic recession from 2007 to 2009 contributed to the decline, as did the rising cost of health insurance premiums.3,4 The most rapid decline in coverage was from 2008 to 2009, with a drop of 3.1 percentage points in Michigan and 2.2 percentage points nationally. In the following two years, private coverage declined more slowly.5

Figure 1
Proportion of the Population with Private Insurance, U.S. and Michigan, 2008–2011

Figure 1

Source: CHRT, using American Community Survey (SHADAC) data, 2013

Private insurance can be directly purchased by individuals or can be provided through an employer-sponsored plan. From 2008 to 2011, most people with private insurance received coverage as a benefit of employment. Reductions in the proportion of people covered by ESI during those years drove the overall declines in private coverage. The decline of ESI is due in part to reductions in the number of employers who offer health benefits, as well as increasing numbers of part-time workers, who may not be eligible for benefits. Affordability may also be a factor, as fewer workers enroll in employer-sponsored plans due to cost sharing, and more people are unemployed.6 Although the proportion of people with ESI declined faster in Michigan (5.1 percentage points) than in the nation overall (3.9 percentage points), the proportion of people enrolled in employer-sponsored plans remained higher in Michigan in 2011 than in the U.S.

The proportion of people with individually purchased coverage did not change as much as did employer-sponsored coverage between 2008 and 2011. Individual coverage fell by only 1.9 percentage points in the nation and by 0.7 percentage points in Michigan. In 2008, 14.1 percent of the population bought insurance individually in the U.S. and 12.9 percent did so in Michigan. In 2011, 12.2 percent of people nationally and in Michigan purchased coverage in the individual market. Figure 2

Figure 2
Proportion of the Population with Private Insurance, ESI and Individual Plans, U.S. and Michigan, 2008–20117

  Overall Private Health Coverage Employer-Sponsored Insurance Individual Coverage
Year U.S. Michigan U.S. Michigan U.S. Michigan
2008 69.8% 73.2% 60.6% 65.1% 14.1% 12.9%
2009 67.6% 70.1% 58.5% 61.7% 13.1% 12.6%
2010 66.0% 68.9% 56.9% 60.5% 12.7% 12.5%
2011 65.4% 68.5% 56.7% 60.0% 12.2% 12.2%

Source: CHRT, using American Community Survey (SHADAC) data, 2013

3 America’s Health Insurance Plans. Rising Health Care Costs. http://www.ahip.org/Issues/Rising-Health-Care-Costs.aspx (accessed 6/1/13).

4 Paul Fronstein. 2012. Sources of Health Insurance and Characteristics of the Uninsured: Analysis of the March 2012 Current Population Survey (Washington, D.C.: Employee Benefit Research Institute). http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=5114 (accessed 6/1/13).

5 State comparison tables displaying 2008 and 2011 rankings based on the percentage of privately insured residents and the percentage of residents with ESI are available in the Appendix.

6 Elizabeth Mendes. February 14, 2012. Fewer Americans Have Employer-Based Health Insurance. Gallup News website. http://www.gallup.com/poll/152621/fewer-americans-employerbased-health-insurance.aspx (accessed 6/1/2013).

7 The sum of employer-sponsored insurance and individual coverage do not equal overall rates of private insurance due to double counting, likely as a result of survey respondent error.

Employer-Sponsored Insurance by Industry

In 2008, 56.9 percent of businesses in Michigan offered employees, and often their dependents, insurance coverage. By 2011, only 52.1 offered such coverage. The proportion of employers offering coverage declined more rapidly between 2008 and 2010 in Michigan than in the nation, causing Michigan to fall below the national average in 2009 and 2010 in terms of the percentage of employers offering health insurance coverage. In 2011, this trend reversed, with 52.1 percent of Michigan employers offering coverage compared to 51 percent nationally. Figure 3

Figure 3
Percent of Employers that Offer ESI, U.S. and Michigan, 2008–2011

Figure 3

Source: CHRT, using Medical Expenditure Panel Survey data, 2013

In 2011, a larger proportion of Michigan employers in several industries offered ESI than employers in these industries nationally. The largest differential between Michigan and national employers was in the agriculture, fishing, forestry, and construction industries: 40.2 percent of Michigan employers in these industries offered health benefits in 2011, compared to 35.2 percent of such employers nationally. A similar differential existed in the mining and manufacturing industry, which includes the auto-manufacturers. A larger percentage of employers in the retail and service industries in Michigan also offered benefits in 2011, compared to such employers nationwide. However, the proportion of Michigan employers in professional services and all other industries offering benefits was lower than the national average in those industries. Figure 4

Figure 4
Percentage of Private Sector Businesses Offering Health Insurance by Industry Type, U.S. and Michigan, 2011

Figure 4

Source: CHRT, using Medical Expenditure Panel Survey data, 2013

Private Health Insurance by Federal Poverty Guideline

From 2008 to 2011, more than 340,000 people in Michigan with incomes above 400 percent of the federal poverty guideline (FPG)8 lost private insurance coverage, accounting for nearly two-thirds of those who lost private insurance statewide during this time. Over one-third of those who lost private coverage had an income between 201 and 400 percent of the FPG (nearly 190,000 people). Less than 5 percent of the total decline in private coverage was among individuals with an income between 139 and 200 percent of the poverty guideline.

People in Michigan whose income was below 138 percent of the FPG experienced a significant9 increase in private coverage (1.3 percentage points) between 2008 and 2011. This low-income group experienced both gains and losses in private coverage in recent years, but the overall gain in 2011 is attributable to the ACA provision that allowed young adults up to age of 26 to be covered by their parents’ insurance plans beginning in 2010. In Michigan, nearly 97 percent of those who gained private coverage in this income bracket were aged 18 to 25 years (approximately 55,000 people). Prior to this policy change, a large proportion of young adults were uninsured, particularly those who were low income.10 Figure 5 & Figure 6

Figure 5
Private Health Coverage in Michigan, by Federal Poverty Guideline, 2008–2011

  Number Privately Insured (in thousands) Percentage Privately Insured
Year 0–138% FPG 139%–200% FPG 201%–400% FPG 401+ FPG Total 0–138% FPG 139%–200% FPG 201%–400% FPG 401+ FPG
2008 935 682 2,479 3,056 7,153 13.1% 9.5% 34.7% 42.7%
2009 954 751 2,430 2,690 6,826 14.0% 11.0% 36.0% 39.0%
2010 925 675 2,392 2,666 6,658 14.0% 10.0% 36.0% 40.0%
2011 951 657 2,293 2,712 6,613 14.4% 9.9% 34.7% 41.0%

Source: CHRT, using American Community Survey (SHADAC) data, 2013

Figure 6
Distribution of Individuals Who Lost Private Health Insurance 2008–2011, by Federal Poverty Guideline, Michigan

Figure 6

Source: CHRT, using American Community Survey (SHADAC) data, 2013

8 The Federal Poverty Guideline is the poverty threshold used by the Department of Health and Human Services to determine eligibility for federal programs. It is often used interchangeably with the Federal Poverty Level, which is based on a slightly different calculation and used primarily for statistical purposes.

9 Significant at a confidence interval of 95 percent.

10 Sara R. Collins, Ruth Robertson, Tracy Garber, and Michelle Doty. June 2012. Young, Uninsured and in Debt: Why Young Adults Lack Health Insurance and How the Affordable Care Act is Helping, Publication 1604, Vol. 14 (Washington, D.C.: The Commonwealth Fund). http://www.commonwealthfund.org/Publications/Issue-Briefs/2012/Jun/Young-Adults-2012.aspx (accessed 6/1/13).

Conclusion

From 2008 to 2011, both the percentage of people with employer-sponsored plans and the proportion of business offering benefits declined in the U.S. and Michigan, driving overall reductions in private coverage rates. Despite declines, in 2011 the proportion of employers offering benefits in Michigan remained higher than the national average. In Michigan, declines in private coverage were partially offset from 2010 to 2011, when approximately 55,000 people between 18 and 25 years gained or retained private coverage as a result of provisions in the ACA. With full implementation of the ACA in 2014, subsidies for individuals with incomes between 100 and 400 percent of the FPG will help make private coverage more widely available at all income levels.

Appendix

Figure A-1
State Comparisons: Percent Privately Insured, All Ages 2008–2011

Rankings (1=high, 51=low)

2011 Rank 2008 Rank State % Privately Insured 2011
1 2 North Dakota 79.1
2 1 Hawaii 77.7
3 6 New Hampshire 76.6
4 4 Minnesota 76.0
5 5 Iowa 75.8
6 3 Massachusetts 74.9
7 9 Virginia 74.7
8 10 Maryland 74.5
9 7 Nebraska 73.9
10 7 Connecticut 73.4
11 14 Utah 73.0
12 12 Kansas 72.8
13 16 South Dakota 72.6
14 13 Pennsylvania 72.1
15 11 Wisconsin 71.6
16 15 Rhode Island 71.3
16 19 Wyoming 71.3
18 17 New Jersey 71.2
19 18 Delaware 70.2
20 27 Vermont 69.7
21 24 Colorado 69.6
22 30 District of Columbia 69.5
23 20 Washington 69.3
24 21 Ohio 69.0
25 22 Michigan 68.5
26 25 Missouri 68.3
27 29 Idaho 68.1
28 23 Indiana 67.9
29 26 Illinois 67.1
30 31 Maine 66.0
31 34 Montana 65.8
32 27 Oregon 65.7
33 33 Alabama 65.3
34 32 New York 65.0
35 38 Alaska 64.9
36 37 North Carolina 64.0
37 38 Kentucky 63.7
38 35 Tennessee 63.5
39 36 Nevada 63.0
40 40 South Carolina 62.5
41 42 Georgia 62.0
42 41 West Virginia 61.8
43 44 Oklahoma 61.5
44 43 California 60.3
45 46 Arizona 59.2
46 48 Arkansas 58.9
46 47 Louisiana 58.9
48 45 Florida 57.7
49 50 Texas 57.6
50 48 Mississippi 56.2
51 51 New Mexico 53.7
    United States 65.4

Source: CHRT, using American Community Survey (SHADAC) data, 2013

Figure A-2
State Comparisons: Percent Privately Insured, Employer-Based Only, All Ages, 2008–2011

Rankings (1=high, 51=low)

2011 Rank 2008 Rank State % Employer Based 2011
1 1 Hawaii 71.5
2 4 New Hampshire 68.6
3 3 Maryland 66.8
4 5 Virginia 66.6
5 2 Massachusetts 65.9
6 6 Connecticut 64.8
7 7 Delaware 64.1
7 9 New Jersey 64.1
9 11 Utah 64.0
10 10 Minnesota 63.8
11 14 Iowa 63.0
12 25 District of Columbia 62.5
13 12 Rhode Island 62.3
14 7 Wisconsin 62.2
15 17 North Dakota 61.5
16 20 Alaska 61.4
16 15 Kansas 61.4
16 13 Ohio 61.4
16 24 Wyoming 61.4
20 17 Pennsylvania 61.2
21 30 Vermont 60.7
22 16 Michigan 60.0
23 19 Nebraska 59.9
24 20 Indiana 59.7
25 22 Washington 59.6
26 28 Colorado 58.8
27 23 Illinois 58.7
28 27 Missouri 58.6
29 36 South Dakota 58.1
30 29 New York 57.6
31 33 Maine 56.8
31 26 Nevada 56.8
33 31 Alabama 56.4
34 31 West Virginia 56.1
35 34 Kentucky 55.6
36 41 Idaho 55.1
37 40 Georgia 54.8
38 38 North Carolina 54.6
39 39 South Carolina 54.4
39 36 Tennessee 54.4
41 35 Oregon 54.0
42 43 Oklahoma 53.5
43 42 Montana 52.7
44 44 California 51.4
45 45 Texas 51.2
46 45 Arizona 50.4
46 48 Louisiana 50.4
48 50 Arkansas 49.7
49 47 Florida 48.0
50 49 Mississippi 47.4
51 51 New Mexico 46.7
    United States 56.7

Source: CHRT, using American Community Survey (SHADAC) data, 2013


Suggested Citation: Hammoud, Abdullah; Dreyer, Theresa; Baum, Nancy; and Udow-Phillips, Marianne. Private Health Insurance in Michigan, 2008 to 2011. Cover Michigan 2013. September 2013. Center for Healthcare Research & Transformation. Ann Arbor, MI.