A weak economy, an increased reliance on part-time workers and a rise in the cost of health insurance contributed to the overall decline in the percentage of people under age 65 who received employer health care coverage from 66.8 percent in 2000 to 62.4 percent in 2004.
Health insurance coverage rates declined for both part-time and full-time employees, though a full-time worker was three times more likely to have health insurance. The percentage of covered full-time employees ages 18 to 64 dropped to 61.5 percent in 2004 from 64.4 percent in 2000. The percentage of part-time workers without health insurance dropped to 18.6 percent from 19.6 percent.
"When you shift workers from full-time to part-time work, because the part-timers are less likely to have coverage, that exacerbates the rate of coverage falling across the board," says Paul Fronstin, a senior research associate at the institute.
Nearly all large employers offer full-time employees health coverage. Large companies with 500 or more people, however, increased their reliance on part-time workers between 2000 and 2004, adding to the overall drop in coverage. The trend is unusual because the percentage of part-time workers tends to decrease as businesses get larger.
Analysts believe that large companies relied more heavily on part-time workers because unemployment rates were high, something that will change as the labor market tightens.
"Part of the increase of part-time workers is a productivity thing," says Bob Goldberg, director of the Center for Medicine in the Public Interest, a health policy think tank that favors consumer-based health initiatives. "It’s a way of not having to pay other kinds of fringe benefits; there is a lot of cost shifting going on."
The distribution of part-time workers varied across industries. Manufacturing and service industries were the most likely to use part-time workers, whereas the number of part-time workers declined by 3 percent in the wholesale and retail industries, according to the report.
As the economy improves and the unemployment rate declines, competition for workers will likely increase full-time employment rates. In March, the unemployment rate was 4.7 percent, down from 5 percent at the end of the fourth quarter.
"Unemployment is now getting down to a level that employers, in order to retain more workers, will let them work more hours," Fronstin says.
Small businesses, however, will continue to struggle to provide health insurance for their workers, Fronstin says.
"The costs of health insurance are still going up. They’re just going up slower," Fronstin says.