Explaining Trends in Health Insurance Coverage Between 1988 and 1991

This paper uses regression-based decompositions to examine the downward trend in insurance coverage between 1988 and 1991. I find that falling family incomes account for much of the decline in overall insurance coverage, while a secular decline in insurance coverage across all industries, firm sizes, employment statuses, income levels, and demographic groups accounts for most of the decline in employer-sponsored insurance among workers. Rising unemployment and changing patterns of industrial employment explain little of the decline in coverage across the entire population. Taken together, these results suggest that fewer employers are offering health coverage, workers are finding it difficult to pay their share of the premiums, and those without access to employer-sponsored plans are finding it harder to purchase nongroup insurance. Thus, it appears that the rising cost of health insurance coupled with falling incomes and profits during the recession account for the fall in health insurance coverage between 1988 and 1991.