Out On The Edge - The Lack of Health Insurance Benefits For Nonstandard Workers In Texas

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A 2005 Commonwealth Fund white paper reported on two important trends in the U.S. workforce - the increasing prevalence of workers in part-time, temporary, contract or non-standard positions, and the decline in access to employer-provided health insurance.

The fact that fewer and fewer individuals in Dallas, Houston and throughout Texas are covered by health insurance as well as the diminished quality of coverage brought about by higher copayments and deductibles has gotten a lot of attention. At the same time, there has been remarkably little attention paid to the status of nonstandard workers, who are particularly vulnerable because their employment status often excludes them from employer-based coverage. This increases their reliance on family members' policies, public coverage or leaves them without insurance completely.

Nonstandard workers currently make up approximately 25 percent of the nation's workforce, totaling 34.3 million workers. Part-time workers make up the biggest category within this group, followed by self-employed independent contractors and direct-hire temporary workers. Nonstandard workers also include on-call and day laborers, temporary help agency workers, independent contractors, and contract company workers.

While access to employer-sponsored health insurance is on the decline for all workers, it is an especially serious problem for nonstandard workers. A recent study showed that 74 percent of standard workers have health insurance through their jobs, compared to only 21 percent of nonstandard workers. Because of this disparity, nonstandard workers are thought to be uninsured at twice the rate of standard workers. Nonstandard workers also rely on government insurance at five times the rate of regular workers and are insured through a spouse's health insurance plan at three and one-half times the rate of regular workers.

In addition to being less likely to be offered employer-sponsored health insurance, nonstandard workers are also less likely to take up employer-sponsored coverage when it is available. About 87 percent of regular full-time workers are offered health insurance, compared with only 40 percent of nonstandard workers. Among those nonstandard workers who are eligible for employer-based plans, only 54 percent choose them, while the selection rate for standard workers is 85 percent. Nonstandard workers who turn down coverage said it was either because they had coverage through another source or because the plan was too expensive.

Families of nonstandard workers are also affected by their spotty insurance coverage. Only 15 percent of children and 16 percent of spouses of nonstandard workers have health insurance through the nonstandard worker's employer. In fact, standard workers' children and spouses were covered by the spouse's employer at three times the rate that they were covered by the nonstandard worker's employer. Almost one in five family members of nonstandard workers was uninsured (18% of children and 16% of spouses). A significant share - 10 percent of children and 6 percent of spouses - relied on public health insurance for coverage.

Because of the rising cost of health insurance, some employers and individuals - both nonstandard workers and regular employees - are turning to low-cost products like high-deductible health insurance plans, limited benefit health insurance and medical discount cards. While these options are typically more affordable than comprehensive health insurance, coverage is limited. A recent Iowa Policy Project (IPP) Survey of Fringe Benefits and Nonstandard Work found that 18 percent of nonstandard workers had discount cards, but no insurance coverage. However, almost all these workers mistakenly reported that their discount card was a health insurance policy. This has led to suggestions that rates of uninsurance may actually be underestimated.

The Iowa report concludes that improving access to health coverage for nonstandard workers will require addressing three issues: regulating employer-employee relationships to ensure that nonstandard workers enjoy the same individual and collective rights as conventional employees; strengthening the foundation of employment-based health insurance, making it easier for employers to offer coverage and workers to afford it; and expanding alternatives to employment-based coverage.

Current policymakers need to start identifying the obstacles facing the uninsured and underinsured, as well as each individual's potential for eligibility, according to income, job tenure, or firm size. It's going to be a formidable task to provide nonstandard workers with access to group-based insurance - by increasing access to conventional job-based coverage, creating new health insurance purchasing pools, or by expanding individual health insurance alternatives.

Although most individuals are covered under employment-based coverage, there's no requirement that employers provide it. Most employers - especially those with fewer employees' have strong reasons to avoid taking on the health insurance burden. Some small business employers have responded to rising health insurance costs by shifting more coverage costs to employees or dropping coverage altogether.

Pat Carpenter writes for Precedent Insurance Company. Precedent puts a new spin on health insurance. Learn more at Precedent.com

Out On The Edge - The Lack of Health Insurance Benefits For Nonstandard Workers In Texas

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