Private Health Insurance in Michigan, 2008 to 2011

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).

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.
The economic recession from 2007 to 2009 contributed to the decline, as did the rising cost of health insurance premiums.3 4The 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

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: Proportion of the Population with Private Insurance, ESI and Individual Plans, U.S. and Michigan, 2008–2011

	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

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

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

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

From 2008 to 2011, more than 340,000 people in Michigan with incomes above 400 percent of the federal poverty guideline (FPG)7 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 significant8 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.9

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

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

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.

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