Number of the Week: As Mandate Looms, Millions Turn Down Health Insurance

By Ben Casselman22.5 million: The number of American workers that have access to health benefits from their employer but don’t accept them.

In recent months, public attention on the Affordable Care Act(better known to some as “Obamacare”) has tended to focus on two elements of the law: the employer mandate and health insurance exchanges.

The employer mandate requires that most companies offer health insurance to full-time employees. It was originally meant to take effect next year, but the Obama administration recently announced it would delay implementing the rule for another year.

The delay turned attention back to the so-called individual mandate, which requires that all Americans have health insurance starting next year or pay a penalty. Those who can’t get insurance through their employers will be able to buy it through government-run marketplaces known as “exchanges,” which are now being set up across the country.

But not all the uninsured will need to turn to the exchanges for coverage. According to data released by the Labor Department this week, the “take-up rate” on employer-provided health insurance was 75% in March. That means that one out of every four workers who was offered coverage—some 22.5 million people—turned it down.

Not all those workers are uninsured. Many of them likely receive coverage through a spouse or parent’s employer or through a government program such as Medicare or Medicaid. According to Census data, 82.6% of Americans (including children and retirees) had health insurance in 2010, four-fifths of them through private sources.

Nonetheless, there’s little doubt that some of the nation’s 45 million uninsured adults lack coverage because they’re turning down benefits offered by their employers. So it’s worth looking at who’s opting out and why. The answer in a nutshell: The people who are turning down insurance are poor. And the insurance they’re turning down is expensive.

Nationally, 75% of workers who are offered health insurance accept it, and the employer covers 81% of the premiums. But those are national averages. Benefits tend to be more generous in the public sector, for example, with the employer covering 87% of premium costs. The same goes for union jobs. No surprise, then, that the take-up rate for health insurance tops 80% in both categories.

Where are take-up rates particularly low? Only 69% of employees in sales positions accept health benefits, and only 61% of private-sector service workers. Both groups also happen to shoulder a bigger share of premiums. The disparity is even clearer among part-time workers: Only 54% of part-timers accept benefits, likely in part because they have to cover 28% of the premium costs. (Part-time workers also tend to be younger, and therefore may be more willing to go without insurance.)

The group least likely of all to accept benefits: Low-wage workers. Of those with wages in the bottom 10%—those earning $ 8.75 per hour or less—just half accepted benefits; those who did had to cover 29% of premium costs.

And those costs are substantial. The government hasn’t yet put its 2013 data into dollar terms. But in 2012, workers with wages in the bottom 10% paid $ 125.85 per month on average for individual coverage, 21% more than workers in the top 10%. The difference is even starker for family coverage: $ 574.55 per month for low-wage workers, 47% more than the $ 389.76 paid by workers in the top 10%. Put in terms of hours, it takes workers at the bottom of the earnings spectrum more than 65 hours of work to pay for a month of family health coverage, versus less than 10 hours for those at the top.

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