In 1990, almost two-thirds of all Americans under age 65, an estimated 138.7 million people, were covered by employment-based health benefits (see Table 1.1, Chapter 1). This group was about evenly split between those who received coverage directly from their employer and those who received it indirectly through a family member. Analyses from the Rand Corporation using March 1988 CPS data indicate that 11 percent of those eligible for direct employer coverage turn it down because they have other coverage and only 2 percent decline coverage without having other coverage (Long and Marquis, 1992). Many employers require employee participation unless the employee has other coverage.

In 1990, only 9 percent of the nonelderly had private insurance that was not employment based; another 14 percent were covered by Medicaid or some other public program. Virtually all of the elderly are covered by Medicare, although—as discussed below—some have supplemental benefits from a former employer. For the relatively small percentage of those aged 65 through 69 who are employed, federal law requires that any employment-based health benefits serve as primary coverage.

Employment-based coverage is most common for full-time, full-year workers (Table 3.1). Among individuals aged 18 to 64 who were working on a full-time, full-year basis in 1990, some 70 percent had employment-based coverage directly from their own employer, former employer, or union, and another 10 percent of this group received such coverage indirectly through a family member. In contrast, among those who worked on a part-time, full-year basis, only 22 percent reported direct employment-based coverage, whereas 38 percent reported indirect coverage. Among nonworkers aged 18 to 64, just over 40 percent had employment-based coverage, and, not surprisingly, most of this coverage was indirect, although some nonworkers have coverage through former employers. Almost one-third of this group, moreover, had coverage through Medicaid or some other public program.

Virtually all organizations that offer coverage to employees also offer coverage to family members, although such coverage is less likely than individual coverage to be fully financed by the employer. In 1990, in addition to nonemployed adults with indirect coverage, about 60 percent of children received employment-based coverage indirectly through a family


the term for purposes of allowing deductions and exemptions on personal income tax returns. However, individuals eligible for health benefit coverage are not always dependents (as defined by the IRS), and dependents are not necessarily eligible for coverage. Two examples illustrate these points. On the one hand, a small number of employers have expanded access to health benefits by extending coverage to domestic partners, some covering only same-sex partners and others covering both same-sex and opposite-sex partners (Schachner, 1992). On the other hand, some states have mandated coverage for individuals who clearly qualify as dependents (e.g., newborns) but who have sometimes been excluded from conventional insurance plans. Table 3.5 shows categories of eligibles mandated by some states.

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