Employment-based health insurance for children: why did coverage increase in the mid-1990s?

Abstract

Between 1994 and 1997 the percentage of children covered by an employment-based health plan increased from 58.1 percent to 59.7 percent, after years of a steady erosion in coverage. As a result of the increase in the percentage of children with employment-based coverage and population growth, 1.8 million more children were covered by an employment-based health plan in 1997 than in 1994. The percentage of adults, both working and nonworking, covered by an employment-based health plan remained virtually constant over this period. The increase in the percentage of children with employment-based coverage is important to understand, for a number of reasons. First, policymakers and others have been puzzled by the overall increase in the number of uninsured persons during the recent period of strong U.S. economic growth. For example, a recent study found that fewer small employers offered health benefits in 1998 than in 1996 but was unable to explain why offer rates have fallen. This paper presents evidence that the strong economy is having a positive effect on health insurance coverage for children.