Health Insurance Coverage Rises in 2012, Driven by Increase in Medicare Enrollment

The Census Bureau published new estimates of health insurance coverage showing improvements in coverage in 2012 compared with 2011. The percentage of Americans without health insurance declined 0.3 percentage points in 2012, falling from 15.7% to 15.4%. Most of the improvement was concentrated in the population under 35, especially among children. This is the second successive year of improvement in insurance coverage. In 2011 noncoverage fell 0.6 percentage points, declining from 16.3% to 15.7%. Noncoverage rates spiked in the Great Recession, increasing 1.6 percentage points between 2007 and 2010.

Following a pattern we have seen since the end of the economic expansion of the late 1990s, improvements in coverage were mainly traceable to government programs or government mandates. In 2012 government health insurance coverage rose 0.4 percentage points while employment-based coverage fell 0.2 percentage points. Since 2000 employer sponsored health insurance plans have provided coverage for a steadily declining percentage of the population. In 2000, 65.1% of Americans obtained coverage under an employer-sponsored plan; in 2012 only 54.9% of Americans were covered by employer plans.

Strikingly, the biggest boost in government-sponsored coverage was provided by the Medicare program, a purely federal insurance plan that offers coverage to the insured disabled and the population past 65. The fraction of the population receiving coverage under Medicare increased from 15.2% to 15.7%. Many of the 2012 gains in Medicare coverage were obtained by Americans under 65, indicating that a sizeable slice of the rise can be traced to enrollment increases in Social Security Disability Insurance. Although the drop in Medicare coverage in the population past 65 was not statistically significant, it is interesting that aged respondents to the Census survey reported slightly lower Medicare coverage rates in 2012 compared with 2011. In 2012, 92.6% of the population older than 65 reported obtaining coverage under Medicare, down from 92.8% in 2011 and 96.1% in 2012. Some of the aged who continue to work may prefer to receive coverage under their employer health plan rather than Medicare.

In spite of the slight drop in the Medicare coverage rate among the population past 65, the absolute number of Medicare enrollees in that population continued to rise, increasing an estimated 1.8 million between 2011 and 2012. Medicare enrollments will continue to surge over the next couple of decades because the large baby boom generation is now attaining age 65. This trend will gradually raise the percentage of Americans eligible for Medicare.

All of the gains in health coverage in recent years have been driven by increased enrollments in government insurance plans—mainly Medicaid and Medicare. In addition, many young adults have gained insurance coverage because of a government mandate that compels employer-sponsored plans to provide continued family coverage to dependents of insured employees until they reach their mid-20s. Because of nonemployment or meager earnings, young adults are among the most vulnerable to the risk that they will be uninsured. The government mandate has increased the percentage of these young people who can obtain coverage under their parents’ health plans.