Health insurance coverage and the kindness of strangers.

Health Affairs' May/June issue has an interesting article that show that workforce characteristics are a bigger influence on health care coverage rates than state health policies. Here's the journal's press release and summary:

Working In Communities With Greater Number Of ‘Advantaged’ Workers
Increases Likelihood Of Employer-Sponsored Coverage
BETHESDA, MD — Although there is wide variation across the country in the rate of employer-sponsored insurance, almost all of the variation can be accounted for by variation in individual demographic characteristics, employment characteristics, and a community effect, according to a new paper published today by Health Affairs and the California HealthCare Foundation.

Author Richard Kronick, a professor with the University of California, San Diego, and two colleagues use Current Population Survey data to demonstrate that community characteristics exert a strong “contextual effect” on employer-sponsored coverage. . . .

According to Kronick, all individual and job characteristics being equal, workers are more likely to receive employer-sponsored coverage in communities with a large proportion of high-income adults and greater numbers of manufacturing and public administration jobs, rather than those whose economy is weighted toward low-income adults, minority workers, and small-business jobs.

Kronick and colleagues conclude that the demographic characteristics of a community have more bearing on rates of employer-sponsored insurance (ESI) than do state policies aimed at reducing the number of uninsured, such as small-group market reform or elimination of benefit mandates.

“In almost all states the actual rate of ESI is within one or two percentage points of the level that would be expected based on demographic and employment characteristics and the contextual effect,” Kronick says.

“Other than Hawaii, there is very little that states have done to move the rate of ESI either substantially above or below the rate that would be expected based on the demographic and employment characteristics of the people who live in the state. The only effective action that any state has taken to substantially increase the level of ESI among workers is to require employers to offer insurance,” as Hawaii has, Kronick says.

The authors find that a worker with a given set of characteristics (age, race/ethnicity, income, family structure, size of employer, industry, health status, home ownership, and union membership) is 3.5 percentage points more likely to have employer-sponsored insurance if they live in a metropolitan area with a high-wage, high-skill economy than if the workers lives in an average metropolitan area.

“There is a strong contextual effect on coverage rates,” Kronick says. “Although there are wide variations across states in the rate of (employer-sponsored insurance), almost all of the variation can be accounted for by the combination of individual characteristics and the contextual effect.”

The authors offer three potential explanations for the “contextual effect”:

In areas where there are the types of workers who expect to have ESI (well-educated, higher-income, native-born Anglos), employers will be more likely to offer coverage. As a result, the search costs for a marginal worker to find a job offering insurance will be lower than in areas where there are fewer employers offering insurance

Total compensation, including ESI and other benefits, is more likely to higher in areas with larger numbers of higher-skilled workers

Workers in high-coverage areas may prefer to search longer for jobs with ESI, while workers in low-coverage areas may find it more acceptable to go without coverage

In other words, poorer and less urban states, with a less skilled workforce and fewer high-end and skilled jobs, can't do much to raise the rate of ESI, short of attracting more skilled jobs, more high-end employers, etc. And that means simultaneously granting tax breaks and spending more on improving public services, paying attention to public education and public health, all of which requires a stronger tax base. How does a comparatively poor state dig itself out of this hole?