As the economy continues to shift towards more service-oriented jobs, a new report indicates that the number of Americans with job-related health benefits declined to 63% from 67% between 2001 and 2003.

The study, based on a national survey of 46,600 people under the age of 65, also highlights the erosion in employer-sponsored health coverage caused by a sluggish economy and rapidly rising health-insurance premiums. During the economic boom of the late 1990s, the percentage of Americans with health benefits tied to their jobs rose modestly.

While sluggish job growth drove most of the decline in coverage, it was compounded by a roughly 28% increase in health-insurance costs over the same two year period, according to the Center for Studying Health System Change. Primarily funded by the Robert Wood Johnson Foundation, the Washington-based independent policy research group also said that the survey indicated that families with at least one worker in the family dropped to 81.4% from 84.2%.

Large Shift In Coverages

The decline in coverage represents one of the largest shifts in employer health-care coverage in recent years.

According to the Center, the recession and then a largely jobless economic recovery over the two-year period in the survey caused much of the decline.. Some families surveyed had a worker with only a part-time job; part-time work is much less likely to offer health benefits.

Confirming a trend spotted in other studies, most notably Small Business Digest’s Fall and Sprint surveys, employers didn't drop health-care coverage on a grand scale. But some made health-care benefits less attractive or more expensive for some low-income employees, through stricter eligibility criteria and higher premium contributions, especially for dependents. The decline in employees electing to take health coverage from an employer was most notable among young adults, falling to 89.9% in 2003 from 91.4% in 2001.

According to the Center’s director, the early 1990’s were the last time the U.S. saw such a decline in employer coverage caused primarily by an economic recession combined with soaring health-care costs. The result was the rise of managed care, which brought health-care costs under control and helped to somewhat expand coverage to more people. Given the tighter restrictions on options, consumers pushed back against the system's tight restrictions on care.

The study does not take into account the newly available Health Savings Accounts (HSAs).