American Consumers Newsletter

by Cheryl Russell, Editorial Director, New Strategist Press
November 2004

The Real Story about Health Insurance

1. Hot Trends: THE REAL STORY
3. Cool research links: PRESCRIPTION
4. New this fall:



Thirty-four percent of Americans have a gun in their home, down from 46
in 1974.


The Real Story about Health Insurance

A few weeks ago, the Census Bureau released its latest report on the health
insurance status of Americans, and the news is not good. The number of
without health insurance grew by more than 5 million between 2000 and 2003.
Today, 16 percent of the population–or 45 million people–do not have health

Behind the rise in the number of uninsured Americans are the failings of
our employment-based health insurance system. The number of people covered
by employment-based health insurance fell by 3.8 million between 2000 and 2003.
Today, only 60 percent of the population has health insurance through their
own or a family member’s employer.

Many blame stingy employers for our health insurance woes, but that’s only
one side of a complex story. Here’s how the plot unfolds:

1. Most of the uninsured are working-age adults. Of the 45 million Americans
without health insurance, 81 percent are aged 18 to 64, according to the Census
Bureau’s 2003 Current Population Survey.

2. Most of the uninsured have jobs. The 59 percent majority of the uninsured
worked in 2003. Nearly half–46 percent–had full-time jobs.

3. Employers are more likely to provide health insurance coverage today than
they were ten years ago. The percentage of private-sector employers offering
health insurance benefits rose from 49 to 58 percent between 1992-93 and 2003,
according to the Bureau of Labor Statistics (see ” Medical and Retirement
Plan Coverage: Exploring the Decline in Recent Years,” by William J. Wiatrowski, Monthly
Labor Review,
August 2004; ).

4. The 42 percent of firms that do not provide health insurance for their
employees are a big part of the problem. Firms that do not provide health insurance
benefits employ 60 percent of uninsured workers, reports Harvard economist
David M. Cutler in a National Bureau of Economic Research study (see “Employee
Costs and the Decline of Health Insurance Coverage,” NBER Working Paper
9036, ).

5. But they are not the only problem: Many workers do not participate in
their employer’s plan. Cutler’s research shows that 20 percent of uninsured
workers declined to participate in the plan available to them. (The remaining
20 percent are not eligible for the health insurance provided by their firm,
primarily because they work part-time.)

6. Worker participation in employer-provided health insurance is declining.
Among workers with access to an employer’s health care plan, only 75 percent
chose to participate in 2003, down from 85 percent in 1992-93, according to
the Bureau of Labor Statistics.

7. Participation is dependent on earnings. Among workers earning less than
$15 per hour, only 69 percent participate in their employer’s health insurance
plan. The participation rate is 82 percent for workers earning $15 per hour
or more, according to the Bureau of Labor Statistics.

8. Most of the decline in employer-provided health insurance coverage over
the past decade stems from the falling employee participation rate. According
to Cutler’s research, the falling participation (or take-up) rate accounts
for 61 percent of the decline.

9. Employee contributions for health care coverage rose 75 percent between
1992-93 and 2003, much faster than the 27 percent rise in the overall cost
of living during those years, according to the Bureau of Labor Statistics.
In 2003, 78 percent of private-sector employees were required to contribute
an average of $60.24 per month for individual health care coverage. For family
coverage, 90 percent of employees were required to contribute an average of
$228.98 per month (see Employee Benefits in Private Industry;

10. Employee participation falls as health care contributions rise. ” Each
$10 increase in the monthly cost of a family policy,” says Cutler, ” lowers
the take-up rate by about 0.4 percentage points.”

Our employment-based health insurance system is breaking down because it
depends on the voluntary participation of employers and employees. As costs
rise, both can opt out of the system, leaving the rest of us to pick up the
tab while health care providers raise fees to cover the uninsured.

By Cheryl Russell, editorial director, New Strategist Publications

To find out how much the average household spends on health care and
of other products and services, see the new ninth edition of Household
Spending: Who Spends How Much on What,
or the new third edition
Best Customers: Demographics of Consumer Demand.
Both will be available
in hardcopy in December 2004. Preorder by November 15 and save $10 on the
price. Or download them today from our Web site at

If you have any questions or comments about the above editorial, e-mail New
Strategist at



Householders aged 65 or older account for 42 percent of out-of-pocket
on prescription drugs.


Q: Do Republicans outnumber Democrats?

A: Given the election results, it might seem that way. But in fact, the percentage
of people identifying themselves as Republican is still surpassed by the percentage
calling themselves Democrat.

According to the General Social Survey of the University of Chicago’ s National
Opinion Research Center, 34 percent of adults aged 18 or older identify
as Democrats. A smaller 28 percent identify themselves as Republicans. The
share of self-identified Democrats has fallen over the past three decades,
while the share of self-identified Republicans has grown. In the early 1970s,
the Democratic Party claimed the allegiance of about 41 percent of adults.
As Democratic Party identification declined, Republican identification grew
from 22 percent in the early 1970s to the 28 percent of today.

The independent label has also grown over the years. The percentage of
identifying themselves as independents rose from 32 to 36 percent over the
past three decades. Today, the plurality of the electorate considers itself
independent rather than Democrat or Republican.

The largest share of the public is most comfortable in the middle of the
road–not only with its political party identification, but in its political
leanings as well. Thirty-eight percent of Americans say they are political
moderates. This share is larger than the 34 percent who are conservative and
the 26 percent who are liberal.

For more about the attitudes of Americans on issues ranging from politics
to work and family life, see the all new fourth edition of American Attitudes:
What Americans Think about the Issues That Shape Their Lives,
in hardcopy in December 2004. Preorder now for a $10 savings. Or download American
today from our Web site at

If you have a question or comment, contact Cheryl Russell at



Could this explain our growing girth? Average household spending on snacks
from restaurants and carry-outs rose 50 percent between 2002 and 1997, after
adjusting for inflation.


To keep up-to-date on ever-changing American demographics and lifestyles,
check out these useful web sites:


This link will take you to the results of the most recent study by the Pew
Internet and American Life Project, Prescription Drugs Online. Sixty-four percent
of households currently use prescription drugs, according to the survey of
2,200 nationally representative adults. A substantial 26 percent of adults
have looked for prescription drug information on the Internet, but only 4 percent
have actually purchased drugs online. Fifty-five percent of Internet users
have received unsolicited e-mail advertising prescription medications. pubid=2004115

At this site you can access hard-to-come-by statistics on homeschooling,
on data collected by the National Household Education Survey of the National
Center for Education Statistics. The findings reveal that 1.1 million U.S.
students were being homeschooled in the spring of 2003. Parents say the most
important reason for homeschooling is their dislike of the school environment,
a factor cited by 31 percent. Thirty percent of parents said the most important
reason was to provide religious or moral instruction.


For those who want to understand changes in the distribution of wealth in
the United States, there is no better place to turn to than the Federal Reserve’s
triennial Survey of Consumer Finances. At this site you can access, “A
Rolling Tide: Changes in the Distribution of Wealth in the U.S.: 1989-2001,” an
analysis of the changing distribution of wealth by Survey of Consumer Finance’s
project director Arthur B. Kennickell. Kennickell provides both an overview
of the changing distribution of wealth and a closer look at three groups: families
with negative net worth, older boomers, and African Americans. Among the interesting
findings is that the number of millionaires among older boomers has more than
tripled between 1989 and 2001, after adjusting for inflation.



The average household had $20,380 in discretionary income in 2002–25
less than in 2000, after adjusting for inflation.

4. Coming in December

The just-updated three-volume American Money Series,
plus a long-awaited new edition of American Attitudes. reserve your
copies now and save up to $40. Order online at ,
call toll free at 800/848-0842, or fax your order to 607/277-5009. The books
can be downloaded now and will be available in hardcopy in December 2004.

Household Spending: Who Spends How Much on
9th ed.
If Americans buy it, you can probably find out how much they’ re spending on
it in the all-new ninth edition of Household Spending, which is based
on unpublished data collected by the Bureau of Labor Statistics. New to this
edition is the inclusion of a free CD containing .pdf files of the entire book
so you can keep its valuable spending data on your hard drive in addition to
your bookshelf. (744 pgs., hardcover, ISBN 1-885070-67-5)

$84.95 ($94.95 after November 15, 2004)

Best Customers: Demographics of Consumer Demand,
3rd ed. Best
analyzes household spending on more than three hundred
and services. It identifies the best and biggest customers for each item,
analyzes spending patterns over the past few years, and predicts future trends
based on changing demographics. (768 pgs., hardcover, ISBN 1-885070-75-6)

$79.95 ($89.95 after November 15, 2004)

American Incomes: Demographics of Who Has Money,
5th ed. American
explores and explains the economic status of Americans and
an analysis of discretionary income produced by New Strategist’ s statisticians
specifically for this book. Library Journal liked the first edition
of this valuable book so much that it selected it as a Best Reference Source.
(416 pgs., hardcover, ISBN 1-885070-68-3)

$79.95 ($89.95 after November 15, 2004)

AMERICAN ATTITUDES: What Americans Think about the Issues That
Their Lives,
4th ed. American Attitudes presents a historical
look at how our thinking has changed since the 1970s on hundreds of subjects
such as abortion, gun ownership, political party identification, the role
of government, and sexual attitudes and behavior. The data in American
come from the General Social Survey of the University of
s National Opinion Research Center. Until publication of this book, the valuable
and fascinating results of the GSS have not been easily accessible beyond
academic circles. (360 pgs., hardcover, ISBN 1-885070-43-8)

$79.95 ($89.95 after November 15, 2004)



The 57 percent majority of adults can get from their house to their mother’
s house within one hour.