Add another troubling statistic to the nation's problems with health-care reform: Employer-provided medical insurance plans are rapidly declining nationwide, and Utah is leading the way.

No other state has a greater rate of employers who have dropped their medical insurance plans for employees, according to a report released today by the Economic Policy Institute, a nonprofit, nonpartisan economic think tank.

The nationwide assumption that full-time work equates to full medical coverage is clearly no longer valid, the report states. Its author, EPI economist Elise Gould, said the rate at which workers are joining the ranks of the uninsured is "alarming."

Coverage reductions have been the trend since 2001, Gould said, noting that "with the employer-based system clearly unraveling, it's critical that publicly provided coverage pick up the slack."

In Utah, the portion of employees younger than 65 covered by a medical benefit from their employer dropped by 8.9 percent between 2000 and 2006 — the largest rate of decline nationwide, according to the report.

In turn, the percentage of children who are uninsured is larger in Utah than in any other state except Vermont. Over the span of six years, more than 43,000 Utah children lost coverage, and Utah's ranking fell 12 places — from ninth to 21st — in the number of children covered by plans offered through their parents' workplace.

Most of the children who lost insurance coverage are from families whose household income is between 100 percent and 200 percent of the amount of income considered to be the federal poverty line. For a family of four in 2007, the federal poverty level is $20,650.

Similarly grim numbers were reported by the Utah Department of Health in its 2006 Health Status Survey. Nearly 90,000 children younger than 18 had no coverage in 2006. That's a 26 percent increase over the number of noncovered children in 2005.

Coverage through work has been the primary method of obtaining health insurance in the United States, Gould said. The approach worked because it effectively shared risk among individuals. But labor-market pressure and rising medical-care inflation have created a combination of problems.

Employees lose jobs or are given fewer hours and no benefits. Meanwhile, employers are requiring those who have benefits to pay a larger part of the premium or to pay more out-of-pocket for health care.

As this shift occurs, the health-care industry's income is the highest in nearly 40 years, Gould said. "The erosion of workers in the employer system into the public one in effect shifts the cost of employers insuring their workers onto taxpayers."

The numbers are not encouraging to advocates for health-care reform and members of special joint private and public task forces reviewing the situation.

Gov. Jon Huntsman Jr. views the report as more evidence of just how deep — and necessary — changes in health care will have to be. Huntsman sees the report as highlighting the need for reforming the health-care system, not just the cost or delivery of health-care services, said Lisa Roskelley, speaking Wednesday for the governor, who is in India this week.

The source of decline in employer-provided coverage is what EPI economist Jacob Hacker calls a side-effect of runaway health-care costs generated by a $2.2-trillion-a-year medical industrial complex "that is enormously wasteful, ill-targeted, inefficient and unfair. The best medical care is extremely good, but the Rube Goldberg system through which that care is financed is extremely bad — and falling apart."

Judi Hilman, executive director of the Utah Health Policy Project, agrees. "There is no doubt the system is broken," she said. She told a conference of health-care providers, small business owners and government officials from across Utah last week that whatever reforms are undertaken, any substantial steps toward addressing cost and access of all Utahns is at least a three-year project.

A task force charged with studying Utah's privately owned health-care market concluded last fall without making any recommendations about how to better the system.

A local twist in a nationally complicated issue is the fact that Utahns who work for the 60 percent of businesses that still offer health-insurance coverage think the system is just fine, said Norm Thurston, health economist of the state Department of Health. For employees at the 40 percent of businesses that don't, "things are not so great."

According to the department's 2006 market report, comprehensive health-insurance premiums in Utah have risen nearly 70 percent since 1999, an increase of about 9 percent each year. In that same time, the number of Utah residents with comprehensive coverage has declined by 13 percent.

According to health-department figures, the state's current uninsured rate is 11.9 percent, or more than 300,000 residents.

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