The source of the uninsured are low income workers and small employers

Not all workers have equal access to health insurance through their work. In addition, not all workers take advantage of the availability of health insurance at their work. The likelihood a worker will have coverage available and the likelihood the worker will accept coverage when offered seems to be closely associated with the worker's hourly wage. At that time, only 53.3 percent of workers who earned $7.00 or less were offered the chance to participate in employer- sponsored health insurance.

Either their employer did not sponsor a plan, or the worker was not eligible for the employer's plan. For workers earning between $7.01 and $10.00 per hour the number rose to 72.2 percent.Ninetytwo percent of workers earning more than $15.00 per hour had health insurance offered to them through their work. Even if an employer offered health insurance coverage to workers, not all workers accepted this coverage. Typically, the employer will pay only part of the cost of coverage, with the employee responsible for paying the balance. It is possible to arrange to have the employee's share of the insurance premium exempt from income tax.

However, for lower-wage workers, the advantage of tax exemption holds less benefit, because these workers typically pay taxes at a lower rate (if at all). In addition, the impact of the reduction in take-home pay resulting from enrolling in the employer's health insurance plan will be greater for low-wage workers than for higherwage workers. As a result, even when offered coverage through their work, low-wage workers choose to accept that coverage less often than their higher-wage counterparts. Of those earning $7.00 per hour or less in 2001 who were offered health insurance, only 71.4 percent accepted the offer and enrolled in the employer's health plan. The comparable number for higher-wage workers was 85–89 percent.

The rate of health insurance coverage depends not only on the wage of the employee but also on the size of the firm in which the worker is employed. Only two-thirds of workers employed in firms with fewer than ten employees are covered by health insurance, either insurance sponsored by the employer or insurance obtained elsewhere (e.g., through a working spouse). Of employees in mid-size firms, between 74.5 and 83.2 percent are covered. More than 90 percent of workers in firms with 100 employees or more are covered by health insurance.

There may well be substantial overlap between the effect of hourly wage and the effect of the size of the firm on the likelihood of coverage. Many small firms such as restaurants and independent retail stores rely on lowerwage workers to maintain their business. The cost of providing health insurance to these workers can be prohibitive. When Congress discussed requiring all employers to provide health insurance to their workers as part of the debate over the Clinton health reform proposals, small businesses spoke with a clear voice that such a mandate would be a severe hardship for them.

Our system of employer-based health insurance has evolved over several decades since the federal government made the two policy decisions described above.However, these decisions were intended to address specific issues of wage stabilization and taxation, and not to create national health policy. The system we have now was neither consciously designed nor explicitly adopted. It simply developed as a result of market forces and the unintended consequences of federal tax and wage policies. The system works well for most Americans.However, it has failed a growing segment of our population and has contributed substantially to the national policy dilemma of finding a way to extend coverage to the uninsured.

A number of people have argued that, if we are going to have a system that provides health insurance through one's work, all employers should be required to provide that insurance. Employers provide other types of mandatory benefits - coverage for unemployment or on-the-job injuries - so it would be straightforward to mandate that employers also provide health insurance. Opponents to this "employer mandate" approach have argued in response that it would place an unreasonable burden on employers, especially smaller businesses, to pay for health insurance for their workers. While a number of states have considered adopting a statewide employer mandate for health insurance, only one has actually adopted such a policy.

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The source of the uninsured are low income workers and small employers

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