Number of People With Private Health Insurance

The number of people with private health insurance declined from 2008 to 2010, falling an annualized 1.8%. In 2009 and 2010, the poor economic climate resulted in many individuals losing their employer-mandated health insurance, placing downward pressure on private health insurance coverage. While healthcare reform caused the number of people with private health insurance to rebound, it had a lagging effect on the number of people with private health insurance. For example, while the Affordable Care Act was signed into law in 2010, it was not until 2014 that the penalty tax was implemented for people who failed to purchase insurance coverage via the healthcare exchanges.

As a result, the number of people with private health insurance grew by a relatively substantial 2.9% in 2014 and 2.5% in 2015, as many rapidly purchased health insurance coverage to avoid the penalty fees in those years. Moreover, the tax penalty for lacking health insurance is a progressive tax, meaning that the tax penalty for lacking health insurance increases with the individual’s income bracket (flat rate penalties are applied if the amount exceeds the percentage of income penalty). Due to the progressive tax penalty, many individuals who may have chosen to forego private health insurance in 2014 may have purchased health insurance in 2015. While the individual mandate has caused the proportion of the population with private insurance to increase since it took effect, it was repealed when The Tax Cuts and Jobs Act came into force in December 2017. This likely did not have much effect on the number of individuals with private health insurance until 2019, as the individual mandate remained in effect for 2018.

However, the contraction stemming from the COVID-19 pandemic significantly weigh on the number of people with private health insurance in the year, as the unemployment rate quadrupled in less than a quarter. But these numbers rose again following 2020 with the economy reopening, boosting more people into private insurance as their economic conditions improve from rejoining the labor force or being part of the flurry of hires following the pandemic that allowed them access to such plans. As these factors remain afoot, these numbers are set to expand in 2024 and 2025, with the labor market remaining tight. Rebounding economic conditions will also provide relief for industries that need it the most to hire more again.