self-employed

Self-employed workers compose approximately 10% of the US labor force and this number is expected to grow in coming years.  Explosion of the ‘gig economy’ through app-based services and other ‘side-hustles’ has created opportunity for individuals to transition from employment to self-employment. Considering most people in the United States carry employer-based insurance, this self-employed population might face challenges in obtaining quality and affordable health insurance.

A recent study analyzed the relationship between the transition to self-employment from an employed position and insurance status. Knowing that lack of insurance is associated with delays in medical care, the authors also asked how self-employment affects delaying needed medical care.

One in four self-employed individuals doesn’t have health insurance; the transition from employment to self-employment more than tripled the risk of not having insurance. Since employer’s contribute money to employee’s health insurance, self-employed individuals would have to pay significantly more to maintain the value of their insurance plan after transitioning out of employment. Therefore private plans can become unaffordable. This explains the increased prevalence of exchange-based plans, Medicaid, and lack of insurance for the self-employed.

With one in four self-employed individuals uninsured, it’s not surprising that self-employment correlates with delaying needed health care. Despite having similar self-reported health statuses across the employed and self-employed groups, self-employed people had a 12% risk of delaying medical care in comparison to a 3.1% risk for employed. After adjusting for insurance coverage, the risk only changed slightly (11.5% vs. 3.2%).

Policymakers should understand that: 1) there will be an increase in the amount of self-employed workers in coming years, 2) workers transitioning from employment to self-employment have higher risk of going uninsured, 3) current systems of health insurance are insufficient to support people transitioning to self-employment, 4) in addition to lacking health insurance, being self-employed is associated with delaying needed medical care, and 5) we need new policies to encourage productive citizens (employed or self-employed) to get and keep health insurance.

This Health Policy Journal Club review is written by Christian Keller as part of our collaboration with the Health Policy Journal Club at Baylor College of Medicine where he is a medical student.

Abstract

Background: Self-employed workers are 10% of the US labor force, with growth projected over the next decade. Whether existing policy mechanisms are sufficient to ensure health insurance coverage for self-employed workers, who do not have access to employer-sponsored coverage, is unclear.

Objective: To determine whether self-employment is associated with lack of health insurance coverage.

Data sources: Secondary analysis of Medical Expenditure Panel Survey (MEPS) data collected 2014-2017.

Study design: Participants were working age (18-64 years), employed, civilian noninstitutionalized US adults with two years of Medical Expenditure Panel Survey (MEPS) participation in 2014-2017. We compared those who were employees vs those who were self-employed. Key outcomes were self-report of health insurance coverage, and of delaying needed medical care.

Data extraction methods: Longitudinal design among individuals who were employees during study year 1, comparing health insurance coverage among those who did vs did not transition to self-employment in year 2.

Principal findings: 16 335 individuals, representing 121 473 345 working-age adults, met inclusion criteria; of these, 147, representing 1 097 582 individuals, transitioned to self-employment. In unadjusted analyses, 25.7% of those who became self-employed were uninsured in year 2, vs 8.1% of those who remained employees (P < .0001). In adjusted models, self-employment was associated with greater risk of being uninsured (26.1% vs 8.0%, risk difference 18.0%, 95% confidence interval [CI] 9.2% to 26.9%, P = .0001). A time-by-employment type product term suggests that 10.0 percentage points (95%CI 0.3 to 19.7 percentage points, P = .04) of the risk difference may be attributable to the change to self-employment. Self-employment was also associated with delaying needed medical care (12.0% vs 3.1%, risk difference: 8.9%, 95% CI 3.1% to 14.6%, P = .003).

Conclusions: One in four self-employed workers lack health insurance coverage. Given the rise in self-employment, it is imperative to identify ways to improve health care insurance access for self-employed working-age US adults.

PMID: 33146406

Berkowitz, SA, et al. Health Serv Res. 2021; 56 (2): 247-255.