Policy Brief #32
Divorce and Women's Risk of Health Insurance Loss
Bridget Lavelle and Pamela J. Smock, University of Michigan
As of 2011, nearly 50 million Americans lacked health insurance coverage (DeNavas-Walt, Proctor and Smith 2012), leaving many individuals with limited access to medical care and vulnerable to acquiring medical debt. Non-elderly Americans access and pay for health care through a fragile patchwork of health insurance sources, structured primarily around employer-based health insurance. As a consequence, life course events such as job transitions, marital transitions, and health problems allow many individuals to slip through the cracks (Quadagno 2004).
While previous research has shown that job losses are associated with insurance loss, little is known about how marital transitions relate to health insurance. Given that half of all marriages in the U.S. end in separation or divorce, marital disruption has the potential to significantly impact insurance coverage (Goldstein 1999; Schoen and Canudas-Romo 2006).
A new paper by Bridget Lavelle and Pamela Smock examines the connection between divorce and health insurance loss among women, who are particularly at risk due to their frequent reliance on dependent coverage within marriage and their financial losses following marital disruption. One quarter of all women aged 18 to 64 are insured as dependents, and the proportion of married women insured as dependents is even higher (Kaiser Family Foundation 2011; Meyer and Pavalko 1996). In addition, women are less likely than men to be insured through their own jobs, in part because of their lower rates of labor force participation and their higher likelihood of working part-time or in jobs and occupations with poorer fringe benefits.
There are three key mechanisms by which women may lose health insurance after divorce: (1) Loss of dependent coverage; (2) Inability to afford other forms of private coverage; and (3) Lack of access to public insurance programs.
- Women who are covered as dependents on husbands' employer-based insurance policies become ineligible to continue receiving employer-subsidized dependent coverage after divorce. The federal COBRA law grants individuals the right to temporarily extend this insurance for up to 36 months after divorce. However, COBRA premiums are expensive; in 2012, they averaged roughly $475 per month for individual coverage (Claxton et al. 2012).
- Women's financial hardship after marital disruption may hinder their ability to retain uninterrupted insurance coverage. Even women who receive insurance through their own employers may struggle to keep paying the employee share of the premium. Women without access to coverage through their own employers may try to purchase non-group policies on the private market. However, these are often unaffordable, particularly for women, who have been found to pay higher premiums than men for the same level of coverage (Pear 2012). Women with chronic health conditions or a history of illness often pay extraordinarily high premiums or may be denied coverage altogether.
- Women's economic losses after divorce make some newly eligible for need-based public insurance programs, primarily Medicaid. However, childless adults are rarely eligible for such programs and parents are typically eligible for Medicaid and similar programs only at very low, sub-poverty income levels (Heberlein et al. 2011). Medicare is only available to the non-elderly who meet disability requirements.
Data and Methods
Previous studies find that divorced and other unmarried women are substantially more likely than married women to be uninsured (Bernstein et al. 2008; Jovanovic, Lin and Chang 2003). These observed differences in insurance coverage, however, could be due to characteristics of women who divorce, rather than to the event of divorce itself. On average, women who divorce have greater socioeconomic disadvantage compared to women who remain married, and may also differ on unobservable traits.
To deal with these selection issues, we analyze nationally representative longitudinal data spanning the period from 1996 through 2007 from the Survey of Income and Program Participation (SIPP), a series of panel surveys administered by the Census Bureau. Our research design utilizes the longitudinal variation in health insurance coverage and marital status to estimate the effect of divorced status on health insurance coverage with fixed-effects models. To examine the extent to which women lose health insurance after divorce, our study compares women's health insurance coverage before and after divorce.
How Does Women's Health Insurance Coverage Change After Divorce?
Women face a significant probability of losing insurance coverage in the months following divorce. We show that women who divorce are more likely than women who remain married to be uninsured, even while they are still married. But their probability of having insurance coverage drops even lower after divorce.
Table 1 presents descriptive analyses of women's insurance coverage, by marital status and baseline insurance coverage. At the first month women were in our longitudinal data sample—the baseline month—11.6 percent of women who remain married over the course of the sample were uninsured, compared to 15.9 percent of women who divorce. Women who divorce are also less likely to be covered by private insurance at baseline, and more likely to be covered by public insurance. These differences reflect the composition of the group of women who become divorced. For example, at baseline, they tend to be younger (37.8 vs. 42.1 years), less educated (20.8 vs. 27.7% hold college degrees), and are more likely to be poor (12.7 vs. 8.2%) than women who remain married.
Compounding this group's lower baseline rate of insurance coverage, some women lose insurance coverage in the process of divorce. Women are 6.6 percentage points less likely to be insured 6 months after divorce than they had been before divorce (see Table 1). If we consider only the subgroup of women who divorce who are insured at baseline, over 16 percent became uninsured by six months after divorce. The total loss of insurance coverage would have been greater if some women had not been able to switch from private coverage to public insurance programs. Six months after divorce, 10.3 percent of women hold public insurance coverage, compared to 5.6 percent at baseline.
The descriptive results in Table 1 demonstrate the gross loss of insurance coverage for women who divorce in the longitudinal SIPP sample. Multivariate fixed-effects models, which control for additional confounders including changes in employment status, job tenure, age, and income-to-poverty ratio, reach a similar conclusion. Net of these other factors, divorce leads to an approximately 8 percentage point decline in women's private health insurance coverage, and an increase of 3 percentage points in women's public health insurance coverage, for a total drop of 5 percentage points.
Who is Most Affected?
Not all women face an equally likely probability of insurance loss after divorce. Some types of insurance are more vulnerable than others, and some factors buffer women against loss of coverage.
Women insured as dependents on a husband's employer-based insurance policy at baseline are particularly vulnerable to loss of coverage after divorce. Nearly one quarter of them are uninsured six months after divorce (see Table 1). In contrast, women who have employer-based coverage in their own name at baseline are less likely than other women insured at baseline to lose coverage (10.6 vs. 16.8%). Women with their own employer-based coverage are not completely immune from loss of insurance coverage in part because major financial losses after divorce may hinder their ability to meet ordinary expenses, including the employee share of health insurance premiums.
Human capital also serves as an important buffer against insurance loss after divorce (analyses not shown). College-educated women experience no significant loss health insurance coverage after divorce, in contrast to those with less education. Women with less than high school education also show no net loss of coverage because their loss of private coverage is offset by their uptake of public insurance. Women who work full-time and who have been employed in the same job for longer than 6 months are also largely protected.
The linkage between divorce and health insurance coverage differs by race and poverty level. Non-Hispanic white women face a significant decline in insurance coverage, in contrast to minority women, whose greater uptake of public insurance coverage offsets their loss of private coverage. Women in moderate-income families at baseline (200-300% of the Federal Poverty Line) face the greatest loss of insurance coverage; they are more likely to lose private coverage compared to higher-income women, but have less access to public safety net insurance programs than lower-income women.
When Is Health Insurance Impacted?
Some women lose insurance coverage in the months preceding divorce, but much of the loss occurs at the time of divorce or in the moths just following. Fig. 1 plots estimated probabilities of private insurance coverage (dark grey), public insurance coverage (light grey), and uninsurance (black) across time, relative to the month of divorce, holding constant other factors in women's lives like their age, job situations, and income levels. Women's probability of holding coverage drops significantly in the month of divorce, and this depressed probability of insurance coverage remains significant for as long as our data extend, more than two years after divorce.
Women's decreased probability of holding private insurance at the time of divorce is sharper than the overall decline in coverage. The widening of the light grey band, representing public coverage, shows that some of the loss of private coverage is offset by women's uptake of public coverage.
Figure 1. Probabilities estimated from multivariate fixed-effects linear probability models estimated from the sample of women ages 26 to 64 observed to divorce in the Survey of Income and Program Participation (1996, 2001, 2004 panels).
Women in the U.S. experience a significant decline in the probability of insurance coverage after divorce, and an even larger decline in the probability of holding private coverage. Some women avoid insurance loss or minimize gaps in coverage by acquiring Medicaid and other public insurance after divorce. The decline in total health insurance coverage is detected for over two years after divorce. Insurance loss may compound the economic losses women experience after divorce, and contribute to as well as compound previously documented negative health consequences.
The current health care and insurance system in the United States is inadequate for a population in which multiple marital and job changes over the life course are not uncommon. Given that approximately 1 million divorces occur in the United States every year (U.S. Census Bureau 2011), our descriptive estimates suggest that roughly 115,000 women lose private health insurance annually in the months following divorce and that roughly 65,000 of these women become uninsured.
It remains to be seen how effectively federal health insurance reform legislation in the Affordable Care Act will remedy the problem of insurance loss after divorce. The law has provisions which expand eligibility for Medicaid and provide subsidies to make insurance more affordable on the private market. The law may also potentially expand the availability of insurance to women through their own jobs. The major provisions of this law are scheduled to go into effect in 2014. Post-implementation research will be needed to determine whether the law helps to reduce loss of health insurance coverage after divorce.
About the Authors
Bridget Lavelle is a PhD Candidate in the Gerald R. Ford School of Public Policy and the Department of Sociology at the University of Michigan. E-mail: firstname.lastname@example.org
Pamela J. Smock is Director of the Population Studies Center at the Institute for Social Research and Professor of Sociology at the University of Michigan. E-mail: email@example.com
The data in this policy brief are based on a paper by Bridget Lavelle and Pamela Smock titled, "Divorce and Women's Risk of Health Insurance Loss," published in the December 2012 issue of the Journal of Health and Social Behavior. This project was supported by the National Poverty Center (NPC) using funds received from the U.S. Census Bureau, Housing and Household Economics Statistics Division through contract number 50YABC266059/TO002. The opinions and conclusions expressed herein are solely those of the authors and should not be construed as representing the opinions or policy of the NPC or of any agency of the Federal government.
- Women face a significant risk of health insurance loss in the months following divorce. This loss is not just a temporary disruption to women's health insurance coverage; rather, women's overall rates of health insurance coverage remain depressed for over two years after divorce. A significant number of women face ongoing difficulties in securing health insurance after divorce.
- Some women avoid insurance loss or minimize gaps in coverage by switching onto public insurance programs after divorce such as Medicaid. But public insurance programs only protect some women.
- Women who are insured as dependents on husbands' employer-based insurance policies prior to divorce are among the most vulnerable to insurance loss after divorce. This source of insurance is directly threatened in the event of divorce, forcing women to quickly find alternative sources of insurance in order to prevent gaps in coverage.
- Women's human capital and labor force attachment buffers against insurance loss following divorce. The best protection against insurance loss for women may be stable long-term employment in jobs which are a direct source of insurance coverage.
- The current U.S. health care and insurance system is inadequate for a population in which multiple marital changes over the life course are not uncommon.
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