Uninsured Leadership Seminar on Healthcare Economics

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Uninsured Leadership Seminar on Healthcare
Economics
West Virginia

• June 4, 2003

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Employer-Sponsored Health Plans Trends and Their
Implications

• William N. Lindsay III, CLU

Developing SolutionsTogether.
3
My Value

• Reality based
• Im an insurance broker
• I am a small business

(Not an Expert)
(Low-Cost)
(Available)
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Purpose

• Discuss emerging national trends for small
  business
• Discuss employer reactions
• Discuss employee reactions

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The average annual increase in health-care costs
over the last decade for various groups of
workersand the projected increase for 2002
Source Towers-Perrin Study, 12/01
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Estimate is statistically different form the
previous year shown 1996-1999, 1999-2000,
2000-2001, 2001-2002. Note Data on premium
increases reflect the cost of health insurance
premiums for a family of four. SOURCE KAISER
FAMILY FOUNDATION AND HEALTH RESEARCH AND
EDUCATIONAL TRUST, SEPTEMBER 5, 2002
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Total HMO enrollment and growth rate, July 1992
to July 2001
Note Growth rates based on total enrollment,
not the rounded-off numbers given in this chart
SOURCE EBRI 5/30/02
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Can we afford it or are we willing to pay for it?
Source Reden Anders, Inc. 2000
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Can we afford it or are we willing to pay for it?
Reden Anders, Inc. 2000
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Business Survey 2002

• 66 of employers are dissatisfied with cost of
  health care/health insurance
• 35 of small businesses will pass premium costs
  on to employees and will reduce benefits
• Source Kaiser Family Foundation 04/02/2002

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Small Employer Health Insurance
Why Should I Care?
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2000 Statistics

• 16,000 businesses had 500 or more employees
  nationwide
• 100,000 had 100 or more employees
• 5.68 million had fewer than 100 employees

Source US Department of Commerce
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Consider These Facts about Small Businesses

• Provide 75 of net new jobs each year
• Provide 51 of all private sector output
• Represent 96 of all exporters of goods
• 53 are home-based

Source US Department of Commerce
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Consider These Facts about Small Businesses

• Represent more than 99 of employers nationally
• Employ 51 of private sector workers
• Non-farm income of small businesses was 638
  billion in 2000 (7.2 increase)
• Represent 38 of all high tech jobs

Source US Department of Commerce
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Number of Employees--Private Sector Only
Source West Virginia Bureau of Employment
Programs, March 2002
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Percentage of Firms Offering Health Benefits, By
Firm Size, Selected Years 1996-2001
Sources Kaiser/Health Research and Educational
Trust (HRET) Survey of Employer-Sponsored Health
Benefits, 1999, 2000, 2001 and KPMG Survey of
Employer-Sponsored Health Benefits, 1996, 1998.
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Workers without Health Insurance Aged 18-64, By
Firm Size
19.9 Million Uninsured Workers Aged 18-64
Source EBRI Analysis of the March 1999 CPS
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Percent of Private Sector Firms that Offer Health
Insurance, by Firm Size
Source 2002 Medical Expenditure Survey
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Population Distribution by Insurance Status
Source State Health Facts, West Virginia
2000-2001
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Employers Reactions to Rising Health Care Costs
December 2000 26 74 38
December 2001 72 28 52
August 2002 88 12 52
Pass on Cost Increase Absorb Cost Change
Coverage
Source BMAD Employer Surveys
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Employers Reactions to Rising Health Care Costs
Source Robert Wood Johnson Foundation Survey
03/13/03 of 600 large and small businesses
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Health Plan Enrollments For Covered Workers,
Selected Years 1996-2001
Sources Kaiser/Health Research and Educational
Trust (HRET) Survey of Employer-Sponsored Health
Benefits, 1999, 2000, 2001 and KPMG Survey of
Employer-Sponsored Health Benefits, 1996, 1998.
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• The leading cause of personal bankruptcy
• is health care costs.

Source Prosperity Institute Report 2/2002
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Premium Elasticity for Individual Enrollees in
the Federal Employees Health Benefits Program, by
Age
Source Authors regression estimates using
FEHBP administrative data and plan benefit data
from the Checkbook Guide, Health Affairs April,
2003.
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Percent of Business Owners Who Believe Most
People Would Be Better Off If They Got Their
Health Insurance Policy Through
61
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8
7
Source The Kaiser Family Foundation National
Survey of Small Businesses, April 2002 (conducted
May-July 2001)
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Conclusion

• Employer/Employee Cost Pressure Increasing
• Insurance Market failures after HIPAA
• Increasing employee cost shift

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Conclusion

• "Picking a healthcare financing system is kind of
  like picking someone to marry--you're picking a
  set of problems you are prepared to live with.
• Marc J. Roberts, Ph.D., Harvard School of Public
  Health

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Thank You
Developing SolutionsTogether.