Trends in Employer-Based Health Insurance

1
Trends in Employer-Based Health Insurance

• Jon R. Gabel
• Senior Fellow
• National Opinion Research Center at the
  University of Chicago

2
Presentation Objectives

• To document the state of employer-based health
  benefits, 2009, in the USA and California
• To examine changes in benefits over the last ten
  years in the USA and California
• To compare coverage for large and small employers
• To examine the legacy health care system if
  health reform fails.

3
KFF/HRET Health Benefits Survey 2009

• Telephone survey of 2,054 randomly selected
  public and private employers
• National Research conducts interviews with
  employee benefit managers from Jan. 2009 to May
  2009
• Response rate of 47 percent in 2009
• Survey conducted by HIAA 1987-1991 and KPMG
  1991-1998
• Use of statistical weights
• Employer-based statistics
• Employee-based statistics

4
California Health Benefits Survey California
HealthCare Foundation/NORC

• Random survey of 827 private employers with 3 or
  more workers
• Questions often identical to national survey
• Conducted from April 2009-July 2009

• Survey conducted since 2000
• Use of statistical weights
• Sampling error of 3.4 percent with full sample.

5
Increases in Health Insurance Premiums Compared
to Other Indicators, 1988-2009
13.9
Estimate is statistically different from the
previous year shown at plt0.05. No statistical
tests were conducted for years prior to 1999.
Estimate is statistically different from the
previous year shown at plt0.1. No statistical
tests were conducted for years prior to
1999. Note Data on premium increases reflect
the cost of health insurance premiums for a
family of four. Source Authors calculations
from KFF/HRET Survey of Employer-Sponsored Health
Benefits, 1999-2009 KPMG Survey of
Employer-Sponsored Health Benefits, 1993, 1996
The Health Insurance Association of America
(HIAA), 1988, 1989, 1990 Bureau of Labor
Statistics, Consumer Price Index (U.S. City
Average of Annual Inflation (April to April),
1988-2009 Bureau of Labor Statistics, Seasonally
Adjusted Data from the Current Employment
Statistics Survey (April to April), 1988-2009.

6
Increases in California Health Insurance Premiums
Compared to Overall Inflation, 1999-2009

• Health insurance premiums in California grew by
  7.5 in 2009, statistically unchanged in recent
  years.
• Premiums continue to rise at much more than the
  California inflation rate.

Estimates are statistically different from the
previous year shown.
Sources CHCF/NORC California Employer Health
Benefits Survey 2007-2009 CHCF/HSC California
Employer Health Benefits Survey 2005-2006
CHCF/HRET California Employer Health Benefits
Survey 2004 Kaiser/HRET California Employer
Health Benefits Survey 1999-2003 California
Division of Labor Statistics and Research,
Consumer Price Index, California Average of
Annual Inflation (April April) 19992009.
7
Cumulative Changes in Health Insurance Premiums,
Overall Inflation, and Workers Earnings 2000 -
2009
Source Authors Calculation of KFF/HRET Survey
of Employer-Sponsored Health Benefits, 2001-2009
Bureau of Labor Statistics, Consumer Price Index,
U.S. City Average of Annual Inflation (April to
April), 2001-2009 Bureau of Labor Statistics,
Seasonally Adjusted Data from the Current
Employment Statistics Survey (April to April),
2001-2009.
8
Average Annual Firm and Worker Premium
Contributions and Total Premiums for Covered
Workers for Single and Family Coverage, by Plan
Type, 2009
HMO
4,878
13,470
PPO
4,922
13,719
POS
4,835
13,075
HDHP/SO
3,986
11,083
ALL PLANS
4,824
13,375
Estimate is statistically different from All
Plans estimate by coverage type (plt.05). Source
Kaiser/HRET Survey of Employer-Sponsored Health
Benefits, 2009.
9
Average Monthly Premiums, by Plan Type, 2009

• Premiums for most plan types in California were
  comparable to premiums nationally.
• California PPOs were more costly for both single
  and family coverage than in the rest of the
  nation.

Single
Family
Estimates are statistically different between
California and US.
Source CHCF/NORC California Employer Health
Benefits Survey 2009 Kaiser/HRET Employer
Health Benefits Survey 2009
10
Health Plan Enrollments for Covered Workers, by
Plan Type, 2001 - 2009
California

• California workers have been consistently more
  likely to enroll in HMOs than covered workers
  nationally. Conversely, PPOs are more popular in
  the U.S. than in California.
• Enrollment in high deductible plans with a
  savings option has changed little since 2007.

U.S.
Distribution is statistically different from
previous year shown.
Note Conventional plan enrollment in California
in 2001, 2005 and 2007 is less than 1. Due to
the addition of HDHP in 2006, no test was
conducted comparing 2006 with 2005.
Sources CHCF/NORC California Employer Health
Benefits Survey 2007-2009 CHCF/HSC California
Employer Health Benefits Survey 2005-2006
CHCF/HRET California Employer Health Benefits
Survey 2004 Kaiser/HRET California Employer
Health Benefits Survey 2001-2003 Kaiser/HRET
Employer Health Benefits Survey 2001-2009.
11
Average Monthly Worker Contribution, 1988-2009
Estimate is statistically different from the
previous year shown at plt.05. No statistical
tests were conducted for years prior to
1999. Source Kaiser/HRET Survey of
Employer-Sponsored Health Benefits, 1999-2009
Health Insurance Association of America (HIAA),
1988.
12
Percentage of Premium Paid by Covered Workers,
1988-2009
Estimate is statistically different from the
previous year shown at plt.05. No statistical
tests were conducted for years prior to
1999. Source Kaiser/HRET Survey of
Employer-Sponsored Health Benefits, 1999-2009
Health Insurance Association of America (HIAA),
1988.
13
Increases in Overall Deductible (All
Plans),2005-2009
Includes plans with and without deductibles
Source Authors calculations from Kaiser/HRET
Survey of Employer-Sponsored Health Benefits,
2005-2009.
14
Percentage of Covered Workers Enrolled in a Plan
with General Annual Deductible of 1,000 or More,
for Single Coverage , by Firm Size, 2006-2009

• Estimate is statistically different from the
  previous year shown at plt.05.
• Note These estimates include workers enrolled in
  HDHP/SO and other plan types. Because we do not
  collect information on the attributes of
  conventional plan types, to be conservative, we
  concluded that workers in conventional plan types
  do not have a deductible of 1,000 or more.
  Because of the low enrollment in conventional
  plans, the impact of this assumption is minimal.
  Average annual general health plan deductible for
  PPOs, POS plans and HDHP/SOs are for in-network
  services.
• Source Kaiser/HRET Survey of Employer-Sponsored
  Health Benefits, 2006-2009.

15
Percentage of Covered Workers in Partially or
Completely Self-Funded Plans, By Firm Size,
1999-2009
Estimate is statistically different from the
previous year shown at plt.05. Source
Kaiser/HRET Survey of Employer-Sponsored Health
Benefits, 1999-2009.
16
Percentage of Workers Covered by Their Employers
Health Benefits, in Firms Both Offering and Not
Offering Health Benefits, by Firm Size, 1999-2009
Year-to-year estimates are not significantly
different at plt.05. However, there is a
significant change between 2000 and 2005 for All
Firms and All Small Firms at plt.05. Source
KFF/HRET Survey of Employer-Sponsored Health
Benefits, 19992009.
17
Distribution of Firms Opinions on the
Effectiveness of the Following Cost Containment
Strategies, 2009
Distributions are statistically different
between All Small Firms and All Large Firms
within category (plt.05). Note Distributions
are among all firms both offering and not
offering health benefits. Source Kaiser/HRET
Survey of Employer-Sponsored Health Benefits,
2009.
18
Likelihood of California Employers Making
Selected Changes Next Year
Increase the Amount Employees Pay for

• Twenty-one percent of employers in California
  reported that they are very likely to increase
  the amount employees pay for health insurance
  premiums in the coming year.

Source CHCF/NORC California Employer Health
Benefits Survey 2009
19
Summary

• Premium increases are moderate (five percent)
  but six percentage points more than overall
  inflation.
• Average deductible has roughly doubled since
  2005.
• 70 percent increase in overall deductibles for
  small firms since 2007.
• Some indications that many small employers in
  California are considering dropping coverage.

20
Legacy System

• The cost of family coverage should reach 25,000
  before the end of the decade.
• Reasons to believe higher premium increases are
  in the near future
• H1NI
• FEBHP shows 8.5 percent increase.
• Benefit consulting firms forecasting upturn.
• Seven year itch.
• Urban Institute forecasts 13.2 million persons
  will lose employer-based insurance and the number
  of uninsured will rise to 57 million.