Employer-Sponsored Insurance Coverage – Survey by Health Research Educational Trust

The Health Research Educational Trust (HRET) and the Kaiser Family Foundation conduct an annual survey of employers concerning their health insurance coverage. A summary of the findings is readily available on the Kaiser Family Foundation website (www.kff.org/insurance/7031/index.cfm) and in annual summary articles by Jon Gabel and colleagues in a fall or winter issue of Health Affairs. The survey is nationally representative of public and private employers, and is drawn from the Dunn and Bradstreet listing of U.S. firms. Responding establishments are resurveyed in subsequent years. Approximately 1,400 firms respond each year, and the overall annual response rate is approximately 50 percent.

We have data reports the percentage of firms offering coverage in 2006 based on the HRET/Kaiser employer survey. The vast majority of larger employers offer coverage. Indeed, it is only the smallest of the small employers that do not. Among employers with 3–9 workers, only 48 percent offered health insurance coverage in 2006. This estimate is down from the 2000 to 2001 estimates of 58 percent.

Employers typically offer coverage to full-time workers. The HRET/Kaiser survey also reported that 31 percent of firms offering cover- age in 2006 offered coverage to part-time workers, and 3 percent offered it to temporary workers. On average, the survey found that 78 percent of workers in a firm offering coverage were eligible for coverage, and of these, only 82 percent took the coverage offered. We discuss these issues in much more depth in later article, but employees decline coverage for several reasons. These include having coverage available through a spouse or believing that the employee’s out-of-pocket premium contribution is too large.

Many employers offer a choice of health plans, but the extent of choice varies significantly over the size of the firm. In 2006, for example, among firms with five thousand or more workers, 29 percent of the firms offered three or more plans, while another 42 percent offered two. In contrast, only 10 percent of firms with fewer than two hundred workers offered more than one plan. Much of this has to do with the administrative costs of offering multiple plans and fears that multiple plans offered in small groups will encourage adverse selection.

As noted previously, employers today almost always offer one or more managed care plans, typically a preferred provider organization (PPO). Smaller employers are the most likely to continue to offer a conventional plan. It is reported that, in a survey of small employers, 24 percent of those with fewer than 250 employees offer only a conventional plan.

Health insurance premiums have been rising at a rate faster than general inflation. In 2006, the HRET/Kaiser data indicate that the average premium for single coverage across all firms offering coverage was $354 per month. Family coverage, on average, cost $957 per month. Historically, health maintenance organization (HMO) premiums have been lower than those of other plans, while conventional plans have been the most expensive. More recently, however, PPO plans have had by far the highest premiums. It is dangerous to make too much of these differences at this point. Raw premium differences reflect differences in covered services, co payments, deductibles, and the expected claims experience of those who enrol.

Nominal and inflation-adjusted premiums have been increasing since 1996, and employers have increased the premium contribution that employees must make for single and family coverage. In 2006, the average monthly premium contribution for single coverage was $52 and $248 for family coverage. It is important to note, however, that while the amount of the employee premium contribution has been increasing, the share of the full premium paid through a premium contribution has remained remarkably stable over the last decade. Workers tend to pay out-of- pocket 16 percent of the single premium and 26 percent of the family premium at the average firm.

Virtually all employer plans cover hospitalizations, physician visits, prescription drugs, and outpatient and inpatient mental health services, among many other health services. The extent of coverage may differ, however, and the amount of copayments and deductibles may vary substantially across firms and across plans within firms. In 2006, for example, 13 percent of covered workers had unlimited covered outpatient mental health visits, while 65 percent were limited to 30 or fewer covered visits. Some 37 percent of those workers with HMO coverage faced $15 copays per physician visit, while 25 percent had $20 copays. About 70 percent of covered workers in a PPO paid an annual deductible for care in 2006. Among single workers with a deductible, the average PPO deductible associated with using in-plan services was $473; it was $1,034 for family coverage. Most plans (90 percent in 2006) also use multitiered copays for prescription drugs. For example, workers may pay $11 per prescription for generic drugs, $24 for preferred brand- name drugs, and $38 for nonpreferred brand-name prescriptions.

Plans also tend to use a variety of utilization management techniques. It is reports the 1997 and 2005 HRET/Kaiser employer survey results for specific techniques. Hospital preadmission certification is the requirement that a physician receive prior approval to admit a covered patient to a hospital. Use of this technique declined markedly between 1997 and 2005. Ambulatory surgery pre certification requires that a physician obtain plan approval before performing an outpatient surgical procedure. About 50 percent of covered workers had this requirement in both 1997 and 2005. High-cost case management and disease management refer to plan efforts to assign a nurse case manager to specific types of cases to ensure that the patient receives care according to clinical guidelines. These efforts have not been rigorously evaluated, but their intent appears to be as much to help patients maintain a regimen of care as much as to control costs.

Consumer-driven health plans (CDHPs) provide a reasonably generous health insurance plan, once a high deductible is satisfied. In addition, these plans provide a tax-sheltered Health Savings Account (HSA) from which people can pay for uncovered expenses. We discuss these new models in considerable depth later. Here we note that the HRET/Kaiser survey reported that 4 percent of employers offered one of these arrangements. The average single-coverage deductible was $1,715 ($3,511 for families), and the employer, on average, made a contribution of $689 to the HSA.