2004 Employer Health Benefits Survey - KFF · 2019-02-08 · SURVEY DESIGN AND METHODS Exhibit M.1 13 Selected Characteristics of Firms in the Survey Sample, 2004 ... Exhibit 2.4
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0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
19991996 1997 19981993 1994 19951988 1989 1990 1991 1992 20012000 2002 2003 2004
5.3%*
8.5%
12.0%
18.0%
14.0%
8.2%*
10.9%*
12.9%*
11.2%*
13.9%†
0.8%
200
4
-and-
T H E K A I S E R F A M I L Y F O U N D A T I O N
- A N D -
H E A L T H R E S E A R C H A N D
E D U C A T I O N A L T R U S T
2 0 0 4 A n n u a l S u r v e y
E m p l o y e rH e a l t h
B e n e f i t s
The Kaiser Family Foundation is a nonprofit, private operating foundation dedicated to providing information and analysis on health care issues to policymakers, the media, the health care community, and the general public. The Foundation is not associated with Kaiser Permanente or Kaiser Industries.
Health Research and Educational Trust is a private, not-for-profit organization involved in research, education, and demonstration programs addressing health management and policy issues. Founded in 1944, HRET, an affiliate of the American Hospital Association, collaborates with health care, government, academic, business, and community organizations across the United States to conduct research and disseminate findings that help shape the future of health care.
Copyright © 2004 Henry J. Kaiser Family Foundation, Menlo Park, California, and Health Research and Educational Trust, Chicago, Illinois. All rights reserved.
Printed in the United States of America.
ISBN 0-87258-812-2
American Hospital Association/Health Research and
Educational Trust Catalog Number 097512
Primary Authors:
kaiser family foundationGary ClaxtonIsadora GilBen FinderErin Holve
health research and educational trustJon GabelJeremy PickreignHeidi WhitmoreSamantha HawkinsCheryl Fahlman
T H E K A I S E R F A M I L Y F O U N D A T I O N
- A N D -
H E A L T H R E S E A R C H A N D
E D U C A T I O N A L T R U S T
2 0 0 4 A n n u a l S u r v e y
E m p l o y e rH e a l t h
B e n e f i t s
-and-
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
ii
T A B L E O F C O N T E N T S
LIST OF EXHIBITS v
SUMMARY OF FINDINGS 1
SURVEY DE SIGN AND METHODS 9
SECTION 1
Cost of Health Insurance 15
SECTION 2
Health Benefits Offer Rates 33
SECTION 3
Employee Coverage, Eligibility, and Participation 45
SECTION 4
Health Insurance Choice 55
SECTION 5
Market Shares of Health Plans 67
SECTION 6
Employee Contributions for Premiums 71
SECTION 7
Employee Cost Sharing 87
SECTION 8
Health Benefits 103
SECTION 9
Prescription Drug and Mental Health Benefits 111
iii
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
SECTION 10
Plan Funding 121
SECTION 11
Retiree Health Benefits 129
SECTION 12
Employer Attitudes and Opinions 137
SUBJECT INDEX 149
v
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
SURVEY DE SIGN AND METHODS
Exhibit M.1 13Selected Characteristics of Firms in the Survey Sample, 2004
Exhibit M.2 14Distribution of Employers, Workers, and Workers Covered by Health Benefits, by Firm Size, 2004
COST OF HEALTH INSURANCE
Exhibit 1.1 17Percentage Change in Health Insurance Premiums From Previous Year, by Plan Type, 1988-2004
Exhibit 1.2 18Increases in Health Insurance Premiums Compared to Other Indicators, 1988-2004
Exhibit 1.3 19Percentage Change in Premiums for Covered Workers, by Firm Size, 2004
Exhibit 1.4 20Distribution of Premium Increases for Covered Workers, by Firm Size, 2004
Exhibit 1.5 21Percentage Change in Premiums, by Firm Size and Plan Type, 2004
Exhibit 1.6 22Premium Increases, by Plan Type and Funding Arrangement, 2004
Exhibit 1.7 23Premium Increases, by Funding Arrangement, 1998-2004
Exhibit 1.8 24Premium Increases, by Firm Size, 1996-2004
Exhibit 1.9 24Premium Increases, by Region, 1996-2004
Exhibit 1.10 25Premium Increases, by Industry, 1996-2004
Exhibit 1.11 26Average Monthly Premiums for Covered Workers, Single and Family Coverage, by Plan Type, 2004
Exhibit 1.12 27Distribution of Single and Family Premiums for Covered Workers, 2001-2004
Exhibit 1.13 28Monthly and Annual Premiums for Covered Workers in Conventional, HMO, PPO, and POS Plans, by Firm Size, 2004
Exhibit 1.14 29Monthly and Annual Premiums for Covered Workers in Conventional, HMO, PPO, and POS Plans, by Region, 2004
Exhibit 1.15 30Monthly and Annual Premiums for Covered Workers in Conventional, HMO, PPO, and POS Plans, by Industry, 2004
HEALTH BENEFITS OFFER RATE S
Exhibit 2.1 36Percentage of All Firms Offering Health Benefits, 1996-2004
Exhibit 2.2 37Percentage of Firms Offering Health Benefits, by Firm Size, 1996-2004
Exhibit 2.3 38Percentage of All Firms Offering Health Benefits, by Firm Characteristics, 2004
Exhibit 2.4 39All Small Firms’ (3-199 Workers) Reasons for Not Offering Health Benefits, 2004
Exhibit 2.5 40The Percentage of Firms Offering Health Benefits to Part-Time Workers, by Firm Size, 1999-2004
Exhibit 2.6 41The Percentage of Firms Offering Health Benefits to Temporary Workers, by Firm Size, 1999-2004
L I S T O F E X H I B I T S
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
vi
Exhibit 2.7 42Percentage of Firms Offering Health Benefits to Nontraditional Partners, by Firm Size and Region, 2004
Exhibit 2.8 43Percentage of Firms Offering Health Benefits to Nontraditional Partners Whose Definition of Nontraditional Partners Includes Same Sex or Unmarried Heterosexual Couples, by Firm Size and Region, 2004
EMPLOYEE COVERAGE, ELIGIBILIT Y, AND PARTICIPATION
Exhibit 3.1 48Percentage of Workers Covered by Their Employer’s Health Benefits, in Firms Both Offering and Not Offering Health Benefits, by Firm Size, 2000-2004
Exhibit 3.2 49Eligibility, Take-Up Rates, and Coverage in Firms Offering Health Benefits, by Firm Size, Region, and Industry, 2004
Exhibit 3.3 50Percentage of Workers in Firms Offering Health Benefits Who Participate in (Take-up) Their Employer’s Health Plan, by Firm Size, 1999-2004
Exhibit 3.4 51Percentage of Workers in Firms Offering Health Benefits Who Are Covered by Their Employer’s Health Plan, by Firm Size, 1989-2004
Exhibit 3.5 52Average Waiting Period for New Employees to be Eligible for Health Coverage, 2004
Exhibit 3.6 53Average Waiting Period for New Employees to be Eligible for Health Coverage, by Firm Size, Region, and Industry, 2004
HEALTH INSURANCE CHOICE
Exhibit 4.1 58Percentage of Covered Workers With a Choice of Conventional, HMO, PPO, or POS Plans, 1988-2004
Exhibit 4.2 59Percentage of Employers Providing a Choice of Health Plans, by Firm Size, 2004
Exhibit 4.3 59Percentage of Covered Workers With a Choice of Health Plans, 1988-2004
Exhibit 4.4 60Percentage of Covered Workers With a Choice of Health Plans, by Firm Size, 1996-2004
Exhibit 4.5 61Percentage of Covered Workers With a Choice of Health Plans, by Region, 2004
Exhibit 4.6 62Distribution of Covered Workers With One or More Plan Options of the Same Plan Type, by Firm Size, 2004
Exhibit 4.7 63Distribution of Contribution Policies for Covered Workers Who Are Offered a Choice of Health Plans, by Firm Size, 2004
Exhibit 4.8 64Percentage of Firms Offering Employees a High-Deductible Health Plan, by Firm Size, 2003-2004
Exhibit 4.9 65Percentage of Firms Reporting Their Familiarity With the Following Types of Health Plans, 2004
Exhibit 4.10 66Percentage of Firms That Say They Are “Very Likely” or “Somewhat Likely” to Offer Workers a High-Deductible Plan with a Personal or Health Savings Account Option in the Next Two Years, 2004
MARKET SHARE S OF HEALTH PL ANS
Exhibit 5.1 69Health Plan Enrollment for Covered Workers, by Plan Type, 1988-2004
Exhibit 5.2 70Health Plan Enrollment, by Firm Size, Region, and Industry, 2004
EMPLOYEE CONTRIBUTIONS FOR PREMIUMS
Exhibit 6.1 74Average Monthly Worker Contribution for Single and Family Premiums, 1988-2004
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T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Exhibit 6.2 74Percentage of Premium Paid by Covered Workers for Single and Family Coverage, 1988-2004
Exhibit 6.3 75Average Annual Premiums for Covered Workers, Single and Family Coverage, by Plan Type, 2004
Exhibit 6.4 76Average Monthly and Annual Worker Premium Contributions, by Plan Type and Firm Size, 2004
Exhibit 6.5 77Average Monthly and Annual Worker Premium Contributions, by Plan Type and Region, 2004
Exhibit 6.6 78Monthly Worker Contributions for Single and Family Coverage in Conventional and HMO Plans, 1988-2004
Exhibit 6.7 78Monthly Worker Contributions for Single and Family Coverage in PPO and POS Plans, 1988-2004
Exhibit 6.8 79Distribution of Percentage of Single Premiums Paid by Firms for Covered Workers, by Firm Size, 2001-2004
Exhibit 6.9 80Distribution of Percentage of Family Premiums Paid by Firms for Covered Workers, by Firm Size, 2001-2004
Exhibit 6.10 81Percentage of Overall Single and Family Premiums Paid by Firm, by Percentage of Workforce That is Low Wage, 2004
Exhibit 6.11 82Percentage of Premium Paid by Firm for Typical Covered Worker, by Plan Type and Firm Size, 2004
Exhibit 6.12 83Percentage of Premium Paid by Covered Workers in Conventional and HMO Plans, 1988-2004
Exhibit 6.13 83Percentage of Premium Paid by Covered Workers in PPO and POS Plans, 1988-2004
Exhibit 6.14 84Percentage of Premium Paid by Firm for Typical Covered Worker, by Plan Type and Region, 2004
Exhibit 6.15 85Percentage of Premium Paid by Firm for Typical Covered Worker, by Plan Type and Industry, 2004
EMPLOYEE COST SHARING
Exhibit 7.1 90Percentage of Covered Workers With the Following Types of Cost Sharing for Health Benefits, 2004
Exhibit 7.2 91Average Annual Deductibles for Covered Workers, by Plan Type, 1988-2004
Exhibit 7.3 92Average Annual Deductible for Covered Workers, by Plan Type and Firm Size, 2004
Exhibit 7.4 93Average Annual Deductible for Covered Workers, by Plan Type and Region, 2004
Exhibit 7.5 94Distribution of Covered Workers in Firms That Have the Following Deductibles for PPO Plans, 2000-2004
Exhibit 7.6 95Distribution of Covered Workers Facing Various Copayments for Physician Office Visits, by Plan Type, 2003-2004
Exhibit 7.7 96Percentage of Covered Workers Facing HMO Copayments for Physician Office Visits, 1996-2004
Exhibit 7.8 97Coinsurance Rates Among Covered Workers Facing Coinsurance for Physician Office Visits, By Plan Type, 2004
Exhibit 7.9 98Distribution of Covered Workers With the Following Types of Cost Sharing for Physician Office Visits, 2004
Exhibit 7.10 98Distribution of Covered Workers With the Following Types of Cost Sharing for a Hospital Admission, 2004
Exhibit 7.11 99For Covered Workers With a Separate Hospital Deductible or Copay, the Average Cost Sharing Per Admission, By Plan Type, 2004
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
viii
Exhibit 7.12 100Average Hospital Cost Sharing for Covered Workers, 2004
Exhibit 7.13 101Percentage of Covered Workers in HMO, PPO, and POS Plans Whose Plan Has a Tiered Cost-Sharing Arrangement or Has Considered Introducing a Tiered Cost-Sharing Arrangement for Physician or Hospital Visits, 2004
HEALTH BENEFITS
Exhibit 8.1 105Level of Benefits for Covered Workers Compared to Last Year, All Plans, 2004
Exhibit 8.2 106Percentage of Covered Workers With Selected Benefits, by Firm Size, 2004
Exhibit 8.3 107Percentage of Covered Workers With Selected Benefits, by Plan Type and Firm Size, 2004
Exhibit 8.4 108Distribution of Covered Workers With Maximum Annual Out-of-Pocket Payment, by Plan Type and Firm Size, 2004
Exhibit 8.5 109Distribution of Covered Workers with Maximum Lifetime Benefit, by Plan Type and Firm Size, 2004
PRE SCRIPTION DRUG AND MENTAL HEALTH BENEFITS
Exhibit 9.1 114Distribution of Covered Workers Facing Different Cost-Sharing Formulas for Prescription Drug Benefits, 2000-2004
Exhibit 9.2 115Average Copays for Generic Drugs, Preferred Drugs, Nonpreferred and Four-Tier Drugs, 2000-2004
Exhibit 9.3 116Average Coinsurance Rate for Generic Drugs, Preferred Drugs, Nonpreferred and Four-Tier Drugs, 2000-2004
Exhibit 9.4 117Distribution of Covered Workers With the Following Types of Cost Sharing for Prescription Drugs, by Drug Type, 2004
Exhibit 9.5 118Percentage of Covered Workers With Mandatory Use of Generic Drugs, 1998-2004
Exhibit 9.6 119Percentage of Covered Workers With Mail Order Discount Plans for Prescription Drugs, 1998-2004
Exhibit 9.7 120Percentage of Covered Workers With Various Outpatient Mental Health Visit Annual Maximums, by Plan Type, 2004
Exhibit 9.8 120Percentage of Covered Workers With Various Annual Inpatient Mental Health Day Maximums, by Plan Type, 2004
PL AN FUNDING
Exhibit 10.1 123Percentage of Covered Workers in Partially or Completely Self-Funded Plans, by Firm Size, 1996-2004
Exhibit 10.2 124Percentage of Covered Workers in Partially or Completely Self-Funded Plans, by Plan Type, 1988-2004
Exhibit 10.3 125Percentage of Covered Workers in Partially or Completely Self-Funded Conventional Plans, by Firm Size, 1996-2004
Exhibit 10.4 125Percentage of Covered Workers in Partially or Completely Self-Funded HMO Plans, by Firm Size, 1996-2004
Exhibit 10.5 126Percentage of Covered Workers in Partially or Completely Self-Funded PPO Plans, by Firm Size, 1996-2004
Exhibit 10.6 126Percentage of Covered Workers in Partially or Completely Self-Funded POS Plans, by Firm Size, 1996-2004
Exhibit 10.7 127Percentage of Covered Workers Under Different Funding Arrangements, by Industry, 2004
ix
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
RETIREE HEALTH BENEFITS
Exhibit 11.1 131Percentage of All Large Firms (200 or More Workers) Offering Retiree Health Benefits, 1988-2004
Exhibit 11.2 132Percentage of Employers Offering Retiree Health Benefits, by Firm Size, Region, and Industry, 2004
Exhibit 11.3 133Percentage of All Large Firms (200 or More Workers) in Which Retirees Are Offered Health Insurance, by Whether or Not the Firm Has Union Workers, 2004
Exhibit 11.4 134Percentage of All Large Employers (200 or More Workers) Offering Health Benefits to Early and Medicare-Age Retirees, Among All Large Firms Offering Retiree Coverage, 1999-2004
Exhibit 11.5 135Percentage of All Large Employers (200 or More Workers) Offering Retiree Benefits to Early and Medicare-Age Retirees, Among All Large Firms Offering Retiree Coverage, by Firm Size, Region, and Industry, 2004
EMPLOYER ATTITUDE S AND OPINIONS
Exhibit 12.1 140Percentage of Firms That Shopped for a New Plan, and the Percentage of These Firms Reporting That They Changed Health Plan Types or Insurance Carriers in the Last Year, by Firm Size, 2004
Exhibit 12.2 141Distribution of Firms’ Opinions on the Effectiveness of the Following Cost Containment Strategies, 2004
Exhibit 12.3 142Percentage of Firms Reporting Changes in the Proportion of Covered Workers Enrolled in Family Coverage Over the Last Several Years, 2004
Exhibit 12.4 143Distribution of Firms Reporting the Use of the Following Contribution Approaches for Health Benefits, 2004
Exhibit 12.5 144Distribution of Firms Reporting the Likelihood of Adopting the Following Contribution Approaches for Health Benefits, 2004
Exhibit 12.6 145Percentage of Firms Reporting the Likelihood of Increasing Employees’ Share of Premiums for Family Coverage in the Next Two Years, 2004
Exhibit 12.7 146Percentage of Firms Reporting the Following Attitudes Toward Coverage for Workers and Dependent Family Members, 2004
Exhibit 12.8 147Percentage of Firms Whose Covered Workers Have Access to Quality of Care Information Through Internet Websites, and Firms’ Rating of the Quality of That Information, 2004
Exhibit 12.9 148Distribution of Firms Reporting the Likelihood of Making the Following Changes in the Next Year, by Firm Size, 2004
x
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
1
The rate of growth of health care pre-
miums moderated somewhat in the last
year, but continues to grow at double-
digit rates. Perhaps reflecting several
years of high premium growth and a
slow economy, the survey also found that
the percentage of all workers receiving
health coverage from their employer fell
from 65% in 2001 to 61% in 2004. As a
consequence, we estimate that there are
at least five million fewer jobs providing
health insurance in 2004 that in 2001. A
likely contributing factor is a decline in
the percentage of all small firms (3-199
workers) offering health insurance over
this period. In 2004, 63% of all small
firms offer health benefits to their work-
ers, down from 68% in 2001.2 Finally,
there has been growth over the past
year in the number of employers famil-
iar with and offering consumer-directed
health plan arrangements, specifically
those that combine a high-deductible
plan with a personal or health savings
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
19991996 1997 19981993 1994 19951988 1989 1990 1991 1992 20012000 2002 2003 2004
5.3*
0.8
8.5
12.0
18.0
14.0
8.2*
10.9*
12.9*
11.2*
13.9†
HEALTH INSURANCEPREMIUMS
WORKERS' EARNINGS
OVERALL INFLATION
E X H I B I T A
Increases in Health Insurance Premiums Compared to Other Indicators, 1988-2004
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002, 2003, 2004; 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), 1988-2004; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1988-2004.
* Estimate is statistically different from the previous year shown at p‹.05.
† Estimate is statistically different from the previous year shown at p‹.10.
Note: Data on premium increases reflect the total cost of health insurance premiums for a family of four. Historical estimates of workers’ earnings have been updated to reflect new industry classifications (NAICS).
1 Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured. Health Insurance Coverage in America, 2002 Data Update, December 2003.
2 The decline in the all small firm offer rate between 2001 and 2004 is significant at p<.10.
S u m m a r y o f F i n d i n g s
Employer-sponsored health insurance reaches more than three out of every five nonelderly Americans.1
To provide current information about the nature of employer-provided health benefits, the Kaiser Family
Foundation (KFF) and the Health Research and Educational Trust (HRET) conduct an annual national
survey of private and public employers of three or more workers. Kaiser and HRET have been conducting
the survey jointly since 1999. Prior to this, the survey was conducted by the Health Insurance Association
of America (HIAA) and Bearing Point (formerly KPMG). Findings in this report draw on the 1999–2004
Kaiser/HRET Survey of Employer-Sponsored Health Benefits, the 1993, 1996, and 1998 KPMG Surveys of
Employer-Sponsored Health Benefits, and the 1988, 1989 and 1990 studies conducted by HIAA.
2
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
account option. Despite increased interest
and knowledge about this type of plan, only
a small percentage of employers currently
offer a high-deductible plan with a personal
or health savings account option.
H E A LT H I N S U R A N C E P R E M I U M S
Between spring of 2003 and spring of 2004,
premiums for employer-sponsored health
insurance rose by 11.2%, lower than the 13.9%
increase in 2003, but still the fourth consec-
utive year of double-digit growth (Exhibit
A). Premiums continued to increase much
faster than overall inflation (2.3%) and wage
gains (2.2%). Since 2000, premiums for fam-
ily coverage have increased by 59%, com-
pared with inflation growth of 9.7% and
wage growth of 12.3%.
Average premium increases in 2004 are
similar across firm sizes and plan types,
but there is significant variability around
the average: 24% of employees work for
firms where premiums increased by five
percent or less, while 28% of employees
work for firms where premiums increased
by more than 15%. Average annual premi-
ums for employer-sponsored coverage rose
to $3,695 for single coverage and $9,950 for
family coverage (Exhibit B).
Although PPOs cover a majority of cov-
ered workers, HMOs remain less expensive.
Annual PPO premiums for single and fam-
ily coverage are $3,808 and $10,217, respec-
tively, compared to annual HMO premiums
of $3,458 for single coverage and $9,504 for
family coverage. Premiums in fully insured
plans and premium equivalents in self-
funded plans grew at similar rates.
E M P L O Y E E C O N T R I B U T I O N S
Almost 80% of covered workers with single
coverage, and over 90% of covered workers
with family coverage make a contribution
toward premiums in 2004 (Exhibit C).
Workers on average contribute $558 of the
$3,695 annual cost of single coverage and
$2,661 of the $9,950 annual cost of family
coverage toward premiums (Exhibit B).
The percentage of premiums paid by
workers is statistically unchanged over the
last several years, at 16% for single cover-
age and 28% for family coverage (Exhibit
D). All small (3-199 workers) and all large
(200 or more workers) firms contribute
about the same amount toward single cov-
erage, but all large firms contribute sig-
nificantly more than all small firms
towards family coverage.
This year we asked employers about benefit
practices that might discourage employees
from enrolling in health benefit plans.
Of firms offering health benefits, 17%
provide additional compensation or ben-
E X H I B I T B
Average Annual Premiums for Covered Workers, Single and Family Coverage by Plan Type, 2004
WORKER CONTRIBUTION
EMPLOYER CONTRIBUTION
CONVENTIONAL
SINGLE
FAMILY
HMO
SINGLE
FAMILY
ALL PLANS
SINGLE
FAMILY
PPO
SINGLE
FAMILY
POS
SINGLE
FAMILY
$2,000$0 $4,000 $6,000 $8,000 $10,000 $12,000
$3,352
$2,382
$468
$7,220
$552
$2,674
$2,906
$6,830
$558
$2,661
$3,137
$7,289
$2,691 $7,526
$2,618 $7,195
$573
$3,085$542
$3,235
$10,217*
$9,813
$9,950
$3,808*
$3,820
$9,602
$3,458*
$9,504*
$3,695
$3,627
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate of total premium is statistically different from All Plans by coverage type shown at p<.05.
Note: Family coverage is defined as health coverage for a family of four.
WORKER CONTRIBUTION
EMPLOYER CONTRIBUTION
CONVENTIONAL
SINGLE
FAMILY
HMO
SINGLE
FAMILY
ALL PLANS
SINGLE
FAMILY
PPO
SINGLE
FAMILY
POS
SINGLE
FAMILY
$2,000$0 $4,000 $6,000 $8,000 $10,000 $12,000
$3,352
$2,382
$468
$7,220
$552
$2,674
$2,906
$6,830
$558
$2,661
$3,137
$7,289
$2,691 $7,526
$2,618 $7,195
$573
$3,085$542
$3,235
$10,217*
$9,813
$9,950
$3,808*
$3,820
$9,602
$3,458*
$9,504*
$3,695
$3,627
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
3
efits to employees who decline the offer of
health coverage altogether. Twelve percent
of employers offering coverage vary the
amount that an employee must pay for
family coverage depending on whether the
employee’s family member has access to
coverage from another source, and three
percent of employers provide additional
compensation or benefits to employees that
0%
5%
10%
15%
20%
25%
30%
35%
FAMILY COVERAGESINGLE COVERAGE
11%
20% 21%
32%
26% 26%27%
1988
1993
1996
2000
2001
2002
2003
2004
28%29%
16% 16% 16%14%*
28%
14%
28%
E X H I B I T D
Percentage of Premium Paid by Covered Workers for Single and Family Coverage, 1988-2004
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; The Health Insurance Association of America (HIAA): 1988.
* Estimate is statistically different from the previous year shown at p<.05.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
E X H I B I T C
Distribution of Percentage of Premiums Paid by Firms for Covered Workers, by Firm Size, 2004
LESS THAN 50%
GREATER THAN OR EQUAL TO 50%, LESS THAN 75%
GREATER THAN OR EQUAL TO 75%, LESS THAN 100%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
SINGLE COVERAGE
FAMILY COVERAGE
ALL SMALL FIRMS(3-199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL FIRMS
ALL SMALL FIRMS(3-199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL FIRMS
17% 35% 42%5%
23% 65% 11%1%
21% 56% 21%2%
17%39% 15%28%
34% 56% 4%6%
36% 44% 7%13%
LESS THAN 50%
GREATER THAN OR EQUAL TO 50%, LESS THAN 75%
GREATER THAN OR EQUAL TO 75%, LESS THAN 100%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
SINGLE COVERAGE
FAMILY COVERAGE
ALL SMALL FIRMS(3-199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL FIRMS
ALL SMALL FIRMS(3-199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL FIRMS
17% 35% 42%5%
23% 65% 11%1%
21% 56% 21%2%
17%39% 15%28%
34% 56% 4%6%
36% 44% 7%13%
0%
5%
10%
15%
20%
25%
30%
35%
FAMILY COVERAGESINGLE COVERAGE
11%
20% 21%
32%
26% 26%27%
1988
1993
1996
2000
2001
2002
2003
2004
28%29%
16% 16% 16%14%*
28%
14%
28%
4
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
elect single rather than family coverage
(Exhibit E). Few employers say that they
are likely to adopt any of these practices in
the near future, but 41% of employers offer-
ing health benefits say that they are “very
likely” or “somewhat likely” to increase
the percentage of the family premium that
employees must pay in the next two years.
E M P L O Y E E C O S T S H A R I N G
In addition to their premium contributions,
most workers make additional payments
when they use health care services. Cost
PMS 575
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
YES
NO
DON’T KNOW
ADDITIONAL COMPENSATIONOR BENEFITS PROVIDED
IF EMPLOYEES ELECT SINGLERATHER THAN FAMILY COVERAGE
3%94%3%
3%80%17%
VARY CONTRIBUTION FOR FAMILYCOVERAGE IF FAMILY MEMBER HAS
OTHER INSURANCE COVERAGE OPTION5%83%12%
ADDITIONAL COMPENSATION ORBENEFITS PROVIDED IF EMPLOYEES
ELECT NOT TO PARTICIPATEIN FIRM’S HEALTH BENEFITS
E X H I B I T E
Distribution of Firms Reporting the Use of the Following Contribution Approaches for Health Benefits, 2004
Source: Kaiser/HRET Survey of Employer-Sponsored Insurance: 2004.
$0
$100
$200
$300
$400
$500
$600
$700
$900
$800
1988
1993
2000
2002
2003
2004
POSNONPREFERRED
PROVIDER
POSPREFERREDPROVIDER
CONVENTIONAL SINGLE
CONVENTIONAL FAMILY
PPOPREFERREDPROVIDER
HMO FAMILYHMO SINGLE PPONONPREFERRED
PROVIDER
352
442
^^
70
^^^^^^ ^^^^
163
222248
295
700*
466*
54
409*
495
106
175
275287
251*289
340
561* 558
113*
210
384414
861
785
30 44 65 80
580
177
375
575
170
E X H I B I T F
Average Annual Deductibles for Covered Workers by Plan Type, 1988-2004
$0
$100
$200
$300
$400
$500
$600
$700
$900
$800
1988
1993
2000
2002
2003
2004
POSNONPREFERRED
PROVIDER
POSPREFERREDPROVIDER
CONVENTIONAL SINGLE
CONVENTIONAL FAMILY
PPOPREFERREDPROVIDER
HMO FAMILYHMO SINGLE PPONONPREFERRED
PROVIDER
352
442
^^
70
^^^^^^ ^^^^
163
222248
295
700*
466*
54
409*
495
106
175
275287
251*289
340
561* 558
113*
210
384414
861
785
30 44 65 80
580
177
375
575
170
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1993; The Health Insurance Association of America (HIAA): 1988.
* Estimate is statistically different from the previous year shown at p<.05.
^ Information was not obtained for HMO plans prior to 2003, or for POS plans in 1988 and 1993.
Note: Average deductibles include covered workers who do not have a deductible or report a $0 deductible. For example, 30% of covered workers in PPO plans do not have a deductible for preferred providers. Among single workers enrolled in a PPO who do have a deductible, the average annual preferred provider deductible is $410 and the average nonpreferred provider deductible is $595.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
YES
NO
DON’T KNOW
ADDITIONAL COMPENSATIONOR BENEFITS PROVIDED
IF EMPLOYEES ELECT SINGLERATHER THAN FAMILY COVERAGE
3%94%3%
3%80%17%
VARY CONTRIBUTION FOR FAMILYCOVERAGE IF FAMILY MEMBER HAS
OTHER INSURANCE COVERAGE OPTION5%83%12%
ADDITIONAL COMPENSATION ORBENEFITS PROVIDED IF EMPLOYEES
ELECT NOT TO PARTICIPATEIN FIRM’S HEALTH BENEFITS
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
5
sharing rose only modestly in 2004, com-
pared to the larger increases observed in
recent years. Fifty-one percent of workers
are in a health plan that requires that a
deductible be met before most plan ben-
efits are provided. The average single cov-
erage deductible for PPO plans is $287 for
services from preferred providers and $558
for services from nonpreferred providers.
Both are statistically unchanged from 2003
(Exhibit F). PPO deductibles in all small
firms (3-199 workers) are substantially high-
er than PPO deductibles in larger firms,
with single coverage deductibles of $420
for preferred provider services and $676 for
nonpreferred-provider services.
More than half of covered workers face sepa-
rate cost sharing when they are admitted to
a hospital. Thirty percent of covered workers
face a separate deductible or copayment when
they are hospitalized, with an average pay-
ment of $224. Thirteen percent of workers face
separate coinsurance when they are hospital-
ized, with an average coinsurance rate of 16%.
An additional five percent of workers face both
a deductible or copayment and coinsurance
when hospitalized.
The vast majority of covered workers face
copayments when they go to the doctor or
fill a prescription. Copayments for physician
office visits rose modestly in 2004, with the
percentage of covered workers in plans with
a $20 copayment for office visits increasing
from 19% in 2003 to 27% this year. The aver-
age drug copayments for generic ($10), pre-
ferred ($21), and nonpreferred ($33) drugs
increased slightly over the last year.
C O V E R A G E
While the percentage of firms offering
health benefits is statistically unchanged
from last year, it has gradually declined
over the last few years (Exhibit G). Annual
changes have been small, but the cumu-
lative result is a statistically significant
decline in the percentage of firms offer-
ing health benefits, from 68% in 2001 to
63% in 2004.3 This drop is driven largely
by a significant decline in the percentage
of all small firms (3-199 workers) offering
coverage during this time.4 The drop in
offer rates are likely the result of multiple
years of double-digit premium increases,
combined with a slow job market. Driven
by similar factors, the percentage of work-
ers receiving health coverage from their
own employer (including those working
both for firms that offer and firms that do
not offer coverage) declined significantly
between 2001 and 2004, from 65% to
61%. A substantial portion of this decline
occurred among all small firms (3-199
workers).
0%
20%
40%
60%
80%
100%
10%
30%
50%
70%
90%
ALL SMALL FIRMS(3–199 WORKERS)
3–9 WORKERS 10–24 WORKERS 25–49 WORKERS 50–199 WORKERS ALL LARGE FIRMS(200 OR MORE WORKERS)
5356
7480
90 91 93
5552
7470*
9086 84
95 9592
96
63
1999
2000
2001
2002
2003
2004
1996
100 99 99 98 98 99
58
78
57 58 59
99
68 68
77
87
97* 97
76†
86
65† 66 65
E X H I B I T G
Percentage of Firms Offering Health Benefits, by Firm Size, 1996-2004
0%
20%
40%
60%
80%
100%
10%
30%
50%
70%
90%
ALL SMALL FIRMS(3–199 WORKERS)
3–9 WORKERS 10–24 WORKERS 25–49 WORKERS 50–199 WORKERS ALL LARGE FIRMS(200 OR MORE WORKERS)
5356
7480
90 91 93
5552
7470*
9086 84
95 9592
96
63
1999
2000
2001
2002
2003
2004
1996
100 99 99 98 98 99
58
78
57 58 59
99
68 68
77
87
97* 97
76†
86
65† 66 65
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996.
* Estimate is statistically different from the previous year shown at p<.05.
† Estimate is statistically different from the previous year shown at p<.10.
Note: The percentage of all small firms (3-199 workers) offering health benefits in 1999 was 65%, not 71% as reported last year.
3 The decline in offer rate for all firms between 2001 and 2004 is significant at p<.10.
4 The decline in the all small firm offer rate between 2001 and 2004 is significant at p<.10.
6
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Employers offering health benefits con-
tinue to vary substantially by firm size:
only 52% of the smallest companies (3-9
workers) offer health benefits, while 74% of
firms with 10-24 workers, and 87% of firms
with 25-49 workers, and nearly all firms
with 50 or more workers offer health
benefits.
Even when a firm offers health insurance,
not all workers get covered. Some workers
are not eligible to enroll as a result of wait-
ing periods or minimum work-hour rules,
and others choose not to enroll because
they must pay a share of the premium
or can get coverage through a spouse. In
firms that offer coverage, 80% of workers
are eligible for coverage, and 82% of those
eligible elect to enroll.
Fourteen percent of all firms offer health
benefits to same-sex couples, and twelve
percent offer health benefits to unmarried
heterosexual couples. Jumbo firms (5,000
or more workers) are more likely to offer
benefits to same-sex couples than smaller
firms. There are no significant differences
by firm size in firms’ likelihood of offer-
ing benefits to unmarried heterosexual
couples.
R E T I R E E C O V E R A G E
The recent passage of the 2003 Medicare
Prescription Drug Improvement and
Modernization Act, combined with cut-
backs in coverage by several large national
firms, has put a spotlight on retiree health
benefits. In 2004, 36% of all large firms (200
or more workers) offer retiree health cover-
age, virtually the same percentage as last
year, but down from 66% in 1988. Among
all large firms offering retiree benefits,
virtually all (96%) offer benefits to early
retirees, while about three-quarters offer
benefits to Medicare-age retirees.
H E A LT H P L A N E N R O L L M E N T A N D
C H O I C E
PPOs continue to be the most com-
mon plan in 2004, enrolling over half
of all employees with health coverage.
HMO enrollment remains stable this
year, enrolling 25% of covered workers.
Conventional (or indemnity) benefit
plans enroll just five percent of employees.
PPO coverage is available to almost eight in
ten covered workers and HMO coverage is
offered to just over half of covered workers.
Enrollment in POS plans has declined over
time, decreasing from 23% in 2001 to 15%
in 2004.
Most workers with health coverage through
their employer continue to have a choice
of health plans, with just under half having
a choice of three or more plans. Covered
workers in all small firms (3-199 workers)
are much less likely to have a choice of
health plans than covered workers in all
large firms (200 or more workers)—73% of
covered workers in all small firms that pro-
vide coverage are offered just one health
plan compared to 18% of covered workers
in all large firms.
H E A LT H B E N E F I T S
Most covered workers (79%) experienced
no change in benefits (other than cost
sharing) in 2004. All large (200 or more
workers) and all small (3-199 workers) firms
generally cover the same benefits, and
there is little difference for most benefits
across plan types.
O U T L O O K F O R T H E F U T U R E
Premiums continue to grow at double-
digit rates in 2004, slowing slightly from
prior years, but at a rate of more than five
times the rate of inflation. As we saw last
year, employers are somewhat skeptical
that current market strategies can have a
major impact on premium growth. When
asked about different approaches for reduc-
ing cost growth, only small percentages
of employers rate any of the following as
likely to be “very effective” at controlling
health insurance costs (15% for disease
management, 11% for consumer-driven
health plans, and nine percent each for
tightly managed care networks and higher
employee cost sharing), although 32% of
the largest firms (more than 5,000 employ-
ees) feel that disease management is likely
to be “very effective.” A majority of firms
report that most of these approaches are
likely to be “somewhat effective.”
Among firms offering coverage, 56% report
that they shopped for a new plan in the past
year. Of those firms, 31% report changing
insurance carriers in the past year and 34%
report changing the type of health plan
offered.
When asked about changes that they may
make in the near future, about half (52%)
of all large firms (200 or more workers)
and 15% of all small firms (3-199 workers),
say that they are “very likely” to increase
employee contributions. Relatively low
percentages of firms say that they are “very
likely” to raise deductibles (9%), raise office
visit cost sharing (5%), raise prescription
drug copayments (5%), introduce a tiered
network for physicians or hospitals (2%),
restrict eligibility for benefits (1%), or drop
coverage altogether (3%) (Exhibit H).
Many individuals in the employee benefits
and health policy communities have shown
interest in consumer-directed health plans,
particularly arrangements that combine a
high-deductible health plan with a person-
al or health savings account option. About
six percent of firms (employing about 13%
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
7
E X H I B I T H
Distribution of Firms Reporting Their Likelihood of Making the Following Changes in the Next Year, by Firm Size, 2004
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
VERY LIKELY
SOMEWHAT LIKELY
NOT AT ALL LIKELY
DON'T KNOWDON'T KNOW
NOT TOO LIKELY
INCREASE THE AMOUNT EMPLOYEESPAY FOR HEALTH INSURANCE
ALL SMALL FIRMS
ALL LARGE FIRMS
RESTRICT EMPLOYEEELIGIBILITY FOR COVERAGE
ALL SMALL FIRMS
ALL LARGE FIRMS
INCREASE THE AMOUNT EMPLOYEESPAY FOR PRESCRIPTION DRUGS
ALL SMALL FIRMS
ALL LARGE FIRMS
ALL SMALL FIRMS
INCREASE THE AMOUNT EMPLOYEES PAY FOR OFFICE VISIT COPAYS OR COINSURANCE
ALL LARGE FIRMS
ALL SMALL FIRMS
INTRODUCE TIERED NETWORKS FOR DOCTOR VISITS AND HOSPITAL STAYS
ALL LARGE FIRMS
*
*
*
*
INCREASE THE AMOUNT EMPLOYEESPAY FOR DEDUCTIBLES
ALL SMALL FIRMS
ALL LARGE FIRMS
DROP COVERAGE ENTIRELY
ALL SMALL FIRMS
ALL LARGE FIRMS
*
*
15% 29% 25% 28% 3%
1%52% 31% 9% 7%
5% 33% 34% 22% 6%
18% 37% 32% 12% 1%
8% 34% 29% 21% 8%
14% 38% 32% 16% 1%
5% 37% 28% 25% 6%
14% 38% 33% 14% 1%
2% 19% 39% 34% 6%
2% 24% 39% 34% 2%
1% 8% 28% 61% 2%
2% 7% 37% 53%
4% 1% 14% 81% 1%
1% 4% 94% <1%
Source: Kaiser/HRET Survey of Employer-Sponsored Insurance: 2004.
* Distributions are statistically different by firm size.
All small firms: 3-199 workers
All large firms: 200 or more workers
Note: Data for All Firms are nearly identical to data reported for All Small Firms.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
VERY LIKELY
SOMEWHAT LIKELY
NOT AT ALL LIKELY
DON'T KNOWDON'T KNOW
NOT TOO LIKELY
INCREASE THE AMOUNT EMPLOYEESPAY FOR HEALTH INSURANCE
ALL SMALL FIRMS
ALL LARGE FIRMS
RESTRICT EMPLOYEEELIGIBILITY FOR COVERAGE
ALL SMALL FIRMS
ALL LARGE FIRMS
INCREASE THE AMOUNT EMPLOYEESPAY FOR PRESCRIPTION DRUGS
ALL SMALL FIRMS
ALL LARGE FIRMS
ALL SMALL FIRMS
INCREASE THE AMOUNT EMPLOYEES PAY FOR OFFICE VISIT COPAYS OR COINSURANCE
ALL LARGE FIRMS
ALL SMALL FIRMS
INTRODUCE TIERED NETWORKS FOR DOCTOR VISITS AND HOSPITAL STAYS
ALL LARGE FIRMS
*
*
*
*
INCREASE THE AMOUNT EMPLOYEESPAY FOR DEDUCTIBLES
ALL SMALL FIRMS
ALL LARGE FIRMS
DROP COVERAGE ENTIRELY
ALL SMALL FIRMS
ALL LARGE FIRMS
*
*
15% 29% 25% 28% 3%
1%52% 31% 9% 7%
5% 33% 34% 22% 6%
18% 37% 32% 12% 1%
8% 34% 29% 21% 8%
14% 38% 32% 16% 1%
5% 37% 28% 25% 6%
14% 38% 33% 14% 1%
2% 19% 39% 34% 6%
2% 24% 39% 34% 2%
1% 8% 28% 61% 2%
2% 7% 37% 53%
4% 1% 14% 81% 1%
1% 4% 94% <1%
8
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
of covered workers) say that they are “very
likely” to offer this type of arrangement in
the next two years, and another 21% of firms
(employing about 26% of covered workers)
report being “somewhat likely” to do so.
This level of interest suggests that these
plans will become more popular over the
next few years.
Looking back from 2004, we see that the
percentage of all small firms (3-199 work-
ers) offering coverage has fallen from 68%
to 63% since 2001, and that over the same
period, the percentage of all workers who
obtain coverage through their own employ-
er has fallen from 65% to 61%, driven
primarily by a decline in coverage among
all small firms. Policymakers will want to
watch these trends closely in coming years
to determine whether these lower rates of
offering and coverage represent a perma-
nent loss to the system, or whether they
are temporary changes that will improve
with the economy and lower rates of cost
growth.
This year’s results also raise the question of
whether smaller firms will continue to sup-
port family coverage for their employees as
costs continue to rise. All small firms (3-199
workers) are significantly less likely than
all large firms (200 or more workers) to say
that it is important for the firm to make a
significant contribution towards the cost of
family coverage. This sentiment is borne
out by current practice: all small and all
large firms make about the same contribu-
tion toward the cost of single coverage, but
all small firms make a far smaller contri-
bution than all large firms toward family
coverage. The cost of family coverage today
is almost $10,000 per year (roughly a year’s
work at minimum wage). Small firms, who
pay their workers less on average than large
firms,5 may have a particularly difficult time
fitting family coverage into their employee
compensation packages if premium growth
continues at recent rates.
5 In the fourth quarter of 2004, the average total compensation in private establishments with fewer than 50 workers was $19.37 per hour, compared with average total compensation in private establishments of 500 or more workers of $32.54. The comparable averages in goods-producing establishments were $22.97 in private establishments with fewer than 50 workers and $37.89 in private establishments with 500 or more workers. For service-providing establishments, the comparable averages were $18.64 in private establishments with fewer than 50 workers and $31.03 in private establishments with 500 or more workers. Source: National Compensation Survey, Bureau of Labor Statistics, U.S. Department of Labor, Employer Cost of Employee Compensation, Data Extracted July 14, 2004. See www.bls.gov/ncs/home.htm.
Employer Health Benefits2004 Annual Survey
S u r v e y D e s i g n
a n d M e t h o d s
78.5 342.6
$227
46.9
%
Employer Health Benefits2004 Annual Survey
S u r v e y D e s i g n
a n d M e t h o d s
9
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
10
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Su
rvey Design
and M
ethods
SURVEY DESIGN AND METHODS
T h e K a i s e r F a m i l y F o u n d a t i o n a n d T h e H e a l t h R e s e a r c h a n d E d u c a t i o n a l T r u s t
( K a i s e r / H R E T ) c o n d u c t t h i s s u r v e y o f e m p l o y e r - s p o n s o r e d h e a l t h b e n e f i t s . F o r
m a n y y e a r s t h e i n t e r n a t i o n a l c o n s u l t i n g a n d a c c o u n t i n g f i r m , B e a r i n g P o i n t
( f o r m e r l y k n o w n a s K P M G ) , s u p p o r t e d t h e s t u d y . I n 1 9 9 8 , K P M G d i v e s t e d i t s e l f o f
i t s C o m p e n s a t i o n a n d B e n e f i t s P r a c t i c e , a n d p a r t o f t h a t d i v e s t i t u r e i n c l u d e d
d o n a t i n g t h e a n n u a l s u r v e y o f h e a l t h b e n e f i t s t o H R E T . H R E T i s a n o n p r o f i t
r e s e a r c h o r g a n i z a t i o n a f f i l i a t e d w i t h t h e A m e r i c a n H o s p i t a l A s s o c i a t i o n . T h e
K a i s e r F a m i l y F o u n d a t i o n p r o v i d e s f i n a n c i a l s u p p o r t a n d c o n d u c t s t h i s s u r v e y
i n p a r t n e r s h i p w i t h H R E T . T h e F o u n d a t i o n p r o v i d e s i n d e p e n d e n t r e s e a r c h a n d
a n a l y s i s o n h e a l t h p o l i c y i s s u e s , a n d i s n o t a f f i l i a t e d i n a n y w a y w i t h t h e K a i s e r
P e r m a n e n t e h e a l t h p l a n .
Kaiser/HRET asked each par-ticipating company as many as 400 questions about its larg-est conventional or indemnity, health maintenance organiza-tion (HMO), preferred provider organization (PPO) and point-of-service (POS) health plans. This year’s survey included questions on the cost of health insurance, offer rates, coverage, eligibility, health plan choice, enrollment patterns, premiums, employee cost sharing, covered benefits, prescription drug benefits, retir-ee health benefits and general policy perceptions and activities.
Kaiser/HRET retained National Research LLC (NR), a Washington, D.C.-based survey research firm, to conduct tele-phone interviews with human
resource and benefits managers. NR conducted interviews from January to May 2004.
R E S P O N S E R A T E
Kaiser/HRET drew its sample from a Dun & Bradstreet list of the nation’s private and public employers with three or more workers. To increase precision, Kaiser/HRET stratified the sam-ple by industry and the number of workers in the firm. Kaiser/HRET attempted to repeat interviews with prior years’ sur-vey respondents (with at least ten employees) who also par-ticipated in 2002 and/or 2003. As a result, 1,378 firms in this year’s total sample of 1,925 firms participated in either the 2002 and 2003 surveys.1 The overall response rate was 50%.
From previous years’ experi-ence, we have learned that firms that decline to participate in the study are more likely not to offer health benefits. Therefore, we asked one question to all firms in the study with which we made phone contact where the firm declined to participate. The question was, “Does your company offer or contribute to a health insurance program as a benefit to your employees?” A total of 3,017 firms responded to this question (including 1,925 who responded to the full survey and 1,092 who responded to this one question). Their responses are included in our estimates of the percentage of firms offering health benefits.2 The response rate for this question was 78%.
1 In total, 305 firms participated in 2002 and 2004, 191 firms participated in 2003 and 2004, and 882 firms participated in 2002, 2003, and 2004.
2 Estimates for EXHIBITS 2.1 and 2.2 are based on the sample of 3,017 firms.
n o t e :
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
11
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Su
rvey Design
and M
ethods
F I R M S I Z E D E F I N I T I O N S ,
R O U N D I N G , A N D
I M P U T A T I O N
Throughout the report, exhibits categorize data by industry, size of firm, and region. Firm size definitions are as follows: 3-199, All Small; and 200 or more work-ers, All Large. Occasionally, firm size categories will be broken into finer groups. The All Small group may be categorized by: 3-24 workers and 25-199 workers; or 3-9 workers, 10-24 workers, 25-49 workers, and 50-199 workers. The All Large group may be categorized by: 200-999 work-ers, midsize; 1,000-4,999 work-ers, large; and 5,000 or more workers, jumbo. Exhibit M.1 shows detailed characteristics of the sample.
Exhibit M.2 displays the dis-tribution of the nation’s firms, workers, and covered workers (of employees receiving coverage from their employer). Among the over three million firms nationally, approximately 60% are firms employing 3-9 work-ers. In contrast, jumbo firms, defined as firms with 5,000 or more workers, employ and cover about 40% of employees. Therefore, the smallest firms dominate any national statis-tics about what employers in general are doing. In contrast, jumbo employers are the most important employer group in calculating statistics regarding covered workers, since they employ the largest percentage of the nation’s workforce.
Some exhibits in Health Benefits 2004 do not sum up to 100% due to rounding effects. Also due to rounding, numbers in the text may be slightly differ-ent from those in the exhibits. Throughout the report, while overall totals as well as totals for size and industry are statistically valid, some breakdowns may not be available due to limited sample sizes. In instances where the sample size is less than 30, exhibits include the notation NSD (Not Sufficient Data).
To control for item nonresponse bias, Kaiser/HRET has tradition-ally identified a select set of key variables as needing complete information from all surveyed firms. These variables include percentage changes in premi-um costs for family coverage, premium amounts, worker con-tribution amounts, self-insur-ance status, level of benefits, prescription drug cost sharing, copay and coinsurance amounts for prescription drugs, and firm workforce characteristics such as average income and part-time status. On average, less than five percent of these observations are imputed for any given vari-able. The imputed values are determined based on the distri-bution of the reported values within stratum defined by firm size and region.
W E I G H T I N G A N D
S T A T I S T I C A L S I G N I F I C A N C E
Because Kaiser/HRET selects firms randomly, it is possible through the use of statisti-cal weights to extrapolate the results to national (as well as
regional, industry, and firm size) averages. These weights allow Kaiser/HRET to present findings based on the number of workers covered by health plans, the number of total workers, and the number of firms.
Calculation of the weights follows a common approach. First, the basic weight is deter-mined, followed by a nonre-sponse adjustment. As part of this nonresponse adjustment, Kaiser/HRET again conducted a small follow-up survey of those firms with 3-49 workers that refused to participate in the full survey. We concluded from this nonresponse analysis that those firms that did not even answer the single question in the origi-nal survey were more likely to not offer health benefits. We therefore applied an additional nonresponse adjustment to the weight to reflect this finding.
Next we trimmed the weights in order to reduce the influ-ence of weight outliers. First, the weights were ranked from largest to smallest based on their proportion of the total weight sum. Next, we identified trim-ming cut points such that the observations to be trimmed contribute no more than five percent towards the total weight sum. We also tried to minimize the number of nontrimmed observations that exceed the cut point after the trimming adjust-ment. This method reduced the variability in the weights and maintained, with a few excep-tions, the ordinal integrity of the observation weights.
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
12
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Su
rvey Design
and M
ethods
Finally, we applied a post-strati-fication adjustment. We use the recently released Statistics of U.S. Businesses conducted by the U.S. Census as the basis for the post-stratification adjust-ment.
The data are analyzed with SUDAAN, which computes appropriate standard error esti-mates by controlling for the complex design of the survey. All statistical tests are performed at the .05 level unless otherwise noted. For figures with multiple years, statistical tests are con-ducted for each year against the previous year shown. No statistical tests are conducted for years prior to 1996. Two types of significance tests performed are the t-Test and the Chi-square test.
H I S T O R I C A L D A T A
Data in this report focus pri-marily on findings from sur-veys jointly authored by the Kaiser Family Foundation and the Health Research and Educational Trust, which have been conducted since 1999. Prior to 1999, the survey was con-ducted by the Health Insurance Association of America (HIAA) and KPMG using the same sur-vey instrument, but data is not available for all the interven-ing years. Following the survey’s introduction in 1988, HIAA con-ducted the survey through 1990, but some data are not available to us. KPMG also conducted the survey from 1991-1998. However, in 1991, 1992, 1994, and 1997, only larger firms were sampled. In 1993, 1995, 1996, and 1998, KPMG interviewed both large and small firms.
This report uses data from the 1993, 1996, and 1998 KPMG Surveys of Employer-Sponsored Health Benefits and the 1999-2003 Kaiser/HRET Survey of Employer-Sponsored Health Benefits. For a longer-term per-spective, we also use the 1988 survey of the nation’s employ-ers conducted by the HIAA, on which the KPMG and Kaiser/HRET surveys are based. Many questions in the HIAA, the KPMG, and Kaiser/HRET sur-veys are identical. The survey designs among the three surveys are also similar.
Su
rvey Design
and M
ethods
Employer Health Benefits 2004 Annual Survey
13
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Exhibit M.1
Selected Characteristics of Firms in the Survey Sample, 2004
Sample Percentage of Sample Distribution Total for Size After Weighting Weighted Sample
FIRM SIZE
Small (3-9 Workers) 139 1,938,414 59.5%
Small (10-24 Workers) 222 761,934 23.4
Small (25-49 Workers) 172 274,113 8.4
Small (50-199 Workers) 268 204,408 6.3
Midsize (200-999 Workers) 392 56,516 1.7
Large (1,000-4,999 Workers) 389 16,170 .5
Jumbo (5,000 or More Workers) 343 7,810 .2
ALL FIRM SIZE S 1,925 3,259,365 100.0%
REGION
Northeast 423 654,193 20.1%
Midwest 524 779,350 23.9
South 620 1,090,571 33.5
West 358 735,251 22.6
ALL REGIONS 1,925 3,259,365 100.0%
INDUSTRY
Mining/Construction/Wholesale 191 602,666 18.5%
Manufacturing 252 226,340 6.9
Transportation/Communications/Utilities 104 128,374 3.9
Retail 185 442,772 13.6
Finance 150 214,504 6.6
Service 587 1,419,385 43.5
State/Local Government 284 47,702 1.5
Health Care 172 177,622 5.4
ALL INDUSTRIE S 1,925 3,259,365 100.0%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
Employer Health Benefits 2004 Annual Survey
14
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Su
rvey Design
and M
ethods
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
3–9 WORKERS
10–24 WORKERS
25–49 WORKERS
50–199 WORKERS
200–999 WORKERS
1,000–4,999 WORKERS
5,000 OR MORE WORKERS
EMPLOYERS WORKERS COVERED WORKERS
<1%<1%
6%
8%
59%
23%
14%
13%
12%
37%
7%
8%
9%
12%
14%
14%
41%
7%
5%
7%
2%
Distribution of Employers, Workers, and Workers Covered by Health Benefits, by Firm Size, 2004
Exhibit M.2
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
3–9 WORKERS
10–24 WORKERS
25–49 WORKERS
50–199 WORKERS
200–999 WORKERS
1,000–4,999 WORKERS
5,000 OR MORE WORKERS
EMPLOYERS WORKERS COVERED WORKERS
<1%<1%
6%
8%
59%
23%
14%
13%
12%
37%
7%
8%
9%
12%
14%
14%
41%
7%
5%
7%
2%
Note: Data are based on a special data request from the U.S. Census Bureau’s most recent Statistics of U.S. Businesses. State and local government data are from the Census of Governments.
Employer Health Benefits2004 Annual Survey
H e a l t h
B e n e f i t s
O f f e r R a t e s
s e c t i o n
2
$14.93
61%37,9
8397,294
Employer Health Benefits2004 Annual Survey
C o s t o f
H e a l t h
I n s u ra n c e
s e c t i o n
1
15
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
16
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Cost of H
ealth In
suran
cese
ctio
n o
ne
1 COST OF HEALTH INSURANCE
I n 2 0 0 4 , p r e m i u m s f o r j o b - b a s e d h e a l t h i n s u r a n c e r o s e b y 1 1 . 2 % , e x c e e d i n g b o t h t h e
o v e r a l l r a t e o f i n f l a t i o n a n d i n c r e a s e s i n w o r k e r s ’ w a g e s b y n e a r ly n i n e p e r c e n t a g e
p o i n t s ( E x h i b i t 1 . 2 ) . T h i s i s t h e f o u r t h c o n s e c u t i v e y e a r o f d o u b l e - d i g i t i n f l a t i o n .
S i n c e 2 0 0 0 , t h e c o s t o f j o b - b a s e d h e a l t h c o v e r a g e h a s i n c r e a s e d b y 5 9 % .
P r e m i u m i n c r e a s e s w e r e l e s s t h a n t h e 1 3 . 9 % f i g u r e p o s t e d i n 2 0 0 3 . T h i s m a r k e d
t h e f i r s t y e a r s i n c e 1 9 9 6 t h a t p r e m i u m i n c r e a s e s w e r e l o w e r t h a n i n c r e a s e s
i n t h e p r e v i o u s y e a r . C o u p l e d w i t h r e c e n t d e c l i n e s i n m e d i c a l c l a i m s e x p e n s e s ,
i t w o u l d a p p e a r t h a t t h e w o r s t o f t h e r e c e n t r o u n d o f i n f l a t i o n i s o v e r .
T h e a v e r a g e a n n u a l c o s t o f f a m i l y c o v e r a g e f o r a f a m i l y o f f o u r i n 2 0 0 4 i s $ 9 , 9 5 0
a n d t h e a v e r a g e c o s t f o r s i n g l e c o v e r a g e i s $ 3 , 6 9 5 . T h e r e i s a c o n s i d e r a b l e r a n g e
i n a v e r a g e p r e m i u m s a c r o s s p l a n t y p e s : t h e a v e r a g e a n n u a l p r e m i u m f o r
f a m i l y c o v e r a g e i n H M O p l a n s i s $ 9 , 5 0 4 , c o m p a r e d t o a n a v e r a g e a n n u a l p r e m i u m
o f $ 1 0 , 2 1 7 i n P P O p l a n s ( E x h i b i t s 1 . 1 3 , 1 . 1 4 , 1 . 1 5 ) .
P R E M I U M I N C R E A S E S
• The cost of health insur-ance rose by 11.2%, down from 13.9% reported in 2003 (Exhibit 1.1).
• All types of health plans experienced similar double-digit premium increases – conventional (11.1%), HMO (12.0%), PPO (10.9%) and POS (11.3%) (EXHIBIT 1.1).
• All large firms (200 or more workers) and all small firms (3-199 workers) had similar increases in premiums (11.1% vs. 11.5%) (EXHIBIT 1.3).
• There was considerable varia-tion in premium growth across employers: 24% of covered
workers are employed in firms with premium increases of five percent or less, while 28% of covered workers experienced premium increases of greater than 15% (EXHIBIT 1.4).
• Unlike 2003, premium equiv-
alents for self-funded plans rose at a statistically equiv-alent rate as premiums for fully insured plans (11.1% vs. 11.4%) (EXHIBIT 1.6).
M O N T H LY P R E M I U M C O S T S
O F S I N G L E A N D F A M I LY
C O V E R A G E
• The average monthly cost for single coverage in 2004 is $308 and the average monthly cost for family coverage is $829 (Exhibit 1.11).
• Covered workers in all large firms (200 or more workers) and all small firms (3-199 workers) face similar over-all premiums (EXHIBIT 1.13). As discussed in Section 7, however, covered workers in all small firms face higher deductibles than workers in all large firms.
• Although PPOs cover a majority of workers, HMOs remain considerably cheaper. PPO premiums for single and family coverage are $317 and $851 per month respectively, compared to HMO monthly premiums of $288 for single coverage and $792 for family coverage (EXHIBIT 1.11).
Employer Health Benefits 2004 Annual Survey
17
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
on
eC
ost of Health
Insu
rance
1Percentage Change in Health Insurance Premiums From Previous Year, by Plan Type, 1988-2004
Exhibit 1.1
-5%
0%
5%
10%
15%
20%
25%
1988
1993
1996
2000
2002
2003
2004
POSPPOHMOCONVENTIONAL ALL PLANS
12.0
0.8
12.4
1.9
7.7
-0.2
7.6*
20.3
7.2
1.0
5.2
^
1.1
9.18.5
11.2*
7.8*8.5*8.4
13.8*
15.2†
12.0*
13.7
10.9*
13.2
11.3
13.9†13.5*
12.7* 12.9*12.2*
8.2*
9.5*
14.3
11.1
-5%
0%
5%
10%
15%
20%
25%
1988
1993
1996
2000
2002
2003
2004
POSPPOHMOCONVENTIONAL ALL PLANS
12.0
0.8
12.4
1.9
7.7
-0.2
7.6*
20.3
7.2
1.0
5.2
^
1.1
9.18.5
11.2*
7.8*8.5*8.4
13.8*
15.2†
12.0*
13.7
10.9*
13.2
11.3
13.9†13.5*
12.7* 12.9*12.2*
8.2*
9.5*
14.3
11.1
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; The Health Insurance Association of America (HIAA): 1988.
* Estimate is statistically different from the previous year shown at p‹.05.
† Estimate is statistically different from the previous year shown at p‹.10.
^ Information was not obtained for POS plans in 1988.
Note: Data on premium increases reflect the cost of health insurance premiums for a family of four.
Employer Health Benefits 2004 Annual Survey
18
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Cost of H
ealth In
suran
cese
ctio
n o
ne
1 Exhibit 1.2
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
19991996 1997 19981993 1994 19951988 1989 1990 1991 1992 20012000 2002 2003 2004
HEALTH
INSURANCE
PREMIUMS
5.3*
0.8
8.5
12.0
18.0
14.0
8.2*
WORKERS'
EARNINGS
OVERALL
INFLATION
5.3*
3.6
2.3
1999
0.8
3.3
2.9
1996
8.5
2.5
3.2
1993
12.0
3.1
3.9
1988
18.0
4.2
5.1
1989
14.0
3.9
4.7
1990
8.2*
3.9
3.1
2000
10.9*
4.0
3.3
2001
12.9*
2002
2.6
1.6
3.0
2.2
13.9†
2003
11.2*
2.3
2.2
2004
10.9*
12.9*
11.2*
13.9†
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002, 2003, 2004; 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), 1988-2004; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April), 1988-2004.
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
19991996 1997 19981993 1994 19951988 1989 1990 1991 1992 20012000 2002 2003 2004
HEALTH
INSURANCE
PREMIUMS
5.3*
0.8
8.5
12.0
18.0
14.0
8.2*
WORKERS'
EARNINGS
OVERALL
INFLATION
5.3*
3.6
2.3
1999
0.8
3.3
2.9
1996
8.5
2.5
3.2
1993
12.0
3.1
3.9
1988
18.0
4.2
5.1
1989
14.0
3.9
4.7
1990
8.2*
3.9
3.1
2000
10.9*
4.0
3.3
2001
12.9*
2002
2.6
1.6
3.0
2.2
13.9†
2003
11.2*
2.3
2.2
2004
10.9*
12.9*
11.2*
13.9†
* Estimate is statistically different from the previous year shown at p‹.05.
† Estimate is statistically different from the previous year shown at p‹.10.
Note: Data on premium increases reflect the cost of health insurance premiums for a family of four. Historical estimates of workers’ earnings have been updated to reflect new industry classifications (NAICS).
Increases in Health Insurance Premiums Compared to Other Indicators, 1988-2004
Employer Health Benefits 2004 Annual Survey
19
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
on
eC
ost of Health
Insu
rance
1Percentage Change in Premiums for Covered Workers, by Firm Size, 2004
Exhibit 1.3
0% 2% 4% 6% 8% 10% 14%12%
ALL SMALL FIRMS(3–199 Workers)
SMALL FIRMS (3–24 Workers)
SMALL FIRMS (25–49 Workers)
SMALL FIRMS (50–199 Workers)
ALL LARGE FIRMS(200 or More Workers)
MIDSIZE FIRMS(200–999 Workers)
LARGE FIRMS(1,000–4,999 Workers)
JUMBO FIRMS(5,000+ Workers)
ALL FIRMS
11.5%
13.6%
9.1%*
10.3%
10.7%
11.6%
11.2%
11.1%
12.4%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate is statistically different from All Firms at p<.05.
Note: Data on premium increases reflect the total cost of health insurance premiums for a family of four.
Employer Health Benefits 2004 Annual Survey
20
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Cost of H
ealth In
suran
cese
ctio
n o
ne
1Distribution of Premium Increases for Covered Workers, by Firm Size, 2004
Exhibit 1.4
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Distribution is statistically different from All Firms at p<.05.
Note: Data on premium increases reflect the total cost of health insurance premiums for a family of four.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
LESS THAN OR EQUAL TO 5%
GREATER THAN 5%, LESS THAN OR EQUAL TO 10%
GREATER THAN 10%, LESS THAN OR EQUAL TO 15%
GREATER THAN 15%, LESS THAN OR EQUAL TO 20%
GREATER THAN 20%
ALL SMALL FIRMS(3–199 Workers)
*
ALL FIRMS
ALL LARGE FIRMS(200+ Workers)
29%21% 23%
18%30% 18% 18% 16%
26%24% 21% 19% 10%
7%19%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
LESS THAN OR EQUAL TO 5%
GREATER THAN 5%, LESS THAN OR EQUAL TO 10%
GREATER THAN 10%, LESS THAN OR EQUAL TO 15%
GREATER THAN 15%, LESS THAN OR EQUAL TO 20%
GREATER THAN 20%
ALL SMALL FIRMS(3–199 Workers)
*
ALL FIRMS
ALL LARGE FIRMS(200+ Workers)
29%21% 23%
18%30% 18% 18% 16%
26%24% 21% 19% 10%
7%19%
Employer Health Benefits 2004 Annual Survey
21
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
on
eC
ost of Health
Insu
rance
1Percentage Change in Premiums, by Firm Size and Plan Type, 2004*
Exhibit 1.5
Conventional HMO PPO POS All Plans
FIRM SIZE
All Small Firms (3-199 Workers) 9.2% 13.1% 10.0% 14.7% 11.5%
All Large Firms (200 or More Workers) 12.8 11.6 11.3 9.2 11.1
ALL FIRM SIZE S 11.1% 12.0% 10.9% 11.3% 11.2%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Tests found no statistically different estimates from All Plans within a firm size at p<.05.
Note: Data on premium increases reflect the cost of health insurance premiums for a family of four.
Employer Health Benefits 2004 Annual Survey
22
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Cost of H
ealth In
suran
cese
ctio
n o
ne
1Premium Increases, by Plan Type and Funding Arrangement, 2004*
Exhibit 1.6
ALL PLANSPOSPPOHMOCONVENTIONAL
11.1% 11.1%
SELF-FUNDED
FULLY INSURED10.0%
11.2%
13.1%
12.4%
10.3%
11.4%
12.5%
0%
2%
4%
6%
8%
10%
12%
14%
9.1%
ALL PLANSPOSPPOHMOCONVENTIONAL
11.1% 11.1%
SELF-FUNDED
FULLY INSURED10.0%
11.2%
13.1%
12.4%
10.3%
11.4%
12.5%
0%
2%
4%
6%
8%
10%
12%
14%
9.1%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Tests found no statistically different estimates between fully insured and self-funded plans at p<.05.
Fully insured plan: An insurance arrangement in which the employer contracts with a health plan to assume financial responsibility for the costs of enrollees’ medical claims.
Self-funded plan: An insurance arrangement in which the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. Employers sponsoring self-funded plans typically contract with a third-party administrator or insurer to provide administrative services for the self-funded plan.
Note: Data on premium increases reflect the total cost of health insurance premiums for a family of four.
Employer Health Benefits 2004 Annual Survey
23
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
on
eC
ost of Health
Insu
rance
1Premium Increases, by Funding Arrangement, 1998-2004
Exhibit 1.7
FULLY INSURED
9.3%*
1999
1998
2001
2000
2003
2004
2002
6.7%*
12.3%*
11.1%
SELF-FUNDED
12.4%
4.5%
12.4%*
13.5%
11.4%*
15.6%*
9.7%*9.4%
6.1%
4.5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
FULLY INSURED
9.3%*
1999
1998
2001
2000
2003
2004
2002
6.7%*
12.3%*
11.1%
SELF-FUNDED
12.4%
4.5%
12.4%*
13.5%
11.4%*
15.6%*
9.7%*9.4%
6.1%
4.5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1998.
* Estimate is statistically different from previous year shown at p<.05.
Fully insured plan: An insurance arrangement in which the employer contracts with a health plan to assume financial responsibility for the costs of enrollees’ medical claims.
Self-funded plan: An insurance arrangement in which the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. Employers sponsoring self-funded plans typically contract with a third-party administrator or insurer to provide administrative services for the self-funded plan.
Note: Data on premium increases reflect the total cost of health insurance premiums for a family of four.
Employer Health Benefits 2004 Annual Survey
24
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Cost of H
ealth In
suran
cese
ctio
n o
ne
1 Premium Increases, by Firm Size, 1996-2004
Exhibit 1.8
0%
2%
4%
6%
8%
10%
12%
14%
16%
1998
2000
2001
JUMBO FIRMS(5,000 OR MORE WORKERS)
LARGE FIRMS(1,000–4,999 WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
2.1
0.5
4.4*
0.3
2.6*
10.0*
8.1*
2002
2003
2004
1996
7.1*
10.3*
3.5*
1.1
5.2*
9.1*10.0*
12.7*12.5*12.4*13.5 13.2
11.6
14.1
10.7*
12.4
10.3
15.5
11.5*
6.9*
12.8*
0%
2%
4%
6%
8%
10%
12%
14%
16%
1998
2000
2001
JUMBO FIRMS(5,000 OR MORE WORKERS)
LARGE FIRMS(1,000–4,999 WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
2.1
0.5
4.4*
0.3
2.6*
10.0*
8.1*
2002
2003
2004
1996
7.1*
10.3*
3.5*
1.1
5.2*
9.1*10.0*
12.7*12.5*12.4*13.5 13.2
11.6
14.1
10.7*
12.4
10.3
15.5
11.5*
6.9*
12.8*
0%
2%
4%
6%
8%
10%
12%
WESTSOUTHMIDWESTNORTHEAST
1.0
4.0* 4.0*
0.6
2.9*
0.0
4.3*
8.8*
14%
16%
18%
7.3*
9.2*
10.9* 10.5* 10.4*
12.4*12.8*
16.3*
13.8
12.5
13.7
11.8*
1.5
9.9*
12.913.5
7.6*
1998
2000
2001
2002
2003
2004
1996
12.1*13.1*
11.3*
Premium Increases, by Region, 1996-2004
Exhibit 1.9
0%
2%
4%
6%
8%
10%
12%
WESTSOUTHMIDWESTNORTHEAST
1.0
4.0* 4.0*
0.6
2.9*
0.0
4.3*
8.8*
14%
16%
18%
7.3*
9.2*
10.9* 10.5* 10.4*
12.4*12.8*
16.3*
13.8
12.5
13.7
11.8*
1.5
9.9*
12.913.5
7.6*
1998
2000
2001
2002
2003
2004
1996
12.1*13.1*
11.3*
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998.
* Estimate is statistically different from the previous year shown at p<.05.
Note: Data on premium increases reflect the total cost of health insurance premiums for a family of four.
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998.
* Estimate is statistically different from the previous year shown at p<.05.
Note: Data on premium increases reflect the total cost of health insurance premiums for a family of four.
Employer Health Benefits 2004 Annual Survey
25
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
on
eC
ost of Health
Insu
rance
1Premium Increases, by Industry, 1996-2004
Exhibit 1.10
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998.
* Estimate is statistically different from the previous year shown at p<.05.
Note: Data on premium increases reflect the total cost of health insurance premiums for a family of four.
2%
0%
4%
6%
8%
16%
18%
14%
12%
10%
MINING/ CONSTRUCTION/
WHOLESALE
2.0
MANUFAC-TURING
0.7
TRANSPORTATION/ COMMUNICATION/
UTILITY
1.1
RETAIL
1.4
FINANCE
1.1
SERVICE
0.6
STATE/LOCAL GOVERNMENT
0.3
HEALTH CARE
0.4
8.7* 8.8*
7.9* 7.9*
9.2*
4.6
2.5
4.9*
3.9*4.3*
2.0
3.1*
1998
2000
2001
11.3
12.2 12.012.4
13.5
10.6
9.3
10.3
11.9*
11.1
2002
2003
2004
1996
9.0*
3.6*
7.3*
11.0*
14.0*
16.1
10.8*
14.9*
13.7
12.0
12.9
11.5
12.8
10.9
14.3
10.6*
13.7
10.7*
11.9
13.2*
7.7*
11.612.2*
9.6
12.4
13.013.0
2%
0%
4%
6%
8%
16%
18%
14%
12%
10%
MINING/ CONSTRUCTION/
WHOLESALE
2.0
MANUFAC-TURING
0.7
TRANSPORTATION/ COMMUNICATION/
UTILITY
1.1
RETAIL
1.4
FINANCE
1.1
SERVICE
0.6
STATE/LOCAL GOVERNMENT
0.3
HEALTH CARE
0.4
8.7* 8.8*
7.9* 7.9*
9.2*
4.6
2.5
4.9*
3.9*4.3*
2.0
3.1*
1998
2000
2001
11.3
12.2 12.012.4
13.5
10.6
9.3
10.3
11.9*
11.1
2002
2003
2004
1996
9.0*
3.6*
7.3*
11.0*
14.0*
16.1
10.8*
14.9*
13.7
12.0
12.9
11.5
12.8
10.9
14.3
10.6*
13.7
10.7*
11.9
13.2*
7.7*
11.612.2*
9.6
12.4
13.013.0
Employer Health Benefits 2004 Annual Survey
26
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Cost of H
ealth In
suran
cese
ctio
n o
ne
1Average Monthly Premiums for Covered Workers, Single and Family Coverage, by Plan Type, 2004
Exhibit 1.11
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate is statistically different from All Plans at p<.05.
Note: Family coverage is defined as health coverage for a family of four.
$0
$100
$200
$300
$400
$500
$600
$700
$900
$800
FAMILYSINGLE
HMO
CONVENTIONAL
POS
ALL PLANS
PPO
$318
$800 $792*
$302
$851*
$818$829
$308$317*$288*
$0
$100
$200
$300
$400
$500
$600
$700
$900
$800
FAMILYSINGLE
HMO
CONVENTIONAL
POS
ALL PLANS
PPO
$318
$800 $792*
$302
$851*
$818$829
$308$317*$288*
Employer Health Benefits 2004 Annual Survey
27
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
on
eC
ost of Health
Insu
rance
1Distribution of Single and Family Premiums for Covered Workers, 2001-2004
Exhibit 1.12
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2001, 2002, 2003, 2004.
* Estimate is statistically different from the previous year shown at p<.05.
0%
5%
10%
15%
20%
25%
30%
50%
40%
45%
35%
LESS THANOR EQUAL
TO 200
201–250 251–300 301–350 351–400 400 ORMORE
LESS THANOR EQUAL
TO 550
551–650 651–750 751–850 851–950 950 ORMORE
6*
10*
37
41
2
38
15
4
2
36*
FAMILY PREMIUMS ($)SINGLE PREMIUMS ($)
29*
11*
200220032004
2001
3
5*
27*
22*
16*
10*
20*
10*
13*
24*
38*
29*
25
13*
19*
7*
12*
5
8*
25
17*
38
5*
2
26*
6*
19*
2
19*
29* 29*
9*
14*
4*
14
4
0%
5%
10%
15%
20%
25%
30%
50%
40%
45%
35%
LESS THANOR EQUAL
TO 200
201–250 251–300 301–350 351–400 400 ORMORE
LESS THANOR EQUAL
TO 550
551–650 651–750 751–850 851–950 950 ORMORE
6*
10*
37
41
2
38
15
4
2
36*
FAMILY PREMIUMS ($)SINGLE PREMIUMS ($)
29*
11*
200220032004
2001
3
5*
27*
22*
16*
10*
20*
10*
13*
24*
38*
29*
25
13*
19*
7*
12*
5
8*
25
17*
38
5*
2
26*
6*
19*
2
19*
29* 29*
9*
14*
4*
14
4
Employer Health Benefits 2004 Annual Survey
28
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Cost of H
ealth In
suran
cese
ctio
n o
ne
1
Monthly Annual
Single Family Single Family Coverage Coverage Coverage Coverage
CONVENTIONAL PL ANS
All Small Firms (3-199 Workers) $318 $778 $3,815 $9,340
All Large Firms (200 or More Workers) 319 820 3,825 9,844
ALL FIRM SIZE S $318 $800 $3,820 $9,602
HMO PL ANS
All Small Firms (3-199 Workers) $289 $773 $3,468 $9,278
All Large Firms (200 or More Workers) 288 799 3,455 9,587
ALL FIRM SIZE S $288 $792 $3,458 $9,504
PPO PL ANS
All Small Firms (3-199 Workers) $323 $848 $3,872 $10,175
All Large Firms (200 or More Workers) 315 853 3,782 10,235
ALL FIRM SIZE S $317 $851 $3,808 $10,217
POS PL ANS
All Small Firms (3-199 Workers) $301 $766 $3,612 $ 9,197
All Large Firms (200 or More Workers) 303 849 3,637 10,193
ALL FIRM SIZE S $302 $818 $3,627 $9,813
ALL PL ANS
All Small Firms (3-199 Workers) $311 $811 $3,732 $ 9,737
All Large Firms (200 or More Workers) 306 837 3,678 10,046
ALL FIRM SIZE S $308 $829 $3,695 $9,950
Monthly and Annual Premiums for Covered Workers in Conventional, HMO, PPO, and POS Plans, by Firm Size, 2004*
Exhibit 1.13
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Tests found no statistically different estimates from All Firms within a plan type at p<.05.
Employer Health Benefits 2004 Annual Survey
29
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
on
eC
ost of Health
Insu
rance
1
Monthly Annual
Single Family Single Family Coverage Coverage Coverage Coverage
CONVENTIONAL PL ANS
Northeast $337 $855 $4,041 $10,256
Midwest 327 802 3,919 9,627
South 290 723 3,485 8,675
West 331 857 3,977 10,286
ALL REGIONS $318 $800 $3,820 $ 9,602
HMO PL ANS
Northeast $295 $821 $3,542 $9,848
Midwest 305 829 3,661 9,945
South 290 802 3,479 9,621
West 268* 731* 3,217* 8,777*
ALL REGIONS $288 $792 $3,458 $9,504
PPO PL ANS
Northeast $331* $918* $3,971* $11,010*
Midwest 319 869 3,832 10,428
South 308 813* 3,701 9,761*
West 325 860 3,899 10,317
ALL REGIONS $317 $851 $3,808 $10,217
POS PL ANS
Northeast $313 $862 $3,756 $10,347
Midwest 295 864 3,536 10,366
South 293 774 3,514 9,293
West 308 784 3,698 9,411
ALL REGIONS $302 $818 $3,627 $ 9,813
ALL PL ANS
Northeast $316 $871* $3,789 $10,449*
Midwest 314 857* 3,769 10,280*
South 302 802* 3,627 9,625*
West 302 802 3,629 9,629
ALL REGIONS $308 $829 $3,695 $ 9,950
Monthly and Annual Premiums for Covered Workers in Conventional, HMO, PPO, and POS Plans, by Region, 2004
Exhibit 1.14
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004. * Estimate is statistically different from All Regions within a plan type at p<.05.
Employer Health Benefits 2004 Annual Survey
30
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Cost of H
ealth In
suran
cese
ctio
n o
ne
1
Monthly Annual
Single Family Single Family Coverage Coverage Coverage Coverage
CONVENTIONAL PL ANS
Mining/Construction/Wholesale NSD NSD NSD NSD
Manufacturing $259* $699* $3,113* $8,383*
Transportation/Communication/Utility NSD NSD NSD NSD
Retail NSD NSD NSD NSD
Finance NSD NSD NSD NSD
Service 325 777 3,894 9,323
State/Local Government 369 927 4,428 11,121
Health Care NSD NSD NSD NSD
ALL INDUSTRIE S $318 $800 $3,820 $9,602
HMO PL ANS
Mining/Construction/Wholesale $244* $737* $2,934* $8,846*
Manufacturing 284 803 3,411 9,632
Transportation/Communication/Utility 275 778 3,295 9,342
Retail 285 789 3,420 9,474
Finance 296 808 3,552 9,691
Service 286 779 3,434 9,345
State/Local Government 311* 812 3,738* 9,740
Health Care 286 811 3,428 9,730
ALL INDUSTRIE S $288 $792 $3,458 $9,504
PPO PL ANS
Mining/Construction/Wholesale $290* $814* $3,479* $ 9,769*
Manufacturing 297* 826 3,570* 9,915
Transportation/Communication/Utility 292* 815 3,507* 9,783
Retail 288 806 3,455 9,675
Finance 339* 939* 4,068* 11,271*
Service 330 879 3,960 10,554
State/Local Government 342* 826 4,103* 9,906
Health Care 352* 913* 4,224* 10,952*
ALL INDUSTRIE S $317 $851 $3,808 $10,217
Monthly and Annual Premiums for Covered Workers in Conventional, HMO, PPO, and POS Plans, by Industry, 2004
Exhibit 1.15
Continued on page 31
Employer Health Benefits 2004 Annual Survey
31
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
on
eC
ost of Health
Insu
rance
1Monthly and Annual Premiums for Covered Workers in Conventional, HMO, PPO, and POS Plans, by Industry, 2004
Exhibit 1.15 Continued from page 30
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004
* Estimate is statistically different from All Industries within a plan type at p<.05.
NSD: Not Sufficient Data.
Monthly Annual
Single Family Single Family Coverage Coverage Coverage Coverage
POS PL ANS
Mining/Construction/Wholesale $278 $789 $3,341 $ 9,472
Manufacturing 254* 793 3,046* 9,516
Transportation/Communication/Utility NSD NSD NSD NSD
Retail NSD NSD NSD NSD
Finance 334 943* 4,014 11,321*
Service 297 764 3,563 9,172
State/Local Government 335 858 4,014 10,296
Health Care NSD NSD NSD NSD
ALL INDUSTRIE S $302 $818 $3,627 $ 9,813
ALL PL ANS
Mining/Construction/Wholesale $282* $796* $3,389* $9,552*
Manufacturing 288* 812 3,462* 9,748
Transportation/Communication/Utility 288 805 3,454 9,663
Retail 294 812 3,526 9,749
Finance 328* 905* 3,931* 10,854*
Service 311 822 3,734 9,867
State/Local Government 332* 830 3,989* 9,963
Health Care 333* 893* 4,000* 10,711*
ALL INDUSTRIE S $308 $829 $3,695 $9,950
33
72.4%
$423-19
912,792
Employer Health Benefits2004 Annual Survey
H e a l t h
B e n e f i t s
O f f e r R a t e s
s e c t i o n
2
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
34
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Health
Ben
efits Offer R
atesse
ctio
n tw
o
2
HEALTH BENEFITS OFFER RATES
A l t h o u g h n e a r l y a l l l a r g e f i r m s ( 2 0 0 o r m o r e w o r k e r s ) o f f e r h e a l t h b e n e f i t s ,
s m a l l f i r m s ( 3 - 9 w o r k e r s ) a r e o n l y a b o u t h a l f a s l i k e l y a s a l l l a r g e f i r m s t o o f f e r
c o v e r a g e ( E x h i b i t 2 . 2 ) .
A n n u a l c h a n g e s i n t h e o f f e r r a t e o v e r t h e l a s t s e v e r a l y e a r s h a v e b e e n s m a l l ; h o w e v e r ,
t h e c u m u l a t i v e r e s u l t i s a s t a t i s t i c a l ly s i g n i f i c a n t d r o p i n t h e p e r c e n t a g e o f f i r m s
o f f e r i n g h e a lt h b e n e f i t s s i n c e 2 0 0 1 . Th i s c h a n g e i s d r i v e n p r i m a r i ly b y a d e c r e a s e o f
f i v e p e r c e n t i n t h e n u m b e r o f a l l s m a l l f i r m s ( 3 - 1 9 9 w o r k e r s ) o f f e r i n g c o v e r a g e o v e r
t h i s t i m e p e r i o d . T h e d e c l i n e i n c o v e r a g e i s l i k e ly a r e s p o n s e t o f o u r c o n s e c u t i v e
y e a r s o f d o u b l e - d i g i t p r e m i u m g r o w t h , c o m b i n e d w i t h a s l o w j o b m a r k e t .
• Sixty-three percent of all small firms (3-199 work-ers) offer health insurance in 2004, down from 68% in 2001 (p<.10), but statistically unchanged from last year. The offer rate for all firms has fallen from 68% in 2001 to 63% over the same period (p<.10). Because there are so many more small firms than large firms, the offering prac-tices of small firms dominate the all-firm rate (Exhibit 2.2).
• The likelihood that a firm offers health benefits to its workers varies considerably with the firm’s characteristics, such as firm size, the propor-tion of part-time workers in the firm, and whether workers are unionized.
• The smallest firms are least likely to offer health insur-ance. Only 52% of firms with 3-9 workers offer cov-erage, compared to 74% of firms with 10-24 workers and 87% of firms with 25-49 workers. Nearly all firms with 50 or more employees offer health insurance cover-age (EXHIBIT 2.2).
• Firms with many part-time workers—where 35% or more of employees work part-time—are also less likely to offer coverage to their work-ers than firms with fewer part-time employees. Among firms with many part-time workers, only 42% offer health insurance, compared to 68% of firms with a lower per-centage of part-time workers (EXHIBIT 2.3).
• Firms that employ union workers are significantly more likely than firms without union workers to offer health benefits to their employees. Ninety-six percent of firms with union workers offer health benefits, whereas only 61% of firms that do not have union employees offer health coverage (EXHIBIT 2.3).
• Among firms offering health benefits, few offer benefits to their part-time and tempo-rary workers. The number of firms offering health benefits to part-time and temporary workers is similar to last year.
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
35
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
two
Health
Ben
efits Offer R
ates
2
• In 2004, 23% of all firms offer health benefits to part-time workers. Larger firms are more likely than smaller firms to do so. Only 20% of firms with 3-24 workers offer benefits to part-time workers, compared to 59% of jumbo firms (5,000 or more workers) (EXHIBIT 2.5).
• Regardless of firm size, very few firms overall (4%) offer health benefits to tem-porary workers. Less than four percent of firms with fewer than 200 workers and only seven percent of firms with 5,000 or more workers offer benefits to their tem-porary employees in 2004 (EXHIBIT 2.6).
• Fourteen percent of all firms offer health benefits to same-sex couples, and twelve per-cent offer health benefits to unmarried heterosexual cou-ples. Jumbo firms (5,000 or more workers) are more likely to offer benefits to same-sex couples than smaller firms.
There are no significant dif-ferences by firm size in firms’ likelihood of offering benefits to unmarried heterosexual couples (Exhibit 12.8).3
• Consistent with rapidly growing premium increases, the cost of health insurance remains the main reason cited by all small firms for not offering health coverage (Exhibit 2.4).
• Of all small firms (3-199 workers) not offering cover-age, 79% cite high premi-ums as a “very important” reason for not doing so (EXHIBIT 2.4).
• Other factors frequently cited by all small firms (3-199 workers) as “very impor-tant” reasons for not offering coverage include: employees are covered elsewhere (36%) and firm can attract good employees without offer-ing health insurance (31%) (EXHIBIT 2.4).
• Some firms not offering health insurance nevertheless shopped for a plan in the past year.
• Of all nonoffering firms, 20% report shopping for a plan in the past year, including 66% of firms with 50-199 workers.
• Despite significant premium increases in recent years, very few employers indicate that they are likely to drop coverage in the near future. Less than five percent of employers say that they are either “very likely” or “somewhat likely” to drop coverage in the next year. Similarly, just under one per-cent of employers say that they are “very likely” to restrict eligi-bility for benefits in the next year, with an additional eight percent indicating that they are “somewhat likely” to do so (see Section 12).
n o t e :
3 Same-sex couples and unmarried heterosexual couples are required to pay federal income tax (and in most cases state and local income tax) on employer-sponsored health benefits; these same benefits are not taxable for federally recognized marriages of opposite sex partners. To date, the IRS has not altered this policy for same-sex partners who are U.S. citizens and permanent residents who have been legally married in other countries or within the U.S.
Employer Health Benefits 2004 Annual Survey
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
36
sec
tion
two
Health
Ben
efits Offer R
ates
2
Percentage of All Firms Offering Health Benefits, 1996-2004
Exhibit 2.1
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998.
* Estimate is statistically different from the previous year shown at p<.05 .
Note: The percentage of all small firms (3-199 workers) offering health benefits in 1999 was 66%, not 61% as reported last year.
10%
0%
20%
30%
40%
50%
60%
70%
55%
1998 20011996
59%
20001999
69%66%*
2002
66%
20042003
63%66%
68%
Health
Ben
efits Offer R
atesEmployer Health Benefits 2004 Annual Survey
37
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
two
2
Percentage of Firms Offering Health Benefits, by Firm Size, 1996-2004
Exhibit 2.2
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996.
* Estimate is statistically different from the previous year shown at p<.05.
† Estimate is statistically different from the previous year shown at p<.10.
Note: The percentage of all small firms (3-199 workers) offering health benefits in 1999 was 65%, not 71% as reported last year.
0%
20%
40%
60%
80%
100%
10%
30%
50%
70%
90%
ALL SMALL FIRMS(3–199 Workers)
3–9 WORKERS 10–24 WORKERS 25–49 WORKERS 50–199 WORKERS ALL LARGE FIRMS(200 or More
Workers)
5356
74
80
90
86
9193
65†
5552
74
70*
76†
90
8684
95 9592
66
96
6563
1999
2000
2001
2002
2003
2004
1996
10099 99 98 98 99
58
78
57 58 59
99
68 68
77
87
97*97
0%
20%
40%
60%
80%
100%
10%
30%
50%
70%
90%
ALL SMALL FIRMS(3–199 Workers)
3–9 WORKERS 10–24 WORKERS 25–49 WORKERS 50–199 WORKERS ALL LARGE FIRMS(200 or More
Workers)
5356
74
80
90
86
9193
65†
5552
74
70*
76†
90
8684
95 9592
66
96
6563
1999
2000
2001
2002
2003
2004
1996
10099 99 98 98 99
58
78
57 58 59
99
68 68
77
87
97*97
Employer Health Benefits 2004 Annual Survey
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
38
sec
tion
two
Health
Ben
efits Offer R
ates
2
Percentage of All Firms Offering Health Benefits, by Firm Characteristics, 2004
Exhibit 2.3
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimates are statistically different from each other within categories at p<.05.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
HIGHER WAGE(LESS THAN 35% EARN
$20,000 A YEAR OR LESS)
WAGE LEVEL*
LOWER WAGE(35% OR MORE EARN
$20,000 A YEAR OR LESS)
LOW TURNOVER(LESS THAN 50% OF THE WORKFORCE
LEFT THE BUSINESS IN THE LAST YEAR)
TURNOVER
HIGH TURNOVER(50% OR MORE OF THE WORKFORCE
LEFT THE BUSINESS IN THE LAST YEAR)
FEW WORKERS ARE PART-TIME(LESS THAN 35% WORK PART-TIME)
PART-TIME WORKERS*
MANY WORKERS ARE PART-TIME(35% OR MORE WORK PART-TIME)
FIRM HAS UNION WORKERS
UNIONS*
FIRM DOES NOT HAVEUNION WORKERS
69%
36%
63%
55%
68%
42%
96%
61%
Health
Ben
efits Offer R
atesEmployer Health Benefits 2004 Annual Survey
39
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
two
2
Very Somewhat Not Too Not At All Don’t Important Important Important Important Know
High Premiums 79% 7% 4% 9% 1%
Employees Covered Elsewhere 36% 36% 14% 12% 2%
High Turnover 13% 18% 22% 47% 0%
Obtain Good Employees Without 31% 36% 10% 23% 1%Offering A Health Plan
Administrative Hassle 9% 26% 29% 35% 2%
Firm Too Newly Established 8% 9% 10% 72% 2%
Firm Is Too Small 50% 19% 14% 17% 0%
Firm Has Seriously Ill Employee 11% 8% 10% 71% 0%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
All Small Firms’ (3-199 Workers) Reasons for Not Offering Health Benefits, 2004
Exhibit 2.4
Employer Health Benefits 2004 Annual Survey
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
40
sec
tion
two
Health
Ben
efits Offer R
ates
2
The Percentage of Firms Offering Health Benefits to Part-Time Workers, by Firm Size, 1999-2004*
Exhibit 2.5
0%
10%
20%
30%
40%
50%
60%
70%
2001
5,000 OR MOREWORKERS
ALL FIRMS1,000–4,999WORKERS
200-999WORKERS
25-199WORKERS
3–24 WORKERS
2002
2003
1999
2000
2004
2124
1921 20
26 25
31
42 43
3633
41
55
48
53
6057
50
60
52
6158 57
59
2123
2124
2623
29 29 29
17
38
0%
10%
20%
30%
40%
50%
60%
70%
2001
5,000 OR MOREWORKERS
ALL FIRMS1,000–4,999WORKERS
200-999WORKERS
25-199WORKERS
3–24 WORKERS
2002
2003
1999
2000
2004
2124
1921 20
26 25
31
42 43
3633
41
55
48
53
6057
50
60
52
6158 57
59
2123
2124
2623
29 29 29
17
38
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Insurance: 1999, 2000, 2001, 2002, 2003, 2004.
* Tests found no statistically different estimates from the previous year shown at p<.05.
Health
Ben
efits Offer R
atesEmployer Health Benefits 2004 Annual Survey
41
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
two
2
The Percentage of Firms Offering Health Benefits to Temporary Workers, by Firm Size, 1999-2004*
Exhibit 2.6
0%
5%
10%
15%
20%
25%
2001
5,000 OR MOREWORKERS
ALL FIRMS1,000–4,999WORKERS
200-999WORKERS
25-199WORKERS
3–24 WORKERS
2002
2003
1999
2000
2004
3%
1%
4%
3%
6%
8%
3%
5%
9%
8%
9%
8%
6%
8%
7%
6%
7%
9%
8%
7%
10%
7%
4% 4% 4%
3%
2%
4%4%
3%
7%
3% 3%
4%
2%
5%
0%
5%
10%
15%
20%
25%
2001
5,000 OR MOREWORKERS
ALL FIRMS1,000–4,999WORKERS
200-999WORKERS
25-199WORKERS
3–24 WORKERS
2002
2003
1999
2000
2004
3%
1%
4%
3%
6%
8%
3%
5%
9%
8%
9%
8%
6%
8%
7%
6%
7%
9%
8%
7%
10%
7%
4% 4% 4%
3%
2%
4%4%
3%
7%
3% 3%
4%
2%
5%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002, 2003, 2004.
* Tests found no statistically different estimates from the previous year shown at p<.05.
Employer Health Benefits 2004 Annual Survey
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
42
sec
tion
two
Health
Ben
efits Offer R
ates
2
Percentage of Firms Offering Health Benefits to Nontraditional Partners, by Firm Size and Region, 2004
Exhibit 2.7
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
Nontraditional Partners
FIRM SIZE
Small (3-24 Workers) 21%
Small (25-49 Workers) 15
Small (50-199 Workers) 12
ALL SMALL FIRMS (3-199 W ORKERS) 19%
Midsize (200-999 Workers) 18
Large (1,000-4,999 Workers) 16
Jumbo (5,000 or More Workers) 32*
ALL L ARGE FIRMS (200 OR MORE W ORKERS) 19%
REGION
Northeast 34%
Midwest 12
South 7*
West 33
ALL FIRM SIZE S AND REGIONS 19%
* Estimate is statistically different from All Firms at p<.05.
Health
Ben
efits Offer R
atesEmployer Health Benefits 2004 Annual Survey
43
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
two
2
Percentage of Firms Offering Health Benefits to Nontraditional Partners Whose Definition of Nontraditional Partners Includes Same-Sex or Unmarried Heterosexual Couples, by Firm Size and Region, 2004‡
Exhibit 2.8
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
Unmarried Same-Sex Heterosexual Couples Eligible Couples Eligible
FIRM SIZE
Small (3-24 Workers) 14% 13%
Small (25-49 Workers) 14 13
Small (50-199 Workers) 10 10
ALL SMALL FIRMS (3-199 W ORKERS) 14% 12%
Midsize (200-999 Workers) 13 13
Large (1,000-4,999 Workers) 15 11
Jumbo (5,000 or More Workers) 32* 20
ALL L ARGE FIRMS (200 OR MORE W ORKERS) 15% 13%
REGION
Northeast 30% 22%
Midwest 7 7
South 3* 3*
West 23 24
ALL FIRM SIZE S AND REGIONS 14% 12%
* Estimate is statistically different from All Firms at p<.05.
‡ These questions were asked of firms that reported offering nontraditional partners health coverage, but are presented as a percentage of all firms offering health benefits. We assume firms not offering nontraditional partner benefits do not offer benefits to same-sex or unmarried heterosexual couples. A small percentage (approximately two percent) of firms responded ‘don’t know’ to either or both questions.
73.9%
$42629.
297,843
Employer Health Benefits2004 Annual Survey
s e c t i o n
E m p l o y e e
C o v e ra g e ,
E l i g i b i l i t y, a n d
Pa r t i c i p a t i o n
3
45
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
46
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
section
three
Em
ployee Coverage, E
ligibility, and Participation
3
EMPLOYEE COVERAGE, ELIGIBILITY, AND PARTICIPATION
E m p l o y e r s a r e t h e p r i n c i p a l s o u r c e o f h e a l t h i n s u r a n c e i n t h e U . S . , p r o v i d i n g h e a l t h
b e n e f i t s t o a b o u t 6 3 % o f n o n e l d e r l y p e r s o n s i n 2 0 0 2 . 4 A l t h o u g h t h e p e r c e n t a g e
o f w o r k e r s r e c e i v i n g h e a l t h i n s u r a n c e t h r o u g h t h e i r o w n e m p l o y e r h a s e x h i b i t e d
o n ly s l i g h t a n n u a l d e c l i n e s , t h e c u m u l a t i v e d r o p s i n c e 2 0 0 1 i s o v e r f o u r p e r c e n t a g e
p o i n t s . T h e m a j o r i t y o f t h i s d e c l i n e i s a m o n g a l l s m a l l f i r m s ( 3 - 1 9 9 w o r k e r s ) . A s a
c o n s e q u e n c e , w e e s t i m a t e t h a t t h e r e a r e a t l e a s t f i v e m i l l i o n f e w e r j o b s p r o v i d i n g
h e a l t h i n s u r a n c e i n 2 0 0 4 t h a n i n 2 0 0 1 .
M o s t w o r k e r s a r e o f f e r e d h e a lt h c o v e r a g e a t w o r k , a n d t h e v a s t m a j o r i t y o f w o r k e r s
w h o a r e o f f e r e d c o v e r a g e t a k e i t . W o r k e r s w i t h o u t c o v e r a g e t h r o u g h t h e i r o w n
e m p l o y e r m a y n o t b e o f f e r e d c o v e r a g e b y t h e i r f i r m , m a y b e i n e l i g i b l e f o r b e n e f i t s
o f f e r e d b y t h e i r f i r m , o r m a y r e f u s e a n o f f e r o f c o v e r a g e f r o m t h e i r f i r m .
• Among firms offering health benefits, 67% of workers are covered by their own firm’s health plan, a similar rate to last year (Exhibit 3.2).
• Despite only small annual declines in the percentage of workers receiving coverage through their own employ-er, coverage (in firms both offering and not offering health benefits) decreased significantly between 2001 and 2004 from 65% to 61%. The majority of this decline in the number of jobs with health insurance is among all small firms (3-199 work-ers) (EXHIBIT 3.1).
• Coverage rates do not differ significantly by firm size, but they do vary by industry, like-ly due to differences in eligi-bility. The coverage rate for workers in the retail industry is 47%, compared to 84% for state and local government workers and 82% for those working in the transportation, communication, and utility industries (EXHIBIT 3.2).
• Higher wage firms—where fewer than 35% of workers earn $20,000 or less annu-ally—have higher cover-age rates than lower wage firms—where 35% or more of workers earn $20,000 or less annually. Seventy percent of
workers in higher wage firms that offer health benefits are covered, compared to 46% of workers in lower wage firms offering benefits.
• Even in firms that offer cov-
erage, not all employees are eligible for their firm’s health benefits. Additionally, not all employees with an offer of health coverage participate in it. The number of work-ers covered is a product of both the percentage of work-ers who are actually eligible for the firm’s health insur-ance and the percentage who choose to “take up” (i.e., elect to participate in) the benefit.
n o t e :
4 Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured. Health Insurance Coverage in America: 2002 Data Update, December 2003.
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
47
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
section
three
3
Em
ployee Coverage, E
ligibility, and Participation
• Eligibility for health benefits does not vary by firm size and is unchanged from last year. Overall, 80% of workers in firms offering health ben-efits are eligible for coverage (EXHIBIT 3.2).
• Employees who are offered coverage through their employer generally elect to participate in it (the “take-up” rate). Eighty percent of workers in all small firms (3-199 workers) take up cover-age, similar to 83% of workers in all large firms (200 or more workers) who choose to par-ticipate. These numbers are statistically unchanged from 2003, but the percentage of workers who take up cover-age in all small firms is sta-tistically different from 2001 (84%) (EXHIBITS 3.2, 3.3).
• The take-up of employer-spon-sored coverage varies some-what by industry. Workers in retail have a lower take-up rate (77%) than workers in other industries. Ninety-four percent of workers in state/local government and 92% of workers in the transportation, communication, and utility industries take up an offer of employer-sponsored coverage (EXHIBIT 3.2).
• The likelihood of accept-ing a firm’s offer of cover-age varies by firm wage level. Employees in higher wage firms—where fewer than 35% of workers earn $20,000 or less annually—are more like-ly to take up coverage (84%) than employees in lower wage firms (35% or more of workers earn $20,000 or less annu-ally) (71%).
• One aspect of coverage affecting eligibility is new employees’ waiting period for coverage. Eighty-two per-cent of covered workers in all small firms (3-199 workers) and 65% of covered workers in all large firms (200 or more workers) work for a firm that imposes a waiting period on new employees before they are eligible for coverage. The average waiting period for coverage is unchanged from last year at 1.6 months (Exhibit 3.5).
Employer Health Benefits 2004 Annual Survey
48
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
section
three
Em
ployee Coverage, E
ligibility, and Participation
3
Percentage of Workers Covered by Their Employer’s Health Benefits, in Firms Both Offering and Not Offering Health Benefits, by Firm Size, 2000-2004*
Exhibit 3.1
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002, 2003, 2004.
* Tests found no statistically different estimates from the previous year shown at p<.05.
Note: The total percentage of covered workers in this figure is calculated from the universe of all workers – including those in firms that do not offer coverage.
2000 2001 2002 2003 2004
FIRM SIZE
3-24 Workers 50% 49% 45% 44% 43%
25-49 Workers 63 62 57 59 56
50-199 Workers 62 67 64 61 56
200-999 Workers 69 71 69 68 69
1,000-4,999 Workers 68 69 70 69 68
5,000 or More Workers 66 69 68 68 67
ALL SMALL FIRMS (3-199 W ORKERS) 57% 58% 54% 53% 50%
ALL LARGE FIRMS (200 OR MORE WORKERS) 67% 69% 69% 68% 68%
ALL FIRMS 63% 65% 63% 62% 61%
Employer Health Benefits 2004 Annual Survey
49
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
section
three
Em
ployee Coverage, E
ligibility, and Participation
3
Eligibility, Take-Up Rates, and Coverage in Firms Offering Health Benefits, by Firm Size, Region, and Industry, 2004
Exhibit 3.2
Percentage of Percentage of Workers Workers Who Percentage of Eligible for Health Participate in Their Workers Covered by Benefits Offered Employers’ Plan Their Employers’ by Their Employer (Take-Up Rate) Health Benefits
FIRM SIZE
Small (3-24 Workers) 86%* 78% 67%
Small (25-49 Workers) 82 78 65
Small (50-199 Workers) 73* 83 61
ALL SMALL FIRMS (3-199 W ORKERS) 80 80 64
Midsize (200-999 Workers) 82 84 70
Large (1,000-4,999 Workers) 80 84 68
Jumbo (5,000 or More Workers) 80 83 67
ALL LARGE FIRMS (200 OR MORE WORKERS) 81% 83% 68%
REGION
Northeast 81% 79% 64%
Midwest 82 83 69
South 81 83 68
West 77 82 64
INDUSTRY
Mining/Construction/Wholesale 78% 80% 61%
Manufacturing 91* 87* 80*
Transportation/Communication/Utility 90* 92* 82*
Retail 62* 77* 47*
Finance 88* 84 73*
Service 76 76* 59*
State/Local Government 90* 94* 84*
Health Care 77 84 65
ALL FIRM SIZE S, REGIONS, AND INDUSTRIE S 80% 82% 67%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate is statistically different from All Firms at p<.05.
Take-up rate: The percentage of eligible workers who choose to participate in health benefits offered by their employer.
Employer Health Benefits 2004 Annual Survey
50
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
section
three
Em
ployee Coverage, E
ligibility, and Participation
3
Percentage of Workers in Firms Offering Health Benefits Who Participate in (Take-up) Their Employer’s Health Plan, by Firm Size, 1999-2004*
Exhibit 3.3
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002, 2003, 2004.
* Tests found no statistically different estimates from the previous year shown at p<.05.
Take-up rate: The percentage of eligible workers who choose to participate in health benefits offered by their employer.
0%
10%
20%
30%
40%
50%
60%
70%
90%
80%
1999
2000
2001
ALL LARGE FIRMS (200 OR MORE WORKERS)
85% 84% 83%83%83%
ALL FIRMS
84% 84% 83% 82%83%83%
2002
2003
2004
ALL SMALL FIRMS (3–199 WORKERS)
82% 81% 80%
84% 84%83% 83%
0%
10%
20%
30%
40%
50%
60%
70%
90%
80%
1999
2000
2001
ALL LARGE FIRMS (200 OR MORE WORKERS)
85% 84% 83%83%83%
ALL FIRMS
84% 84% 83% 82%83%83%
2002
2003
2004
ALL SMALL FIRMS (3–199 WORKERS)
82% 81% 80%
84% 84%83% 83%
Employer Health Benefits 2004 Annual Survey
51
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
section
three
Em
ployee Coverage, E
ligibility, and Participation
3
Percentage of Workers in Firms Offering Health Benefits Who Are Covered by Their Employer’s Health Plan, by Firm Size, 1989-2004
Exhibit 3.4
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998; The Health Insurance Association of America (HIAA): 1989.
* Estimate is statistically different from the previous years shown at p‹.05.
† Estimate is statistically different from the previous year shown at p‹.10.
0%
10%
20%
30%
40%
50%
60%
70%
80%
1996
1998
2000
2002
ALL FIRMSALL LARGE FIRMS (200 OR MORE WORKERS)
ALL SMALL FIRMS (3–199 WORKERS)
72%
66%†68%
73%
67%*68% 68% 68%
67%
64%
67%
73%
67%*65%
68%68%
64%†
69%68%
2003
2004
1989
68% 67%
0%
10%
20%
30%
40%
50%
60%
70%
80%
1996
1998
2000
2002
ALL FIRMSALL LARGE FIRMS (200 OR MORE WORKERS)
ALL SMALL FIRMS (3–199 WORKERS)
72%
66%†68%
73%
67%*68% 68% 68%
67%
64%
67%
73%
67%*65%
68%68%
64%†
69%68%
2003
2004
1989
68% 67%
Employer Health Benefits 2004 Annual Survey
52
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
section
three
Em
ployee Coverage, E
ligibility, and Participation
3
Average Waiting Period for New Employees to be Eligible for Health Coverage, 2004*
Exhibit 3.5
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002, 2003, 2004.
* Tests found no statistically different estimates from the previous year shown at p<.05.
1.6 1.61.7
0 MONTHS
2 MONTHS
1.5 MONTHS
1.0 MONTHS
.5 MONTHS
2002 2003 2004200120001999
1.5
1.71.6
Employer Health Benefits 2004 Annual Survey
53
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
section
three
Em
ployee Coverage, E
ligibility, and Participation
3
Average Waiting Period for New Employees to be Eligible for Health Coverage, by Firm Size, Region, and Industry, 2004
Exhibit 3.6
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate is statistically different from All Firms at p<.05.
Average Wait for Health Coverage (Months)
FIRM SIZE
ALL SMALL FIRMS (3-199 W ORKERS) 2.1*
Midsize (200-999 Workers) 1.6
Large (1,000-4,999 Workers) 1.6
Jumbo (5,000 or More Workers) 1.2*
ALL L ARGE FIRMS (200 OR MORE W ORKERS) 1.3*
REGION
Northeast 1.5
Midwest 1.3*
South 1.7
West 1.8
INDUSTRY
Mining/Construction/Wholesale 2.4*
Manufacturing 1.3*
Transportation/Communication/Utility 1.3
Retail 2.8*
Finance 1.3
Service 1.5
State/Local Government 1.2*
Health Care 1.5
ALL FIRM SIZE S, REGIONS, AND INDUSTRIE S 1.6 MONTH S
55
24%
73.1349
10,932Employer Health Benefits
2004 Annual Survey
H e a l t h
I n s u ra n c e
C h o i c e
s e c t i o n
4
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
56
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
fou
rH
ealth In
suran
ce Ch
oice
4
HEALTH INSURANCE CHOICE
C h o i c e a m o n g h e a l t h p l a n s i s s t i l l a n o p t i o n f o r m o s t c o v e r e d w o r k e r s w i t h
j o b - b a s e d i n s u r a n c e . S i x t y - f i v e p e r c e n t o f c o v e r e d w o r k e r s a r e a b l e t o c h o o s e
f r o m t w o o r m o r e h e a l t h p l a n s . T h i s y e a r ’ s s u r v e y a l s o e x a m i n e d e m p l o y e r s ’
f a m i l i a r i t y w i t h a n d i n t e r e s t i n c o n s u m e r - d r i v e n h e a l t h c a r e , p a r t i c u l a r l y
h i g h - d e d u c t i b l e p l a n s c o u p l e d w i t h a p e r s o n a l o r h e a l t h s a v i n g s a c c o u n t
o p t i o n . 5
P L A N C H O I C E
• PPO coverage, a less restrictive form of managed care, con-tinues in 2004 to be the most popular health plan option offered to covered workers.
• Nearly four out of five cov-
ered workers (79%) have the option of electing a PPO plan, similar to last year (EXHIBIT 4.1).
• The percentage of covered workers with the option to enroll in an HMO increased somewhat from 47% in 2003 to 54% this year (EXHIBIT 4.1).
• The percentage of covered workers who have a choice of conventional coverage has fallen dramatically since 1988, from 90% to just 16% in 2004 (EXHIBIT 4.1).
• The availability of POS plans is unchanged in 2004, with 30% of covered workers hav-ing the option (EXHIBIT 4.1).
• The percentage of covered workers who can choose from multiple health plans has remained relatively stable since 1996. In 2004, 65% of covered workers have more than one health plan option, similar to last year (Exhibit 4.3).
• Health plan choice varies by firm size: 73% of covered workers in all small firms (3-199 workers) offer only one plan, compared to 18% in all large firms (200 or more work-ers) (EXHIBIT 4.4).
• Choice of plans varies by region, with covered workers in the South slightly more likely (44%) than workers overall (35%) to have just one plan option (EXHIBIT 4.5).
C O N S U M E R - D R I V E N
H E A LT H C A R E
• New plan arrangements, including so-called consum-er-driven health plans, are receiving increasing attention. The most common model of a consumer-driven plan pairs a relatively large deductible plan (e.g., a $1,000 deduct-ible) with a personal or health savings account option. These accounts permit employers (and sometimes employees) to make pre-tax contributions, which can be used by employ-ees to pay for routine medical care.6, 7
n o t e s :
5 Survey respondents were asked whether the firm offers a personal or health savings account, including a Health Reimbursement Arrangement (HRA) or other type of health savings account option.
6 There are several savings account options permitted under the law, including health reimbursement arrangements, health savings accounts and medical savings accounts.
7 Due to the low number of respondents offering a combination high-deductible plan with a personal or health savings account, data on average deductibles and worker contributions are not sufficiently robust to publish in the 2004 survey. We hope to report these values in future surveys.
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• Approximately ten percent of all firms offer a high-deduct-ible plan in 2004. Only a small percentage (3.5%) of firms offering a high-deduct-ible plan offer a personal or health savings account option along with the high-deductible plan (EXHIBIT 4.8).
• The percentage of large firms (1,000-4,999 workers) offer-ing a high-deductible plan increased from five to nine percent between 2003 and 2004. Jumbo firms (5,000 or more workers) are more likely (20%) than all firms (10%) to offer employees a high-deduct-ible plan (EXHIBIT 4.8).
• When asked about their familiarity with consumer-driven plans, 40% of firms responded that they are either “very familiar” or “somewhat familiar” with such plans. All large firms (200 or more work-ers) tend to be more familiar than all small firms (3-199 workers) with consumer-driv-en plans, with 22% of all large firms reporting that they are “very familiar” with con-sumer-driven health plans, compared to two percent of all small firms (EXHIBIT 4.9).
• A larger percentage of firms are familiar with the concept of personal or health savings accounts than with consum-er-driven health care. Fifty-
six percent of firms report being either “very familiar” or “somewhat familiar” with personal or health savings accounts. A larger percentage of all large firms (200 or more workers) report being “very familiar” with personal or health savings accounts than all small firms (3-199 workers) (24% vs. 10%) (EXHIBIT 4.9).
• Although very few employers currently offer the combina-tion of a high-deductible plan with a personal or health sav-ings account option, 27% of all firms report that they are “very likely” or “somewhat likely” to offer this combination in the next two years (Exhibit 4.10).
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s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; The Health Insurance Association of America (HIAA): 1988.
* Estimate is statistically different from the previous year shown at p<.05.
^ Information was not obtained for POS plans in 1988.
0%
20%
40%
60%
80%
100%
10%
30%
50%
70%
90%
50%53%*
64%
54%*
46%
HMO
34%*
41%*
30%
21%
POS
^
1988
1993
1996
2000
2002
2003
200474%*
65%*
45%
49%
PPO
18%
14%*14%
47%
77%79%
30% 30%
21%*
52%
CONVENTIONAL
90%
59%
16%
68%
0%
20%
40%
60%
80%
100%
10%
30%
50%
70%
90%
50%53%*
64%
54%*
46%
HMO
34%*
41%*
30%
21%
POS
^
1988
1993
1996
2000
2002
2003
200474%*
65%*
45%
49%
PPO
18%
14%*14%
47%
77%79%
30% 30%
21%*
52%
CONVENTIONAL
90%
59%
16%
68%
Exhibit 4.1
Percentage of Covered Workers With a Choice of Conventional, HMO, PPO, or POS Plans, 1988-2004
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4
Percentage of Employers Providing a Choice of Health Plans, by Firm Size, 2004
Exhibit 4.2
0%
20%
40%
60%
80%
100%
JUMBO FIRMS*(5,000 OR MORE
WORKERS)
LARGE FIRMS*(1,000–4,999 WORKERS)
MIDSIZE FIRMS*(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
THREE OR MORE PLANS
TWO PLANS
ONE PLAN
ALL FIRMS
16%
12%
72%
26%
24%
50%
33%
43%
24%
3%11%
86% 84%
4%12%
0%
20%
40%
60%
80%
100%
JUMBO FIRMS*(5,000 OR MORE
WORKERS)
LARGE FIRMS*(1,000–4,999 WORKERS)
MIDSIZE FIRMS*(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
THREE OR MORE PLANS
TWO PLANS
ONE PLAN
ALL FIRMS
16%
12%
72%
26%
24%
50%
33%
43%
24%
3%11%
86% 84%
4%12%
0%
20%
40%
60%
80%
100%
1988 1996 1998 2002 2004*20032000*
THREE OR MORE PLANS
TWO PLANS
ONE PLAN36%
17%
47%
16%
33%
51%
15%
34%
51%
15%
40%
45%
18%
35%
47%
16%
38%
47%
15%
39%
46%
Percentage of Covered Workers With a Choice of Health Plans, 1988-2004
Exhibit 4.3
0%
20%
40%
60%
80%
100%
1988 1996 1998 2002 2004*20032000*
THREE OR MORE PLANS
TWO PLANS
ONE PLAN36%
17%
47%
16%
33%
51%
15%
34%
51%
15%
40%
45%
18%
35%
47%
16%
38%
47%
15%
39%
46%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Distribution is statistically different from All Firms at p<.05.
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998; The Health Insurance Association of America (HIAA): 1988.
* Distribution is statistically different from the previous year shown at p<.05.
Employer Health Benefits 2004 Annual Survey
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Distribution of Covered Workers With a Choice of Health Plans, by Firm Size, 1996-2004
Exhibit 4.4
Three or More One Plan Only Two Plans Plans
1996
All Small Firms (3-199 Workers)* 79% 15% 6%
All Large Firms (200 or More Workers)* 21 17 63
ALL FIRM SIZE S 33% 16% 51%
2000
All Small Firms (3-199 Workers)* 77% 14% 9%
All Large Firms (200 or More Workers)* 20 15 65
ALL FIRM SIZE S 39% 15% 46%
2002
All Small Firms (3-199 Workers)* 76% 15% 10%
All Large Firms (200 or More Workers)* 23 15 62
ALL FIRM SIZE S 40% 15% 45%
2003
All Small Firms (3-199 Workers)* 62% 17% 21%
All Large Firms (200 or More Workers)* 26 15 59
ALL FIRM SIZE S 38% 16% 47%
2004
All Small Firms (3-199 Workers)* 73% 17% 10%
All Large Firms (200 or More Workers)* 18 18 63
ALL FIRM SIZE S 35% 18% 47%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996.
* Distribution is statistically different from All Firms within a year at p<.05.
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Percentage of Covered Workers With a Choice of Health Plans, by Region, 2004
Exhibit 4.5
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Distribution is significantly different from All Regions at p<.05.
THREE OR MORE PLANS
TWO PLANS
ONE PLAN
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
WEST
SOUTH
MIDWEST
NORTHEAST*
ALL REGIONS
46%33% 21%
37%44% 19%
53%33% 14%
58%25% 17%
47%35% 18%
THREE OR MORE PLANS
TWO PLANS
ONE PLAN
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
WEST
SOUTH
MIDWEST
NORTHEAST*
ALL REGIONS
46%33% 21%
37%44% 19%
53%33% 14%
58%25% 17%
47%35% 18%
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Distribution of Covered Workers With One or More Plan Options of the Same Plan Type, by Firm Size, 2004
Exhibit 4.6
Three or More One Plan Two Plans Plans
CONVENTIONAL PL ANS
All Small Firms (3-199 Workers)* 97% 2% 1%
All Large Firms (200 or More Workers) 70 12 18
ALL FIRM SIZE S 83% 7% 9%
HMO PL ANS
All Small Firms (3-199 Workers)* 84% 10% 6%
All Large Firms (200 or More Workers)* 35 22 44
ALL FIRM SIZE S 48% 19% 33%
PPO PL ANS
All Small Firms (3-199 Workers)* 88% 9% 3%
All Large Firms (200 or More Workers) 56 23 21
ALL FIRM SIZE S 65% 19% 16%
POS PL ANS
All Small Firms (3-199 Workers)* 90% 7% 2%
All Large Firms (200 or More Workers) 58 27 15
ALL FIRM SIZE S 70% 20% 10%
* Distribution is statistically different from All Firms within a plan type at p<.05.
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
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T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
4
Distribution of Contribution Policies for Covered Workers Who Are Offered a Choice of Health Plans,‡ by Firm Size, 2004*
Exhibit 4.7
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
WORKERS CONTRIBUTE THE SAME DOLLAR AMOUNT REGARDLESS OF PLAN CHOSEN
COMPANY CONTRIBUTES THE SAME PERCENTAGE OF TOTAL PREMIUM REGARDLESS OF PLAN CHOSEN
COMPANY CONTRIBUTES THE SAME DOLLAR AMOUNT REGARDLESS OF PLAN CHOSEN
WORKER CONTRIBUTION VARIES BASED ON OTHER FACTORS
OTHER
DON’T KNOW
LARGE FIRMS(1,000–4,999 WORKERS)
ALL FIRMS
JUMBO FIRMS(5,000 OR MORE WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
35% 3%19% 3%
39%18% 5% 4%
1%
33%
37%19% 3% 3%37%
40%
37% 3%
2%
14% 4%
43%26% 2% 27% 2%
40%
* Tests found no statistically different distribution from All Firms at p<.05.
‡ The distributions refer only to covered workers offered a choice of more than one health plan. The percentage of covered workers with a choice of plans is as follows by firm size: All Small (29%), Midsize (57%), Large (79%), Jumbo (91%), All Firms (65%).
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
WORKERS CONTRIBUTE THE SAME DOLLAR AMOUNT REGARDLESS OF PLAN CHOSEN
COMPANY CONTRIBUTES THE SAME PERCENTAGE OF TOTAL PREMIUM REGARDLESS OF PLAN CHOSEN
COMPANY CONTRIBUTES THE SAME DOLLAR AMOUNT REGARDLESS OF PLAN CHOSEN
WORKER CONTRIBUTION VARIES BASED ON OTHER FACTORS
OTHER
DON’T KNOW
LARGE FIRMS(1,000–4,999 WORKERS)
ALL FIRMS
JUMBO FIRMS(5,000 OR MORE WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
35% 3%19% 3%
39%18% 5% 4%
1%
33%
37%19% 3% 3%37%
40%
37% 3%
2%
14% 4%
43%26% 2% 27% 2%
40%
Employer Health Benefits 2004 Annual Survey
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Percentage of Firms Offering Employees a High-Deductible Health Plan, by Firm Size, 2003-2004
Exhibit 4.8
5%
JUMBO FIRMS(5,000 OR MORE
WORKERS)
ALL FIRMSLARGE FIRMS(1,000-4,999
WORKERS)
MIDSIZE FIRMS(200-999 WORKERS)
ALL SMALL FIRMS(3-199 WORKERS)
5% 5%5%
0%
10%
20%0%
30%
40%0%
50%
60%0%
70%
80%0%
90%
100%
17%
9%*10% 10%7%
20%2004
2003
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2003, 2004.
* Estimate is statistically different from previous year shown at p<.05.
High-deductible health plan: A plan with an annual deductible of more than $1,000 for single coverage. High-deductible plans can be offered with or without a personal or health savings account option.
5%
JUMBO FIRMS(5,000 OR MORE
WORKERS)
ALL FIRMSLARGE FIRMS(1,000-4,999
WORKERS)
MIDSIZE FIRMS(200-999 WORKERS)
ALL SMALL FIRMS(3-199 WORKERS)
5% 5%5%
0%
10%
20%0%
30%
40%0%
50%
60%0%
70%
80%0%
90%
100%
17%
9%*10% 10%7%
20%2004
2003
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T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
40% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
VERY FAMILIAR
SOMEWHAT FAMILIAR
NOT TOO FAMILIAR
NOT AT ALL FAMILIAR
DON’T KNOW
ALL SMALL FIRMS(3–199 WORKERS)
*
‡
ALL FIRMS
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
CONSUMER-DRIVENHEALTH CARE
HIGH-DEDUCTIBLE PLANWITH A PERSONAL OR
HEALTH SAVINGS ACCOUNT
*
ALL FIRMS
ALL LARGE FIRMS(200 OR MORE WORKERS)
9%24% 55%
11%10% 46% 33%
11%10% 46% 33%
11%
13%22% 52%
26%2% 37% 34% 1%
25%3% 37% 33% 1%
12%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Insurance: 2004.
Percentage of Firms Reporting Their Familiarity With the Following Types of Health Plans, 2004
Exhibit 4.9
* Distribution is significantly different from All Firms at p<.05.
‡ The Survey respondents were asked whether the firm is familiar with a personal or health savings account, including a Health Reimbursement Account (HRA) or other type of health savings account option.
High-deductible health plan: A plan with an annual deductible of more than $1,000 for single coverage. High-deductible plans can be offered with or without a personal or health savings account option.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
VERY FAMILIAR
SOMEWHAT FAMILIAR
NOT TOO FAMILIAR
NOT AT ALL FAMILIAR
DON’T KNOW
ALL SMALL FIRMS(3–199 WORKERS)
*
‡
ALL FIRMS
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
CONSUMER-DRIVENHEALTH CARE
HIGH-DEDUCTIBLE PLANWITH A PERSONAL OR
HEALTH SAVINGS ACCOUNT
*
ALL FIRMS
ALL LARGE FIRMS(200 OR MORE WORKERS)
9%24% 55%
11%10% 46% 33%
11%10% 46% 33%
11%
13%22% 52%
26%2% 37% 34% 1%
25%3% 37% 33% 1%
12%
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Percentage of Firms That Say They Are “Very Likely” or “Somewhat Likely” to Offer Workers a High-Deductible Plan with a Personal or Health Savings Account Option in the Next Two Years, 2004
Exhibit 4.10
5%
JUMBO FIRMS*(5,000 OR MORE
WORKERS)
ALL FIRMSLARGE FIRMS(1,000-4,999
WORKERS)
MIDSIZE FIRMS(200-999 WORKERS)
ALL SMALL FIRMS(3-199 WORKERS)
5% 5%5%
17%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
SOMEWHAT LIKELY
VERY LIKELY
21%
6%
28%
22%
25%
11%
28%
7%
20%
6%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.5%
JUMBO FIRMS*(5,000 OR MORE
WORKERS)
ALL FIRMSLARGE FIRMS(1,000-4,999
WORKERS)
MIDSIZE FIRMS(200-999 WORKERS)
ALL SMALL FIRMS(3-199 WORKERS)
5% 5%5%
17%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
SOMEWHAT LIKELY
VERY LIKELY
21%
6%
28%
22%
25%
11%
28%
7%
20%
6%
* Column total is statistically different from All Firms at p<.05.
High-deductible health plan: A plan with an annual deductible of more than $1,000 for single coverage. High-deductible plans can be offered with or without a personal or health savings account option.
12.7%
9,113200+
$14,288Employer Health Benefits
2002 Annual Survey
M a rk e t
S h a re s o f
H e a l t h P l a n s
s e c t i o n
67
Employer Health Benefits2004 Annual Survey
M a rk e t
S h a re s o f
H e a l t h P l a n s
s e c t i o n
5
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
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T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Market S
hares of H
ealth P
lans
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5
MARKET SHARES OF HEALTH PLANS
T h e d i s t r i b u t i o n o f e n r o l l m e n t a m o n g t y p e s o f h e a l t h p l a n s h a s r e m a i n e d f a i r l y
c o n s t a n t o v e r t h e p a s t s e v e r a l y e a r s . T h e m a j o r i t y o f c o v e r e d w o r k e r s a r e
e n r o l l e d i n P P O p l a n s ( 5 5 % ) , f o l l o w e d b y H M O p l a n s ( 2 5 % ) ( E x h i b i t 5 . 1 ) .
A l t h o u g h a n n u a l c h a n g e s i n p l a n e n r o l l m e n t h a v e b e e n m o d e r a t e , e n r o l l m e n t i n
P P O p l a n s h a s g r o w n b y n i n e p e r c e n t a g e p o i n t s s i n c e 2 0 0 1 .
• More than half of covered workers (55%) are enrolled in PPO plans, an increase from 46% in 2001 (Exhibit 5.1). Conventional plan enroll-ment has remained fairly min-imal since 2000, comprising less than ten percent of total enrollment.
• There are slight regional dif-ferences in plan enrollment. PPO plans have higher enroll-ment in the Midwest (64%) and the South (64%). HMO enrollment is consistently highest in the West (36%).
POS plans tend to have higher enrollment in the Northeast compared to other regions (23%) (Exhibit 5.2).
• PPO enrollment is particularly strong in certain industries. Enrollment in PPO plans is high in the mining, construc-tion, and wholesale industries (68%), and in the transpor-tation, communications and utilities industries (65%) (Exhibit 5.2).
• The percentage of work-ers enrolled in HMOs has remained steady since 2001 at approximately 25% (EXHIBIT 5.1).
• Conventional plan enroll-ment remains low at five percent of covered workers (EXHIBIT 5.1).
Market S
hares of H
ealth P
lans
Employer Health Benefits 2004 Annual Survey
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5
Health Plan Enrollment for Covered Workers, by Plan Type, 1988-2004
Exhibit 5.1
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996, 1998; The Health Insurance Association of America (HIAA): 1988.
* Distribution is statistically different from the previous year shown at p<.05.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2000*
2001*
1999*
1998*
1996
2004
1993
1988
CONVENTIONAL
HMO
PPO
POS
2002*
2003*
42%8% 29% 21%
46%7% 24% 23%
39%10% 28% 24%
35%14% 27% 24%
28%27% 31% 14%
26%46% 21% 7%
11%73% 16%
52%4% 27% 18%
54%5% 24% 17%
55%5% 25% 15%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2000*
2001*
1999*
1998*
1996
2004
1993
1988
CONVENTIONAL
HMO
PPO
POS
2002*
2003*
42%8% 29% 21%
46%7% 24% 23%
39%10% 28% 24%
35%14% 27% 24%
28%27% 31% 14%
26%46% 21% 7%
11%73% 16%
52%4% 27% 18%
54%5% 24% 17%
55%5% 25% 15%
Market S
hares of H
ealth P
lans
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Health Plan Enrollment, by Firm Size, Region, and Industry, 2004
Exhibit 5.2
Conventional HMO PPO POS
FIRM SIZE
Small (3-24 Workers) 13%* 23% 39%* 26%*
Small (25-49 Workers) 3 21 56 20
Small (50-199 Workers) 4 20 64* 12
ALL SMALL FIRMS (3-199 W ORKERS) 7% 22% 52% 19%
Midsize (200-999 Workers) 5 23 59 13
Large (1,000-4,999 Workers) 3 24 64* 9*
Jumbo (5,000 or More Workers) 3 28 54 15
ALL LARGE FIRMS (200 OR MORE WORKERS) 3% 26% 57% 14%
REGION
Northeast 5% 32%* 40%* 23%*
Midwest 5 21 64* 10*
South 4 17* 64* 14
West 5 36* 44* 15
INDUSTRY
Mining/Construction/Wholesale 4% 14%* 68%* 13%
Manufacturing 4 24 62* 10
Transportation/Communication/Utility 5 26 65* 5*
Retail 4 21 51 24
Finance 4 25 54 17
Service 6 26 46* 22*
State/Local Government 5 32* 50 14
Health Care 4 25 64 8*
ALL FIRM SIZE S, REGIONS, AND
INDUSTRIE S 5% 25% 55% 15%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate is statistically different from All Firms at p<.05.
71
$35
19947.2
%24,960
Employer Health Benefits2004 Annual Survey
Employee
Contributions for
Premiums
s e c t i o n
6
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
72
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Em
ployee Con
tribution
s for Prem
ium
sse
ctio
n six
6
EMPLOYEE CONTRIBUTIONS FOR PREMIUMS
T h e s h a r e o f t o t a l p r e m i u m s p a i d b y w o r k e r s i s e s s e n t i a l l y u n c h a n g e d i n 2 0 0 4 .
A c r o s s a l l p l a n t y p e s , o n a v e r a g e , w o r k e r s p a y 1 6 % o f p r e m i u m s f o r s i n g l e c o v e r a g e
a n d 2 8 % o f p r e m i u m s f o r f a m i l y c o v e r a g e ( E x h i b i t 6 . 2 ) .
A v e r a g e e m p l o y e e c o n t r i b u t i o n s f o r s i n g l e c o v e r a g e a r e s t a t i s t i c a l ly u n c h a n g e d
f r o m 2 0 0 3 , w h i l e a v e r a g e c o n t r i b u t i o n s f o r f a m i ly c o v e r a g e g r e w b y $ 2 1 p e r m o n t h ,
o r 1 0 % — a s i m i l a r r a t e t o t h e a v e r a g e p r e m i u m i n c r e a s e o v e r a l l ( E x h i b i t 6 . 1 ) .
W O R K E R C O N T R I B U T I O N S
F O R H E A LT H I N S U R A N C E
P R E M I U M S
• The average monthly worker contribution for single cover-age is $47 in 2004. For family coverage, the average monthly worker contribution is $222 in 2004, up from $201 in 2003. On average, covered workers con-tribute $249 more to annual family premiums in 2004 than in 2003 (Exhibits 6.1, 6.3).
• The average percentage of total premiums that workers pay is essentially unchanged in 2004: 16% across plan types for single coverage and 28% for family coverage. Percentage contributions for family cover-age have been stable, while those for single coverage declined between 1996 and 2000 (from 21% to 14%) and have been stable since that time (Exhibit 6.2).
• Nearly all firms that offer health insurance contribute 50% or more to the cost of premiums for their employees. Most employers contribute between 75% and 100% of pre-miums for single and family coverage (Exhibits 6.8, 6.9).
• Employers are more likely to pay the full cost of single cov-erage than family coverage. The percentage of covered workers whose employers pay the full cost of coverage is vir-tually unchanged compared to last year, both for single (21%) and family coverage (7%). Although the percent-age of firms paying 100% of the cost of single or family coverage is unchanged from last year, it is lower than in 2001 (32% for single, 14% for family) (EXHIBITS 6.8, 6.9).
• All small firms (3-199 work-ers) are more likely to pay the full cost of single cover-age than all large firms (200 or more workers). Forty-two percent of all small firms pay the entire premium for single coverage compared to 11% of all large firms (EXHIBIT 6.8).
• Covered workers in all small firms (3-199 workers) are more likely to be responsible for paying 50% or more of the premium for family coverage (28%) than covered workers in all large firms (200 or more workers) (6%) (EXHIBIT 6.9).
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
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• Covered workers in all small firms (3-199 workers) pay a higher share of family premi-ums than workers in all large firms (200 or more workers). On average, covered workers in all small firms pay an aver-age of 36% of the premium for family coverage, com-pared to 24% for workers in all large firms. Covered work-ers in all small firms pay an average of $282 per month for
family coverage, compared to $195 per month paid by cov-ered workers in all large firms (Exhibits 6.4, 6.11).
• Covered workers in lower wage firms—where 35% or more earn $20,000 or less per year—have higher premium contribution rates than cov-ered workers in higher wage firms—where fewer than 35% earn $20,000 or less per year.
On average, covered workers in lower wage firms contribute 39% of the premium for fam-ily coverage compared to 26% of the family premium paid by covered workers in higher wage firms (Exhibit 6.10). Covered workers in firms with unions also pay less for family coverage than those in firms with no union workers (20% vs. 32%).
Em
ployee Con
tribution
s for Prem
ium
s
Employer Health Benefits 2004 Annual Survey
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Average Monthly Worker Contribution for Single and Family Premiums, 1988-2004
Exhibit 6.1
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
$220
$240
$124 $122
FAMILY COVERAGESINGLE COVERAGE
1988
1993
1996
2000
2001
2002
2003
2004
$8
$34 $28* $30$39* $42
$47
$178*
$201*
$222*
$52
$149*
$37
$135
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
$220
$240
$124 $122
FAMILY COVERAGESINGLE COVERAGE
1988
1993
1996
2000
2001
2002
2003
2004
$8
$34 $28* $30$39* $42
$47
$178*
$201*
$222*
$52
$149*
$37
$135
0%
5%
10%
15%
20%
25%
30%
35%
FAMILY COVERAGESINGLE COVERAGE
11%
20% 21%
32%
26% 26% 27% 1988
1993
1996
2000
2001
2002
2003
2004
28%29%
16% 16% 16%14%*
28%
14%
28%
Percentage of Premium Paid by Covered Workers for Single and Family Coverage, 1988-2004
Exhibit 6.2
0%
5%
10%
15%
20%
25%
30%
35%
FAMILY COVERAGESINGLE COVERAGE
11%
20% 21%
32%
26% 26% 27% 1988
1993
1996
2000
2001
2002
2003
2004
28%29%
16% 16% 16%14%*
28%
14%
28%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; The Health Insurance Association of America (HIAA): 1988.
* Estimate is statistically different from the previous year shown at p<.05.
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; The Health Insurance Association of America (HIAA): 1988.
* Estimate is statistically different from the previous year shown at p<.05.
Employer Health Benefits 2004 Annual Survey
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Average Annual Premiums for Covered Workers, Single and Family Coverage, by Plan Type, 2004
Exhibit 6.3
WORKER CONTRIBUTIONEMPLOYER CONTRIBUTION
CONVENTIONAL
SINGLE
FAMILY
HMO
SINGLE
FAMILY
ALL PLANS
SINGLE
FAMILY
PPO
SINGLE
FAMILY
POS
SINGLE
FAMILY
$2,000$0 $4,000 $6,000 $8,000 $10,000 $12,000
$3,352
$2,382
$468
$7,220
$552
$2,674
$2,906
$6,830
$558
$2,661
$3,137
$7,289
$2,691 $7,526
$2,618 $7,195
$573
$3,085$542
$3,235
$10,217*
$9,813
$9,950
$3,808*
$3,820
$9,602
$3,458*
$9,504*
$3,695
$3,627
WORKER CONTRIBUTIONEMPLOYER CONTRIBUTION
CONVENTIONAL
SINGLE
FAMILY
HMO
SINGLE
FAMILY
ALL PLANS
SINGLE
FAMILY
PPO
SINGLE
FAMILY
POS
SINGLE
FAMILY
$2,000$0 $4,000 $6,000 $8,000 $10,000 $12,000
$3,352
$2,382
$468
$7,220
$552
$2,674
$2,906
$6,830
$558
$2,661
$3,137
$7,289
$2,691 $7,526
$2,618 $7,195
$573
$3,085$542
$3,235
$10,217*
$9,813
$9,950
$3,808*
$3,820
$9,602
$3,458*
$9,504*
$3,695
$3,627
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate of total premium is statistically different from All Plans by coverage type shown at p<.05.
Note: Family coverage is defined as health coverage for a family of four.
Em
ployee Con
tribution
s for Prem
ium
s
Employer Health Benefits 2004 Annual Survey
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Average Monthly and Annual Worker Premium Contributions, by Plan Type and Firm Size, 2004
Exhibit 6.4
Monthly Annual
Single Family Single Family Coverage Coverage Coverage Coverage
CONVENTIONAL PL ANS
All Small Firms (3-199 Workers) $38 $246 $455 $2,957
All Large Firms (200 or More Workers) 40 154 479 1,850
ALL FIRM SIZE S $39 $198 $468 $2,382
HMO PL ANS
All Small Firms (3-199 Workers) $49 $309* $584 $3,706*
All Large Firms (200 or More Workers) 45 191* 541 2,298*
ALL FIRM SIZE S $46 $223 $552 $2,674
PPO PL ANS
All Small Firms (3-199 Workers) $39 $281* $470 $3,372*
All Large Firms (200 or More Workers) 51 201* 616 2,410*
ALL FIRM SIZE S $48 $224 $573 $2,691
POS PL ANS
All Small Firms (3-199 Workers) $48 $267* $577 $3,206*
All Large Firms (200 or More Workers) 43 188 520 2,254
ALL FIRM SIZE S $45 $218 $542 $2,618
ALL PL ANS
All Small Firms (3-199 Workers) $43 $282* $514 $3,382*
All Large Firms (200 or More Workers) 48 195* 578 2,340*
ALL FIRM SIZE S $47 $222 $558 $2,661
* Estimate is statistically different from All Firms within a plan type at p<.05.
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
Employer Health Benefits 2004 Annual Survey
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Average Monthly and Annual Worker Premium Contributions, by Plan Type and Region, 2004
Exhibit 6.5
Monthly Annual
Single Family Single Family Coverage Coverage Coverage Coverage
CONVENTIONAL PL ANS
Northeast $41 $179 $487 $2,152
Midwest 30 181 364 2,177
South 38 230 460 2,762
West 48 191 579 2,289
ALL REGIONS $39 $198 $468 $2,382
HMO PL ANS
Northeast $50 $186* $597 $2,230*
Midwest 45 181 545 2,166
South 47 289* 569 3,468*
West 42 230 505 2,764
ALL REGIONS $46 $223 $552 $2,674
PPO PL ANS
Northeast $55 $189* $661 $2,269*
Midwest 50 192* 605 2,303*
South 44 259* 526 3,105*
West 47 224 559 2,690
ALL REGIONS $48 $224 $573 $2,691
POS PL ANS
Northeast $57 $223 $684 $2,681
Midwest 46 228 558 2,732
South 43 226 514 2,713
West 30* 189 363* 2,270
ALL REGIONS $45 $218 $542 $2,618
ALL PL ANS
Northeast $53 $196* $637 $2,347*
Midwest 48 193* 576 2,311*
South 44 258* 529 3,097*
West 43 219 511 2,632
ALL REGIONS $47 $222 $558 $2,661
* Estimate is statistically different from All Regions within a plan type at p<.05.
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
Em
ployee Con
tribution
s for Prem
ium
s
Employer Health Benefits 2004 Annual Survey
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6
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; The Health Insurance Association of America (HIAA): 1988.
* Estimate is statistically different from the previous year shown at p<.05.
Information was not obtained for POS plans in 1988 or POS single plans in 1993.
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; The Health Insurance Association of America (HIAA): 1988.
* Estimate is statistically different from the previous year shown at p<.05.
Exhibit 6.6
$0
$40
$80
$120
$160
$200
$240
CONVENTIONAL SINGLE
$24$11
$33 $38*
$164*$179
$223*
CONVENTIONAL FAMILY
$103
$60
$117
HMO SINGLE
$46
$26*
$9
$42$46
HMO FAMILY
$58
$117
$151
$131$128
$198$198*
$35
1988
1993
1996
2000
2002
2003
2004
$32 $39$29$30
$111
$0
$40
$80
$120
$160
$200
$240
CONVENTIONAL SINGLE
$24$11
$33 $38*
$164*$179
$223*
CONVENTIONAL FAMILY
$103
$60
$117
HMO SINGLE
$46
$26*
$9
$42$46
HMO FAMILY
$58
$117
$151
$131$128
$198$198*
$35
1988
1993
1996
2000
2002
2003
2004
$32 $39$29$30
$111
1988
1993
1996
2000
2002
2003
2004
POS FAMILY
$189
^
$180*
$136
POS SINGLE
$40*
^ ^
$40 $45$41
$210*
PPO FAMILY
$83
$123
$188*
$141$146
PPO SINGLE
$7
$39*
$0
$40
$80
$120
$160
$200
$240
$129
$29*$31$44$48$44
$206$218
$28*
$224
Monthly Worker Contributions for Single and Family Coverage in PPO and POS Plans, 1988-2004
Exhibit 6.7
1988
1993
1996
2000
2002
2003
2004
POS FAMILY
$189
^
$180*
$136
POS SINGLE
$40*
^ ^
$40 $45$41
$210*
PPO FAMILY
$83
$123
$188*
$141$146
PPO SINGLE
$7
$39*
$0
$40
$80
$120
$160
$200
$240
$129
$29*$31$44$48$44
$206$218
$28*
$224
Monthly Worker Contributions for Single and Family Coverage in Conventional and HMO Plans, 1988-2004
Employer Health Benefits 2004 Annual Survey
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Distribution of Percentage of Single Premiums Paid by Firms for Covered Workers, by Firm Size, 2001-2004*
Exhibit 6.8
LESS THAN 50%
GREATER THAN OR EQUAL TO 50%, LESS THAN 75%
GREATER THAN OR EQUAL TO 75%, LESS THAN 100%
100%
2003
2002
2002
ALL FIRMS
ALL LARGE FIRMS(200 OR MORE WORKERS)
2002
2004
2001
2001
2003
2004
ALL SMALL FIRMS(3–199 WORKERS)
2001
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2003
2004
35%6% 14% 45%
69%4% 14% 14%
35%8% 13% 45%
35%5% 17% 42%
50%3% 15% 32%
63%2% 16% 19%
67%1% 18% 14%
65%1% 23% 11%
57%3% 17% 24%
58%5% 13% 24%
56%2% 21% 21%
25%5% 13% 57%
LESS THAN 50%
GREATER THAN OR EQUAL TO 50%, LESS THAN 75%
GREATER THAN OR EQUAL TO 75%, LESS THAN 100%
100%
2003
2002
2002
ALL FIRMS
ALL LARGE FIRMS(200 OR MORE WORKERS)
2002
2004
2001
2001
2003
2004
ALL SMALL FIRMS(3–199 WORKERS)
2001
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2003
2004
35%6% 14% 45%
69%4% 14% 14%
35%8% 13% 45%
35%5% 17% 42%
50%3% 15% 32%
63%2% 16% 19%
67%1% 18% 14%
65%1% 23% 11%
57%3% 17% 24%
58%5% 13% 24%
56%2% 21% 21%
25%5% 13% 57%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2001, 2002, 2003, 2004.
* Tests found no statistically different distribution from the previous year shown at p<.05.
Em
ployee Con
tribution
s for Prem
ium
s
Employer Health Benefits 2004 Annual Survey
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Distribution of Percentage of Family Premiums Paid by Firms for Covered Workers, by Firm Size, 2001-2004*
Exhibit 6.9
2003
2002
2002
ALL FIRMS
ALL LARGE FIRMS(200 OR MORE WORKERS)
2002
2004
2001
2001
2003
2004
ALL SMALL FIRMS(3–199 WORKERS)
2001
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2003
2004
LESS THAN 50%
GREATER THAN OR EQUAL TO 50%, LESS THAN 75%
GREATER THAN OR EQUAL TO 75%, LESS THAN 100%
100%
28%31% 26% 15%
23%31% 28% 18%
18%30% 25% 27%
57%6% 33% 4%
57%9% 29% 5%
57%8% 28% 7%
46%16% 29% 9%
44%15% 27% 14%
47%14% 31% 8%
17%28% 39% 15%
56%6% 34% 4%
44%13% 36% 7%
2003
2002
2002
ALL FIRMS
ALL LARGE FIRMS(200 OR MORE WORKERS)
2002
2004
2001
2001
2003
2004
ALL SMALL FIRMS(3–199 WORKERS)
2001
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2003
2004
LESS THAN 50%
GREATER THAN OR EQUAL TO 50%, LESS THAN 75%
GREATER THAN OR EQUAL TO 75%, LESS THAN 100%
100%
28%31% 26% 15%
23%31% 28% 18%
18%30% 25% 27%
57%6% 33% 4%
57%9% 29% 5%
57%8% 28% 7%
46%16% 29% 9%
44%15% 27% 14%
47%14% 31% 8%
17%28% 39% 15%
56%6% 34% 4%
44%13% 36% 7%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2001, 2002, 2003, 2004.
* Tests found no statistically different distribution from the previous year shown at p<.05.
Employer Health Benefits 2004 Annual Survey
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Percentage of Overall Single and Family Premiums Paid by Firm, by Percentage of Workforce That is Low Wage, 2004
Exhibit 6.10
Single Coverage Family Coverage
PERCENTAGE OF W ORKFORCE EARNING
$20,000 OR LE SS PER YEAR
Less Than 35% (Higher Wage Firms) 85% 74%
35% or More (Lower Wage Firms) 80%* 61%*
ALL FIRMS 84% 72%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate is statistically different from All Firms at p<.05.
Em
ployee Con
tribution
s for Prem
ium
s
Employer Health Benefits 2004 Annual Survey
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Percentage of Premium Paid by Firm for Typical Covered Worker, by Plan Type and Firm Size, 2004
Exhibit 6.11
Single Coverage Family Coverage
CONVENTIONAL PL ANS
All Small Firms (3-199 Workers) 88% 67%
All Large Firms (200 or More Workers) 85 78
ALL FIRM SIZE S 87% 73%
HMO PL ANS
All Small Firms (3-199 Workers) 84% 60%*
All Large Firms (200 or More Workers) 84 76*
ALL FIRM SIZE S 84% 71%
PPO PL ANS
All Small Firms (3-199 Workers) 87%* 65%*
All Large Firms (200 or More Workers) 83 76*
ALL FIRM SIZE S 84% 73%
POS PL ANS
All Small Firms (3-199 Workers) 83% 65%*
All Large Firms (200 or More Workers) 85 77
ALL FIRM SIZE S 84% 72%
ALL PL ANS
All Small Firms (3-199 Workers) 86% 64%*
All Large Firms (200 or More Workers) 84 76*
ALL FIRM SIZE S 84% 72%
* Estimate is statistically different from All Firms within a plan type at p<.05.
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
Employer Health Benefits 2004 Annual Survey
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Percentage of Premium Paid by Covered Workers in Conventional and HMO Plans, 1988-2004
Exhibit 6.12
0%
5%
10%
15%
20%
25%
30%
35%
40%
1988
1993
1996
2000
2002
2003
2004
HMO FAMILY
30%
26%*
38%
26%29%
HMO SINGLE
11%
22%
14%*
29%27%*
CONVENTIONAL FAMILY
36%
21%18%
27%
CONVENTIONAL SINGLE
15%
19%
13%*10%
18%16% 16%
12% 13%
29%29%27%
17%
27%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1988
1993
1996
2000
2002
2003
2004
HMO FAMILY
30%
26%*
38%
26%29%
HMO SINGLE
11%
22%
14%*
29%27%*
CONVENTIONAL FAMILY
36%
21%18%
27%
CONVENTIONAL SINGLE
15%
19%
13%*10%
18%16% 16%
12% 13%
29%29%27%
17%
27%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1988
1993
1996
2000
2002
2003
2004
POS FAMILY
31%30%
^
28% 28%26%
POS SINGLE
^
24%
16%20%
16%
PPO FAMILY
35%33%
39%
27%*29%
PPO SINGLE
26%
14%*14%16% 16%16%
8%
28%
^
28% 27%
14%*
Percentage of Premium Paid by Covered Workers in PPO and POS Plans, 1988-2004
Exhibit 6.13
0%
5%
10%
15%
20%
25%
30%
35%
40%
1988
1993
1996
2000
2002
2003
2004
POS FAMILY
31%30%
^
28% 28%26%
POS SINGLE
^
24%
16%20%
16%
PPO FAMILY
35%33%
39%
27%*29%
PPO SINGLE
26%
14%*14%16% 16%16%
8%
28%
^
28% 27%
14%*
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; The Health Insurance Association of America (HIAA): 1988.
* Estimate is statistically different from the previous year shown at p<.05.
Information was not obtained for POS plans in 1988 or POS single plans in 1993.
* Estimate is statistically different from the previous year shown at p<.05.
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; The Health Insurance Association of America (HIAA): 1988.
Em
ployee Con
tribution
s for Prem
ium
s
Employer Health Benefits 2004 Annual Survey
84
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sec
tion
six
6
Percentage of Premium Paid by Firm for Typical Covered Worker, by Plan Type and Region, 2004
Exhibit 6.14
Single Coverage Family Coverage
CONVENTIONAL PL ANS
Northeast 88% 80%
Midwest 91 75
South 83 64
West 86 77
ALL REGIONS 87% 73%
HMO PL ANS
Northeast 83% 78%*
Midwest 86 78*
South 83 64*
West 85 67
ALL REGIONS 84% 71%
PPO PL ANS
Northeast 83% 79%*
Midwest 84 78*
South 85 68*
West 85 73
ALL REGIONS 84% 73%
POS PL ANS
Northeast 82% 73%
Midwest 82 73
South 84 70
West 89* 74
ALL REGIONS 84% 72%
ALL PL ANS
Northeast 83% 77%*
Midwest 84 77*
South 85 67*
West 86 72
ALL REGIONS 84% 72%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate is statistically different from All Regions by plan type at p<.05.
Employer Health Benefits 2004 Annual Survey
85
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
sixE
mployee C
ontribu
tions for P
remiu
ms
6
Percentage of Premium Paid by Firm for Typical Covered Worker, by Plan Type and Industry, 2004
Exhibit 6.15
Single Coverage Family Coverage
CONVENTIONAL PL ANS Mining/Construction/Wholesale NSD NSDManufacturing 89% 77%Transportation/Communication/Utility NSD NSDRetail NSD NSDFinance NSD NSDService 87 71State/Local Government 90 77Health Care NSD NSDALL INDUSTRIE S 87% 73%
HMO PL ANS Mining/Construction/Wholesale 86% 56%*
Manufacturing 82 76Transportation/Communication/Utility 84 76Retail 77* 67Finance 82 68Service 83 65*
State/Local Government 90* 80*
Health Care 84 78*
ALL INDUSTRIE S 84% 71%
PPO PL ANS Mining/Construction/Wholesale 83% 71%Manufacturing 81* 78*
Transportation/Communication/Utility 83 76Retail 77* 66*
Finance 86 74Service 85 68*
State/Local Government 90* 75Health Care 89* 76ALL INDUSTRIE S 84% 73%
POS PL ANS Mining/Construction/Wholesale 85% 74%Manufacturing 82 77Transportation/Communication/Utility NSD NSDRetail NSD NSDFinance 85 67Service 82 82State/Local Government 94* 58*
Health Care NSD NSDALL INDUSTRIE S 84% 72%
ALL PL ANS Mining/Construction/Wholesale 84% 69%Manufacturing 81* 78*
Transportation/Communication/Utility 84 76Retail 77* 68Finance 85 73Service 84 67*
State/Local Government 91* 78*
Health Care 87* 75ALL INDUSTRIE S 84% 72%
* Estimate is statistically different from All Industries by plan type at p<.05.
NSD: Not Sufficient Data.
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
4,117
14.3%$20
37,292
87
Employer Health Benefits2004 Annual Survey
s e c t i o n
7
E m p l o y e e
C o s t S h a r i n g
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
88
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Em
ployee Cost S
harin
g7
section
seven
EMPLOYEE COST SHARING
C o s t s h a r i n g r o s e o n ly m o d e s t ly i n 2 0 0 4 , c o m p a r e d t o l a r g e r i n c r e a s e s o b s e r v e d i n
r e c e n t y e a r s . W h i l e i n c r e a s e s i n d e d u c t i b l e s i n e a c h p l a n t y p e a r e n o t s i g n i f i c a n t ly
d i f f e r e n t f r o m l a s t y e a r , i n c r e a s e s s i n c e 2 0 0 1 a r e s i g n i f i c a n t . F o r e x a m p l e ,
d e d u c t i b l e s f o r P P O p l a n s , t h e m o s t c o m m o n t y p e o f h e a l t h p l a n , r o s e b y n e a r l y
4 0 % s i n c e 2 0 0 1 . T h e p e r c e n t a g e o f c o v e r e d w o r k e r s f a c i n g a $ 2 0 c o p a y m e n t f o r
p h y s i c i a n o f f i c e v i s i t s i n c r e a s e d t o 2 7 % i n 2 0 0 4 f r o m 1 9 % i n 2 0 0 3 . S i n c e 2 0 0 1 , t h e
p e r c e n t a g e o f c o v e r e d w o r k e r s i n H M O s f a c i n g a $ 2 0 c o p a y m e n t f o r p h y s i c i a n o f f i c e
v i s i t s i n c r e a s e d f r o m o n ly t h r e e p e r c e n t t o 2 2 % .
A s i n p r e v i o u s y e a r s , c o v e r e d w o r k e r s i n a l l s m a l l f i r m s ( 3 - 1 9 9 w o r k e r s ) f a c e
h i g h e r a v e r a g e d e d u c t i b l e s t h a n w o r k e r s i n a l l l a r g e f i r m s ( 2 0 0 o r m o r e w o r k e r s ) .
O v e r h a l f o f c o v e r e d w o r k e r s n o w h a v e a d d i t i o n a l c o s t s h a r i n g f o r i n p a t i e n t
h o s p i t a l s e r v i c e s . R e s e a r c h h a s d e m o n s t r a t e d t h a t h i g h e r c o p a y m e n t s a n d
d e d u c t i b l e s r e d u c e s p e n d i n g o n h e a l t h c a r e , b u t m a y a l s o d i s c o u r a g e u s e o f
n e e d e d s e r v i c e s , p a r t i c u l a r ly a m o n g l o w e r i n c o m e i n d i v i d u a l s . 8
• Workers face many different forms of cost sharing. More than three quarters of workers with single coverage contrib-ute to their monthly health insurance premium and simi-lar percentages face cost shar-ing such as copayments for prescription drugs and office visits (Exhibit 7.1).
• The vast majority of cov-ered workers face a fixed-dollar copayment rather than a percentage coinsurance when they visit a physician (EXHIBIT 7.9).
• Over the last year, the per-centage of covered workers with a $20 copayment for office visits grew from 12% to 22% in HMO plans and from 14% to 36% in POS plans. Overall, 27% of covered work-ers are in a plan with a $20 copayment, up from 19% last year (Exhibit 7.6).
• Almost half (49%) of covered workers with single coverage have no annual plan deduct-ible. The average plan deduct-ibles shown in Exhibits 7.2 through 7.4 are calculated by assigning a value of $0 for cov-ered workers in plans without an annual deductible.
• Annual deductibles in PPO plans—the most common plan type—are stable in 2004. Average deductibles for single PPO coverage are $287 for preferred providers and $558 for nonpreferred providers. If workers without deductibles were excluded from the calculation above, the average PPO deductible for single, preferred provider coverage and the average PPO nonpreferred deductible would be $595 (EXHIBIT 7.2).
n o t e :
8 Newhouse, Joseph, et. al., Free for All, Lessons From the RAND Health Insurance Experiment, Harvard University Press, Cambridge, Massachusetts, 1993.
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
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Em
ployee Cost S
harin
g
7
section
seven
• Only a small percentage of covered workers in HMO plans (9%) face an annual deductible.
• Deductibles are higher for covered workers in all small firms (3-199 workers) than all large firms (200 or more workers), across all types of plans. For single coverage in PPO plans, average deduct-ibles for preferred providers are $420 in all small firms and $232 in all large firms (EXHIBIT 7.3).
• When admitted to a hospital, the majority of covered work-ers in HMO, PPO, and POS plans face separate cost shar-ing in various forms such as a deductible, copayment, coin-surance, or a per diem charge (Exhibit 7.10). On average across all plans, covered work-ers with deductibles or copay-ments for inpatient hospital admissions pay $224 per hospi-tal admission (Exhibit 7.11). Covered workers facing coinsur-ance pay a coinsurance rate of 16%, on average (Exhibit 7.12).
• Tiered cost-sharing arrange-ments, where the health plan varies enrollee cost sharing for network hospitals or phy-sicians based on their costs and quality, remain uncom-mon. Ten percent of workers enrolled in HMO plans have a tiered provider arrange-ment, six percent of covered workers in a PPO plan have such an arrangement, and 16% of workers enrolled in a POS plan have a tiered pro-vider network arrangement (Exhibit 7.13).
Em
ployee Cost S
harin
g
Employer Health Benefits 2004 Annual Survey
90
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7sectio
n seven
Percentage of Covered Workers With the Following Types of Cost Sharing for Health Benefits, 2004
Exhibit 7.1
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
51%
PLAN
DEDUCTIBLE §WORKER
CONTRIBUTIONS
TO SINGLE
PREMIUM
TIERED COST
SHARING FOR
PRESCRIPTION
DRUGS
SEPARATE
HOSPITAL
COST SHARING ‡
WORKER
CONTRIBUTIONS
TO FAMILY
PREMIUM
COPAY AND/OR
COINSURANCE
FOR OFFICE VISITS
97%
79%
93%89%
53%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
‡ Covered workers with separate hospital cost sharing includes those with a hospital deductible or copay, coinsurance, both a coinsurance and a deductible or copay, a charge per day, or an annual deductible.
§ The percentage of covered workers with a plan deductible is calculated for workers with single coverage in conventional, HMO, PPO and POS plans. For PPO and POS plans, the deductible for services received from preferred providers is used in the calculation.
Note: The percentage of covered workers with a plan deductible in 2003 is 52%, not 79% as reported last year.
Employer Health Benefits 2004 Annual Survey
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Em
ployee Cost S
harin
g
7
section
seven
$0
$100
$200
$300
$400
$500
$600
$700
$900
$800
1988
1993
2000
2002
2003
2004
POSNONPREFERRED
PROVIDER
POSPREFERREDPROVIDER
CONVENTIONAL SINGLE
CONVENTIONAL FAMILY
PPOPREFERREDPROVIDER
HMO FAMILYHMO SINGLE PPONONPREFERRED
PROVIDER
352
442
575
^^
70
^^^^^^ ^^^^
163
222248
295
700*
466*
54
409*
495
106
170 175
275287
251*
289
340
561*558
113*
210
384
414
861
785
3044
6580
580
177
375
Average Annual Deductibles for Covered Workers, by Plan Type, 1988-2004
Exhibit 7.2
$0
$100
$200
$300
$400
$500
$600
$700
$900
$800
1988
1993
2000
2002
2003
2004
POSNONPREFERRED
PROVIDER
POSPREFERREDPROVIDER
CONVENTIONAL SINGLE
CONVENTIONAL FAMILY
PPOPREFERREDPROVIDER
HMO FAMILYHMO SINGLE PPONONPREFERRED
PROVIDER
352
442
575
^^
70
^^^^^^ ^^^^
163
222248
295
700*
466*
54
409*
495
106
170 175
275287
251*
289
340
561*558
113*
210
384
414
861
785
3044
6580
580
177
375
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1993; The Health Insurance Association of America (HIAA): 1988.
* Estimate is statistically different from the previous year shown at p<.05.
Information was not obtained for HMO plans prior to 2003, or for POS plans in 1988 and 1993.
Preferred providers: Providers that are part of a plan’s approved list of doctors and hospitals; consumers generally pay lower cost sharing when using these providers.
Nonpreferred providers: Providers that are not part of a plan’s approved list of doctors and hospitals.
Note: Average deductibles include covered workers who do not have a deductible or report a $0 deductible. For example, 30% of covered workers in PPO plans do not have a deductible for preferred providers. Among single workers enrolled in a PPO plan who do have a deductible greater than $0, the average annual preferred provider deductible is $410 and the average nonpreferred provider deductible is $595.
Em
ployee Cost S
harin
g
Employer Health Benefits 2004 Annual Survey
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7sectio
n seven
Average Annual Deductible for Covered Workers, by Plan Type and Firm Size, 2004
Exhibit 7.3
Single Coverage Family Coverage
CONVENTIONAL PL ANS
ALL SMALL FIRMS (3-199 W ORKERS) $559 $1,089
Midsize (200-999 Workers) 250* 528*
Large (1,000-4,999 Workers) 217* 455*
Jumbo (5,000 or More Workers) 320 792ALL LARGE FIRMS (200 OR MORE WORKERS) 280* 651
ALL FIRM SIZE S $414 $861
HMO PL ANS
ALL SMALL FIRMS (3-199 W ORKERS) $119* $201*
Midsize (200-999 Workers) 27 53Large (1,000-4,999 Workers) 26 57Jumbo (5,000 or More Workers) 11* 24*
ALL LARGE FIRMS (200 OR MORE WORKERS) 17* 35*
ALL FIRM SIZE S $44 $80
Single Coverage Single Coverage Preferred Provider Nonpreferred Provider
PPO PL ANS
ALL SMALL FIRMS (3-199 W ORKERS) $420* $676*
Midsize (200-999 Workers) 262 511Large (1,000-4,999 Workers) 215* 539Jumbo (5,000 or More Workers) 227* 497
ALL LARGE FIRMS (200 OR MORE WORKERS) 232* 510
ALL FIRM SIZE S $287 $558
POS PL ANS
ALL SMALL FIRMS (3-199 W ORKERS) $427 $773
Midsize (200-999 Workers) 99 417Large (1,000-4,999 Workers) 12* 347*
Jumbo (5,000 or More Workers) 81* 483ALL LARGE FIRMS (200 OR MORE WORKERS) 75* 453
ALL FIRM SIZE S $210 $575
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate is statistically different from All Firms within a plan type at p<.05.
Preferred providers: Providers that are part of a plan’s approved list of doctors and hospitals; consumers generally pay lower cost sharing when using these providers.
Nonpreferred providers: Providers that are not part of a plan’s approved list of doctors and hospitals.
Note: Results include covered workers who do not have a deductible or report a $0 deductible.
Employer Health Benefits 2004 Annual Survey
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Em
ployee Cost S
harin
g
7
section
seven
Average Annual Deductible for Covered Workers, by Plan Type and Region, 2004
Exhibit 7.4
Single Coverage Family Coverage
CONVENTIONAL PL ANS
Northeast $315 $629Midwest 465 880South 361 721West 533 1,279ALL REGIONS $414 $861
HMO PL ANS
Northeast $42 $55Midwest 33 66South 52 102West 48 92ALL REGIONS $44 $80
Single Coverage Single Coverage Preferred Provider Nonpreferred Provider
PPO PL ANS
Northeast $148* $590Midwest 279 530South 331 587West 310 507ALL REGIONS $287 $558
POS PL ANS
Northeast $47* $513Midwest 281 602South 339 745West 180 367ALL REGIONS $210 $575
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate is statistically different from All Regions within a plan type at p<.05.
Preferred providers: Providers that are part of a plan’s approved list of doctors and hospitals; consumers generally pay lower cost sharing when using these providers.
Nonpreferred providers: Providers that are not part of a plan’s approved list of doctors and hospitals.
Note: Results include covered workers who do not have a deductible or report a $0 deductible.
Em
ployee Cost S
harin
g
Employer Health Benefits 2004 Annual Survey
94
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7sectio
n seven
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
$0
$1 - $499
$500 - $999
$1,000 - $1,999
$2,000 OR MORE
PPO PREFERREDPROVIDERS
2003
2004
2002
2001
2000
2003
2002
2001
2000
PPO NONPREFERREDPROVIDERS
2004 37%6% 42%
30%5% 56%
25%4% 62%
25%6% 66%
14%32% 47%
11%31% 54%
11%32% 54%
8%
10%
7%
7%
3%
6%
4%
2%
1%
5%
33%4% 46% 11% 6%
3%
2%
1%
1%
14%30% 50% 4% 2%
1%
34% 57%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
$0
$1 - $499
$500 - $999
$1,000 - $1,999
$2,000 OR MORE
PPO PREFERREDPROVIDERS
2003
2004
2002
2001
2000
2003
2002
2001
2000
PPO NONPREFERREDPROVIDERS
2004 37%6% 42%
30%5% 56%
25%4% 62%
25%6% 66%
14%32% 47%
11%31% 54%
11%32% 54%
8%
10%
7%
7%
3%
6%
4%
2%
1%
5%
33%4% 46% 11% 6%
3%
2%
1%
1%
14%30% 50% 4% 2%
1%
34% 57%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002, 2003, 2004.
* Tests found no statistically different distribution from previous year shown at p<.05.
Distribution of Covered Workers in Firms That Have the Following Deductibles for PPO Plans, 2000-2004*
Exhibit 7.5
Employer Health Benefits 2004 Annual Survey
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Em
ployee Cost S
harin
g
7
section
seven
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
$5 PER VISIT
$10 PER VISIT
$15 PER VISIT
$20 PER VISIT
OTHER
ALL PLANS
POS PREFERREDPROVIDER
PPO PREFERREDPROVIDER
HMO
‡
CONVENTIONAL
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
17%1% 42%21% 19%
7%3% 40%28% 22%
19%1% 35%17% 28%
9%3% 34%17% 36%
15%1% 37%19% 27%
11%36%42% 11%
12%4% 37%35% 12%
11%1% 41%21% 25%
9%5% 44%29% 14%
11%3% 40%27% 19%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
$5 PER VISIT
$10 PER VISIT
$15 PER VISIT
$20 PER VISIT
OTHER
ALL PLANS
POS PREFERREDPROVIDER
PPO PREFERREDPROVIDER
HMO
‡
CONVENTIONAL
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
17%1% 42%21% 19%
7%3% 40%28% 22%
19%1% 35%17% 28%
9%3% 34%17% 36%
15%1% 37%19% 27%
11%36%42% 11%
12%4% 37%35% 12%
11%1% 41%21% 25%
9%5% 44%29% 14%
11%3% 40%27% 19%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2003, 2004.
* Tests found no statistically different distribution from previous year shown at p<.05.
‡ In calculating the distribution of copayments across all plan types, the copayments applicable to preferred providers were used for PPO and POS plans.
Note: The distribution of copayments for physician office visits does not include covered workers who do not have a copayment or report a $0 copayment. Distributions shown in last year’s report included those with a $0 copayment.
Exhibit 7.6
Distribution of Covered Workers Facing Various Copayments for Physician Office Visits, by Plan Type, 2003-2004*
Em
ployee Cost S
harin
g
Employer Health Benefits 2004 Annual Survey
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7sectio
n seven
1996
1998
2000
2002
2003
2004
0%
10%
20%
30%
40%
50%
60%
70%
OTHER$20 PER VISIT$15 PER VISIT$10 PER VISIT$5 PER VISIT
24
21
59
65
10
40
11*
27*
7*
10
22
54*
3
16*
4 3
35*37*
12
22*
53
6
3
7†
12*
9
52
28†
Percentage of Covered Workers Facing HMO Copayments for Physician Office Visits, 1996-2004
Exhibit 7.7
1996
1998
2000
2002
2003
2004
0%
10%
20%
30%
40%
50%
60%
70%
OTHER$20 PER VISIT$15 PER VISIT$10 PER VISIT$5 PER VISIT
24
21
59
65
10
40
11*
27*
7*
10
22
54*
3
16*
4 3
35*37*
12
22*
53
6
3
7†
12*
9
52
28†
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004. KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998.
* Estimate is statistically different from the previous year shown at p<.05.
† Estimate is statistically different from the previous year shown at p<.10.
Note: The distribution of HMO copayments for physician office visits does not include covered workers who do not have a copayment or report a $0 copayment. Last year’s report included those with a $0 copayment.
Employer Health Benefits 2004 Annual Survey
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ployee Cost S
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7
section
seven
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
Exhibit 7.8
Note: The distribution of coinsurance rates does not include covered workers who do not have coinsurance or report 0% coinsurance. HMO coinsurance rates are not included because less than two percent of covered workers report having coinsurance for office visits.
Coinsurance Rates Among Covered Workers Facing Coinsurance for Physician Office Visits, By Plan Type, 2004
10% or 15% 20% or 25% 30% 40% Other
COINSURANCE RATE S
Conventional Plans 5% 85% 9% 0% 1%
PPO Preferred Provider 40 56 2 0 2
PPO Nonpreferred Provider 4 26 32 23 15
POS Preferred Provider 18 81 0 0 1
POS Nonpreferred Provider 4% 26% 31% 19% 20%
Em
ployee Cost S
harin
g
Employer Health Benefits 2004 Annual Survey
98
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
7sectio
n seven
Exhibit 7.9
Copay Coinsurance Both Neither
OFFICE VISITS
Conventional 47% 44% 2% 7%
HMO* 96 1 1 2
PPO Preferred Provider 78 15 4 3
POS Preferred Provider 84 4 8 4
ALL PL ANS 83% 10% 4% 3%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Distribution is significantly different from All Plans at p<.05.
Distribution of Covered Workers With the Following Types of Cost Sharing for a Hospital Admission, 2004*
Exhibit 7.10
Deductible Charge Annual or Copay Coinsurance Both Per Day Deductible None
HOSPITAL ADMISSIONS
Conventional 15% 9% 1% 2% 3% 70%
HMO 49 3 3 5 1 39
PPO 21 18 5 1 2 53
POS 36 8 8 4 2 42
ALL PL ANS 30% 13% 5% 3% 2% 47%
* Tests found no statistically different distribution from All Plans at p<.05.
Distribution of Covered Workers With the Following Types of Cost Sharing for Physician Office Visits, 2004
Employer Health Benefits 2004 Annual Survey
99
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Em
ployee Cost S
harin
g
7
section
seven
For Covered Workers With a Separate Hospital Deductible or Copay, the Average Cost Sharing Per Admission, By Plan Type, 2004*
Exhibit 7.11
$229 $228
POS ALL FIRMSPPOHMOCONVENTIONAL
$174
$224
$249
$0
$50
$100
$150
$200
$250
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Tests found no statistically different estimates from All Firms at p<.05.
Note: Results do not include covered workers who do not have a separate hospital deductible or copay or report a $0 hospital deductible or copay.
Em
ployee Cost S
harin
g
Employer Health Benefits 2004 Annual Survey
100
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7sectio
n seven
Average Hospital Cost Sharing for Covered Workers, 2004
Exhibit 7.12
Average Average Average Average Hospital Hospital Hospital Hospital Deductible/Copay Coinsurance Per Diem Annual Deductible
All Small Firms (3-199 Workers) $279* 18%* $221 $685*
All Large Firms (200 or More Workers) $208 16% $138 $312*
ALL FIRMS $224 16% $167 $474
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate is statistically different from All Firms at p<.05.
Note: Results do not include covered workers who do not have separate hospital cost sharing or report $0 or 0% amounts.
Employer Health Benefits 2004 Annual Survey
101
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Em
ployee Cost S
harin
g
7
section
seven
Percentage of Covered Workers in HMO, PPO, and POS Plans Whose Plan Has a Tiered Cost-Sharing Arrangement or Has Considered Introducing a Tiered Cost-Sharing Arrangement for Physician or Hospital Visits, 2004‡
Exhibit 7.13
HAVE TIERED
PROVIDER BENEFITS
AMONG FIRMS NOT OFFERING
A TIERED PROVIDER BENEFIT,
THOSE WHO HAVE CONSIDERED
INTRODUCING TIERED BENEFITS
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
HMO
PPO
POS
10%
6%
16%
12%12%13%
HAVE TIERED
PROVIDER BENEFITS
AMONG FIRMS NOT OFFERING
A TIERED PROVIDER BENEFIT,
THOSE WHO HAVE CONSIDERED
INTRODUCING TIERED BENEFITS
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
HMO
PPO
POS
10%
6%
16%
12%12%13%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
‡ Conventional plans are not asked about tiered cost-sharing arrangements because providers are not organized into networks.
Tiered cost-sharing arrangement: Health plan varies enrollee cost sharing for network hospitals or physicians based on their costs and quality.
97%
$49572,8
2126.3%
103
Employer Health Benefits2004 Annual Survey
H e a l t h B e n e f i t s
s e c t i o n
8
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
104
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Health
Ben
efits
8
section eigh
t
HEALTH BENEFITS
B e n e f i t p a c k a g e s i n e m p l o y e r - s p o n s o r e d h e a l t h p l a n s h a v e b e c o m e m o r e
g e n e r o u s o v e r t h e p a s t t w e n t y y e a r s , m o s t n o t a b l y w i t h r e g a r d t o p r e s c r i p t i o n
d r u g c o v e r a g e a n d p r e v e n t i v e s e r v i c e s . T h e s h i f t f r o m c o n v e n t i o n a l t o m a n a g e d
c a r e p l a n s w a s a d r i v i n g f a c t o r i n t h e r i s e o f p r e s c r i p t i o n d r u g c o v e r a g e a n d
p r e v e n t i v e s e r v i c e s . M a n a g e d h e a l t h p l a n s h a v e h i s t o r i c a l l y f a v o r e d p r e v e n t i v e
c a r e s u c h a s a d u l t p h y s i c a l s , a n n u a l O B / G Y N v i s i t s , w e l l - b a b y c a r e , a n d
c o m p r e h e n s i v e c a r e i n t h e f o r m o f p r e s c r i p t i o n d r u g s a n d a m b u l a t o r y c o v e r a g e .
• Seventy-nine percent of cov-ered workers are employed in firms reporting that the level of benefits offered in 2004 is unchanged from 2003 (other than changes in cost sharing) (Exhibit 8.1).
• Most health plans offer an annual adult physical, pre-scription drug coverage, pre-natal care, annual OB/GYN visit, well-baby care, and inpa-tient and outpatient mental health services (Exhibit 8.2).
• In general, all small firms (3-199 workers) offer the same level of benefits as all large firms (200 or more work-ers), although, as discussed in Section 7, workers in all small firms on average face higher deductibles than work-ers in all large firms.
• Conventional plans provide less comprehensive coverage for preventive care. While most covered workers are covered for an annual adult physical (95%), only 77% of those enrolled in conven-tional plans have this benefit (EXHIBITS 8.2, 8.3).
• Eighty-nine percent of cov-ered workers have coverage for oral contraceptives in 2004, up from 70% in 2000. Still, covered workers across all plan types are less likely to have coverage for oral contraceptives than for other types of prescription drugs (EXHIBIT 8.2).
• Covered workers in all small firms (3-199 workers) are more likely to have a limit on out-of-pocket spending than covered workers in all large firms (200 or more workers), although the vast majority of covered workers (80%) have this protection (Exhibit 8.4).
• The majority of covered work-ers in HMO and POS plans have no lifetime limit on ben-efits—the maximum amount of benefits a plan will pay for an employee over his or her lifetime. Covered work-ers in PPO and conventional plans are more likely to have a limit, although the limit is typ-ically more than $1,000,000 (Exhibit 8.5).
• Only one percent of covered workers have a lifetime limit on benefits of $1,000,000 or less (EXHIBIT 8.5).
Health
Ben
efitsEmployer Health Benefits 2004 Annual Survey
105
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
8
section eigh
t
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
Level of Benefits for Covered Workers Compared to Last Year, All Plans, 2004‡
Exhibit 8.1
SAME AS LAST YEAR
79%
LESS THAN LAST YEAR
15%
MORE THAN LAST YEAR
6%
‡ Respondents are asked about changes in the level of benefits “other than cost sharing.”
Note: In this and prior years, the question asks about changes in the level of benefits for family coverage.
Employer Health Benefits 2004 Annual Survey
106
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Health
Ben
efits
8
section eigh
t
All Small Firms All Large Firms (3-199 Workers) (200 or More Workers) All Firms
ALL PL ANS
Adult Physicals 96% 94% 95%
Prescription Drugs 100 100 100
Outpatient Mental 95 99 98
Inpatient Mental 96 99 98
Annual ob/gyn Visit 99 98 98
Prenatal Care 97 100* 99
Oral Contraceptives 87 89 89
Well-Baby Care 95 98 97
Acupuncture 41 50 47
Chiropractic 79* 91* 87
Percentage of Covered Workers With Selected Benefits, by Firm Size, 2004
Exhibit 8.2
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate is statistically different from All Firms at p<.05.
Health
Ben
efitsEmployer Health Benefits 2004 Annual Survey
107
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
8
section eigh
t
All Small Firms All Large Firms (3-199 Workers) (200 or More Workers) All Firms
CONVENTIONAL PL ANS
Adult Physicals 95%* 61% 77%Prescription Drugs 99 100 99Outpatient Mental 94 94 94Inpatient Mental 88 96 92Annual ob/gyn Visit 97 84 90Prenatal Care 99 93 96Oral Contraceptives 71 70 71Well-Baby 95 88 91Chiropractic 88 91 90Acupuncture 42 46 44
HMO PL ANS
Adult Physicals 97% 99% 99%Prescription Drugs 100 100 100Outpatient Mental 94 100 98Inpatient Mental 93 99 97Annual ob/gyn Visit 100 100 100Prenatal Care 99 100 100Oral Contraceptives 88 95 93Well-Baby 96 100 99Chiropractic 65* 83 78Acupuncture 32 45 41
PPO PL ANS
Adult Physicals 96% 93% 94%Prescription Drugs 100 100 100Outpatient Mental 98 99 99Inpatient Mental 99 99 99Annual ob/gyn Visit 98 98 98Prenatal Care 97 100* 99Oral Contraceptives 89 87 88Well-Baby 95 97 97Chiropractic 87* 95 92Acupuncture 45 48 47
POS PL ANS
Adult Physicals 94% 98% 96%Prescription Drugs 100 100 100Outpatient Mental 90 100* 96Inpatient Mental 93 100* 97Annual ob/gyn Visit 100 100 100Prenatal Care 92 100 97Oral Contraceptives 86 93 90Well-Baby 94 99 97Chiropractic 68 90 82Acupuncture 39 60 52
Percentage of Covered Workers With Selected Benefits, by Plan Type and Firm Size, 2004
Exhibit 8.3
* Estimate is statistically different from All Firms within a plan type at p<.05.
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
Employer Health Benefits 2004 Annual Survey
108
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Health
Ben
efits
8
section eigh
t
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
POS PLANS
ALL SMALL FIRMS(3–199 WORKERS)
*
*
*
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
HMO PLANS
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
PPO PLANS
ALL LARGE FIRMS(200 OR MORE WORKERS)
CONVENTIONAL PLANS
ALL SMALL FIRMS(3–199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL PLANS
ALL SMALL FIRMS(3–199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL FIRMS
$999 OR LESS
$1,000 – $1,499
$1,500 – $1,999
$2,000 – $2,499
$2,500 – $2,999
$3,000 OR MORE
NO LIMIT
19% 15% 23% 15% 19%4%5%
11% 29% 16% 17% 15%3%8%
13% 16% 7% 14% 27%4%20%
6% 14% 6% 6% 48%4%17%
10% 25% 15% 17% 6%12%15%
7% 19% 23% 11% 12%8%19%
7% 14% 10% 20% 16%10%23%
5% 26% 10% 6% 27%1%24%
11% 21% 13% 17% 13%9%16%
7% 20% 17% 9% 23%7%19%
8% 20% 16% 11% 20%7%18%
Distribution of Covered Workers With Maximum Annual Out-of-Pocket Payment, by Plan Type and Firm Size, 2004
Exhibit 8.4
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
POS PLANS
ALL SMALL FIRMS(3–199 WORKERS)
*
*
*
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
HMO PLANS
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
PPO PLANS
ALL LARGE FIRMS(200 OR MORE WORKERS)
CONVENTIONAL PLANS
ALL SMALL FIRMS(3–199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL PLANS
ALL SMALL FIRMS(3–199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL FIRMS
$999 OR LESS
$1,000 – $1,499
$1,500 – $1,999
$2,000 – $2,499
$2,500 – $2,999
$3,000 OR MORE
NO LIMIT
19% 15% 23% 15% 19%4%5%
11% 29% 16% 17% 15%3%8%
13% 16% 7% 14% 27%4%20%
6% 14% 6% 6% 48%4%17%
10% 25% 15% 17% 6%12%15%
7% 19% 23% 11% 12%8%19%
7% 14% 10% 20% 16%10%23%
5% 26% 10% 6% 27%1%24%
11% 21% 13% 17% 13%9%16%
7% 20% 17% 9% 23%7%19%
8% 20% 16% 11% 20%7%18%
* Distribution is statistically different between All Small and All Large Firms within a plan type.
Health
Ben
efitsEmployer Health Benefits 2004 Annual Survey
109
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
8
section eigh
t
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
POS PLANS
ALL SMALL FIRMS(3–199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
HMO PLANS
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
PPO PLANS
ALL LARGE FIRMS(200 OR MORE WORKERS)
CONVENTIONAL PLANS
ALL SMALL FIRMS(3–199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
*
*
*ALL PLANS
ALL FIRMS
ALL SMALL FIRMS(3–199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
$1,000,000 OR LESS
$1,000,001 – $1,999,999
$2,000,000 OR MORE
NO LIMIT
13% 22% 19% 46%
43%
7%
33%
1%
<1%
7%
1% 23%
85%
18% 71%11%
1% 24% 26% 48%
32% 30%
1% 16% 17% 66%
14% 60%
2% 19% 60%
1% 45%27%
1%
19%
27%
24% 49%25%
2% 24%
1% 36%
Distribution of Covered Workers with Maximum Lifetime Benefit, by Plan Type and Firm Size, 2004
Exhibit 8.5
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
POS PLANS
ALL SMALL FIRMS(3–199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
HMO PLANS
ALL LARGE FIRMS(200 OR MORE WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
PPO PLANS
ALL LARGE FIRMS(200 OR MORE WORKERS)
CONVENTIONAL PLANS
ALL SMALL FIRMS(3–199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
*
*
*ALL PLANS
ALL FIRMS
ALL SMALL FIRMS(3–199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
$1,000,000 OR LESS
$1,000,001 – $1,999,999
$2,000,000 OR MORE
NO LIMIT
13% 22% 19% 46%
43%
7%
33%
1%
<1%
7%
1% 23%
85%
18% 71%11%
1% 24% 26% 48%
32% 30%
1% 16% 17% 66%
14% 60%
2% 19% 60%
1% 45%27%
1%
19%
27%
24% 49%25%
2% 24%
1% 36%
* Distribution is statistically different between All Small and All Large Firms within a plan type.
111
$52
37.2%643.
911,789
Employer Health Benefits2004 Annual Survey
Prescription
Drug and Mental
Health Benefits
s e c t i o n
9
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
112
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
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rescription D
rug an
d Men
tal Health
Ben
efits
9 PRESCRIPTION DRUG AND MENTAL HEALTH BENEFITS
R a p i d g r o w t h i n p r e s c r i p t i o n d r u g c o s t s o v e r t h e p a s t f e w y e a r s h a s l e d
e m p l o y e r s a n d h e a l t h p l a n s t o a d o p t c h a n g e s i n a n e f f o r t t o c o n s t r a i n d r u g
s p e n d i n g . E m p l o y e r s h a v e i m p l e m e n t e d a n u m b e r o f s t r a t e g i e s t o r e d u c e g r o w i n g
d r u g c o s t s , t h e m o s t p r o m i n e n t b e i n g t i e r e d c o s t - s h a r i n g a r r a n g e m e n t s w h i c h
g i v e w o r k e r s a f i n a n c i a l i n c e n t i v e t o c h o o s e l e s s e x p e n s i v e d r u g s . A l m o s t
s e v e n i n t e n w o r k e r s a r e i n p l a n s w i t h a t h r e e - t i e r o r f o u r - t i e r c o s t - s h a r i n g
a r r a n g e m e n t .
A l a r g e n u m b e r o f c o v e r e d w o r k e r s a c r o s s a l l p l a n t y p e s a l s o h a v e a m a i l o r d e r
d i s c o u n t p l a n a v a i l a b l e t o t h e m . R e l a t i v e ly f e w w o r k e r s a r e r e q u i r e d t o u s e g e n e r i c
d r u g s i f t h e y a r e a v a i l a b l e . R e s t r i c t i o n s o n m e n t a l h e a l t h c o v e r a g e r e m a i n a
c o m m o n f e a t u r e o f h e a l t h p l a n s i n 2 0 0 4 . T h e s e r e s t r i c t i o n s i n c l u d e a n n u a l l i m i t s
o n t h e n u m b e r o f o u t p a t i e n t v i s i t s a n d t h e n u m b e r o f i n p a t i e n t d a y s .
P R E S C R I P T I O N D R U G
B E N E F I T S
• As with prior years, nearly all (99.9%) covered workers in employer-sponsored plans have a prescription drug benefit (Section 8; Exhibit 8.2). To combat rising costs, firms are increasingly providing employ-ees with financial incentives to encourage use of generic drugs and certain categories of preferred brand name drugs.
• A majority of covered workers (88%) in 2004 have some sort of tiered cost-sharing formula for prescription drugs. In past reports, we documented the
increase in three-tier cost-sharing arrangements, where a worker faces one copayment for generic drugs, a higher one for preferred drugs (such as brand name drugs with no generic substitutes), and an even higher one for nonpre-ferred drugs (such as brand name drugs with generic sub-stitutes). This year we began asking employers whether they have copayment struc-tures with four tiers. These new four-tier arrangements typically build another layer of higher copayments and/or coinsurance for specifically identified types of drugs, such as lifestyle or injectable drugs.
Sixty-eight percent of covered workers are enrolled in plans with three or four tiers of cost sharing for prescription drugs (EXHIBIT 9.1).
• The average drug copayments
for generic ($10), preferred ($21) and nonpreferred ($33) drugs increased slightly over the last year. Average copay-ments for a four-tier drug are $48 (EXHIBIT 9.2). 9
• For workers with coinsurance rather than copayments for prescription drugs, cost-sharing levels average 20% for generic drugs, 26% for preferred drugs, 31% for nonpreferred drugs,
n o t e :
9 There are fewer observations for estimating the average copayment for four-tier drugs compared to other drug types.
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
113
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
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Ben
efits
9and 31% for four-tier drugs (EXHIBIT 9.3). While average coinsurance remains essential-ly unchanged from 2003, rates for preferred and nonpreferred drugs are higher in 2004 than in 2001.
• Other strategies used by firms and health plans to curb the rising cost of prescription drug coverage include mandatory use of generic drugs (when available) and mail order dis-count plans. The last time the survey included these ques-tions was in 2000.
• Nineteen percent of all covered workers in 2004 face mandatory use of generic drugs, essentially unchanged from 18% in 2000.
• The percentage of covered workers in PPOs who have a mail order discount plan available to them increased from 73% in 2000 to 84% in 2004. The availability of mail order discount plans in HMO and POS plans is statistically unchanged from 2000 (EXHIBIT 9.6).
M E N T A L H E A LT H B E N E F I T S
• Although nearly all covered workers (98%) have mental health benefits, limits on the number of visits for outpatient care and the number of days of inpatient care remain a com-mon feature of all plan types (Section 8; Exhibit 8.2).
• Only 19% of covered workers have coverage for an unlim-ited number of outpatient mental health visits in 2004. The likelihood of having a limit on the number of out-patient mental health visits is similar across plan types (EXHIBIT 9.7).
• Many plans limit the num-ber of inpatient mental health days covered. Overall, only 21% of covered work-ers have coverage for unlim-ited inpatient mental health days. Approximately 59% of covered workers face an inpa-tient limit of 30 or fewer days (EXHIBIT 9.8).
Employer Health Benefits 2004 Annual Survey
114
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tion
nin
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rescription D
rug an
d Men
tal Health
Ben
efits
9 Distribution of Covered Workers Facing Different Cost-Sharing Formulas for Prescription Drug Benefits, 2000-2004*
Exhibit 9.1
2001
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2002
2003
2004
2000
THREE-TIER: ONE PAYMENT FOR GENERIC DRUGS, ANOTHER FOR PREFERRED DRUGS,
AND A THIRD FOR NONPREFERRED DRUGS
TWO-TIER: ONE PAYMENT FOR GENERIC DRUGS AND ONE FOR ALL NAME BRAND DRUGS
FOUR-TIER: ONE PAYMENT FOR GENERIC DRUGS, ANOTHER FOR PREFERRED DRUGS,
A THIRD FOR NONPREFERRED DRUGS, AND A FOURTH FOR OTHER SPECIFIED DRUGS
PAYMENT IS THE SAME REGARDLESS OF TYPE OF DRUG
OTHER/DON’T KNOW
22%27% 49%
18%41% 41% 1%
2%
13%55% 30% 1%
13%63% 23% 2%
10%65% 20% 1%3%
2001
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2002
2003
2004
2000
THREE-TIER: ONE PAYMENT FOR GENERIC DRUGS, ANOTHER FOR PREFERRED DRUGS,
AND A THIRD FOR NONPREFERRED DRUGS
TWO-TIER: ONE PAYMENT FOR GENERIC DRUGS AND ONE FOR ALL NAME BRAND DRUGS
FOUR-TIER: ONE PAYMENT FOR GENERIC DRUGS, ANOTHER FOR PREFERRED DRUGS,
A THIRD FOR NONPREFERRED DRUGS, AND A FOURTH FOR OTHER SPECIFIED DRUGS
PAYMENT IS THE SAME REGARDLESS OF TYPE OF DRUG
OTHER/DON’T KNOW
22%27% 49%
18%41% 41% 1%
2%
13%55% 30% 1%
13%63% 23% 2%
10%65% 20% 1%3%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002, 2003, 2004.
* Tests found no statistically different distribution from the previous year shown at p<.05. No test was conducted between 2003 and 2004 due to the addition of a new category.
Generic drugs: A drug product that is no longer covered by patent protection and thus may be produced and/or distributed by multiple drug companies.
Preferred drugs: Drugs included on a formulary or preferred drug list; for example, a brand name drug without a generic substitute.
Nonpreferred drugs: Drugs not included on a formulary or preferred drug list; for example, a brand name drug with a generic substitute.
Brand name drugs: Generally, a drug product that is covered by a patent and is thus manufactured and sold exclusively by one firm. Cross-licensing occasionally occurs, allowing an additional firm to market the drug. After the patent expires, multiple firms can produce the drug product, but the brand name or trademark remains with the original manufacturer’s product.
Four-tier drugs: New types of cost-sharing arrangements that typically build additional layers of higher copayments or coinsurance for specifically identified types of drugs, such as lifestyle or injectable drugs.
Note: Four-tier drug copay information was not obtained prior to 2004.
sec
tion
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rescription D
rug an
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Ben
efitsEmployer Health Benefits 2004 Annual Survey
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
9
115
Average Copays for Generic Drugs, Preferred Drugs, Nonpreferred and Four-Tier Drugs, 2000-2004
Exhibit 9.2
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002, 2003, 2004.
* Estimate is statistically different from previous year at p<.05.
Four-tier drug copay information was not obtanied prior to 2004.
Generic drugs: A drug product that is no longer covered by patent protection and thus may be produced and/or distributed by multiple drug companies.
Preferred drugs: Drugs included on a formulary or preferred drug list; for example, a brand name drug without a generic substitute.
Nonpreferred drugs: Drugs not included on a formulary or preferred drug list; for example, a brand name drug with a generic substitute.
Brand name drugs: Generally, a drug product that is covered by a patent and is thus manufactured and sold exclusively by one firm. Cross-licensing occasionally occurs, allowing an additional firm to market the drug. After the patent expires, multiple firms can produce the drug product, but the brand name or trademark remains with the original manufacturer’s product.
Four-tier drugs: New types of cost-sharing arrangements that typically build additional layers of higher copayments or coinsurance for specifically identified types of drugs, such as lifestyle or injectable drugs.
Note: On average, generic drugs cost $7.42 in 2000, $8.05 in 2001, $8.74 in 2002, $9.47 in 2003 and $10.46 in 2004.
2001
2002
2000
2003
2004
$0
$5
$10
$15
$20
$25
$30
$40
$35
$45
$50
NONPREFERRED DRUGS FOUR-TIER DRUGSPREFERRED DRUGSGENERIC DRUGS
$25*
$8*
$21*
$7
$17*
^ ^ ^ ^
$17
$20
$29*
$33*
$9* $9*$10*
$19*
$48
$15*$13
2001
2002
2000
2003
2004
$0
$5
$10
$15
$20
$25
$30
$40
$35
$45
$50
NONPREFERRED DRUGS FOUR-TIER DRUGSPREFERRED DRUGSGENERIC DRUGS
$25*
$8*
$21*
$7
$17*
^ ^ ^ ^
$17
$20
$29*
$33*
$9* $9*$10*
$19*
$48
$15*$13
Employer Health Benefits 2004 Annual Survey
116
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
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Ben
efits
9Average Coinsurance Rate for Generic Drugs, Preferred Drugs, Nonpreferred and Four-Tier Drugs, 2000-2004
Exhibit 9.3
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002, 2003, 2004.
* Estimate is statistically different from previous year shown at p<.05.
^ Information was not obtained for four-tier drugs prior to 2004.
Generic drugs: A drug product that is no longer covered by patent protection and thus may be produced and/or distributed by multiple drug companies.
Preferred drugs: Drugs included on a formulary or preferred drug list; for example, a brand name drug without a generic substitute.
Nonpreferred drugs: Drugs not included on a formulary or preferred drug list; for example, a brand name drug with a generic substitute.
Brand name drugs: Generally, a drug product that is covered by a patent and is thus manufactured and sold exclusively by one firm. Cross-licensing occasionally occurs, allowing an additional firm to market the drug. After the patent expires, multiple firms can produce the drug product, but the brand name or trademark remains with the original manufacturer’s product.
Four-tier drugs: New types of cost-sharing arrangements that typically build additional layers of higher copayments or coinsurance for specifically identified types of drugs, such as lifestyle or injectable drugs.
0%
5%
10%
15%
20%
25%
40%
35%
30%
2001
2002
2000
2003
2004
NONPREFERREDPREFERREDGENERIC FOUR-TIER
19%18%
21%*20% 20%
23%
21%
24%* 24%
26%
22%
24%
28%*
^ ^ ^ ^
31%
29%
31%
0%
5%
10%
15%
20%
25%
40%
35%
30%
2001
2002
2000
2003
2004
NONPREFERREDPREFERREDGENERIC FOUR-TIER
19%18%
21%*20% 20%
23%
21%
24%* 24%
26%
22%
24%
28%*
^ ^ ^ ^
31%
29%
31%
sec
tion
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tal Health
Ben
efitsEmployer Health Benefits 2004 Annual Survey
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
9
117
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
COPAY
COINSURANCE
BOTH
NEITHER
COPAY OR COINSURANCE – WHICHEVER IS GREATER
NONPREFERRED
PREFERRED
FOUR-TIER
GENERIC
5%84% 8%
4%84% 9%
1%
2%
2%2%
3%17% 50% 31%
3% 3%84% 10%
1%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
COPAY
COINSURANCE
BOTH
NEITHER
COPAY OR COINSURANCE – WHICHEVER IS GREATER
NONPREFERRED
PREFERRED
FOUR-TIER
GENERIC
5%84% 8%
4%84% 9%
1%
2%
2%2%
3%17% 50% 31%
3% 3%84% 10%
1%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
Distribution of Covered Workers With the Following Types of Cost Sharing for Prescription Drugs, by Drug Type, 2004
Exhibit 9.4
Generic drugs: A drug product that is no longer covered by patent protection and thus may be produced and/or distributed by multiple drug companies.
Preferred drugs: Drugs included on a formulary or preferred drug list; for example, a brand name drug without a generic substitute.
Nonpreferred drugs: Drugs not included on a formulary or preferred drug list; for example, a brand name drug with a generic substitute.
Brand name drugs: Generally, a drug product that is covered by a patent and is thus manufactured and sold exclusively by one firm. Cross-licensing occasionally occurs, allowing an additional firm to market the drug. After the patent expires, multiple firms can produce the drug product, but the brand name or trademark remains with the original manufacturer’s product.
Four-tier drugs: New types of cost-sharing arrangements that typically build additional layers of higher copayments or coinsurance for specifically identified types of drugs, such as lifestyle or injectable drugs.
Employer Health Benefits 2004 Annual Survey
118
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
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tal Health
Ben
efits
9 Percentage of Covered Workers With Mandatory Use of Generic Drugs, 1998-2004
Exhibit 9.5
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1998.
* Estimate is statistically different from previous year shown at p<.05.
Generic drugs: A drug product that is no longer covered by patent protection and thus may be produced and/or distributed by multiple drug companies.
0%
5%
10%
15%
20%
30%
40%
25%
35%
1999
2000
1998
2004
PPOHMOCONVENTIONAL POS
16% 16%
23%
15%*
18%
33%
30%
20%
33%
37%
22%
14% 14%
24% 24%
19%*
0%
5%
10%
15%
20%
30%
40%
25%
35%
1999
2000
1998
2004
PPOHMOCONVENTIONAL POS
16% 16%
23%
15%*
18%
33%
30%
20%
33%
37%
22%
14% 14%
24% 24%
19%*
sec
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Ben
efitsEmployer Health Benefits 2004 Annual Survey
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
9
119
Percentage of Covered Workers With Mail Order Discount Plans for Prescription Drugs, 1998-2004
Exhibit 9.6
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1998.
* Estimate is statistically different from previous year shown at p<.05.
Mail order discount plans: Plans under which members pay less for drugs obtained through the mail rather than directly from a pharmacy.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1998
1999
2000
2004
PPOHMOCONVENTIONAL POS
50%54%
67%
52%
59%
69%* 71%75%
66%
72% 71%
78%
71% 69%73%
84%*
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1998
1999
2000
2004
PPOHMOCONVENTIONAL POS
50%54%
67%
52%
59%
69%* 71%75%
66%
72% 71%
78%
71% 69%73%
84%*
Employer Health Benefits 2004 Annual Survey
120
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
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rescription D
rug an
d Men
tal Health
Ben
efits
9Percentage of Covered Workers With Various Outpatient Mental Health Visit Annual Maximums, by Plan Type, 2004*
Exhibit 9.7
Conventional HMO PPO POS All Plans
20 Visits or Less 25% 48% 26% 32% 32%
21 to 30 Visits 26 26 34 28 31
31 to 50 Visits 5 6 11 8 9
More than 50 Visits 9 5 9 14 9
Unlimited 35 15 19 17 19
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Tests found no statistically different distribution from All Plans at p<.05.
Percentage of Covered Workers With Various Annual Inpatient Mental Health Day Maximums, by Plan Type, 2004*
Exhibit 9.8
Conventional HMO PPO POS All Plans
10 Days or Less 5% 4% 7% 5% 6%
11 to 20 Days 8 9 8 6 8
21 to 30 Days 44 47 45 46 45
31 or More Days 17 21 18 26 21
Unlimited 27 18 22 17 21
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Tests found no statistically different distribution from All Plans at p<.05.
64%
$2710.2
5,000Employer Health Benefits2004 Annual Survey
Plan Funding
s e c t i o n
10
121
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
sec
tion
ten
122
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Plan
Fu
ndin
g
10
PLAN FUNDING
T h e E m p l o y e e R e t i r e m e n t I n c o m e a n d S e c u r i t y A c t ( E R I S A ) o f 1 9 7 4 e x e m p t s s e l f -
f u n d e d p l a n s f r o m s t a t e r e g u l a t i o n , i n c l u d i n g r e s e r v e r e q u i r e m e n t s , m a n d a t e d
b e n e f i t s , p r e m i u m t a x e s , a n d c o n s u m e r p r o t e c t i o n r e g u l a t i o n s . 10 S e l f f u n d i n g i s
c o m m o n a m o n g a l l l a r g e f i r m s ( 2 0 0 o r m o r e w o r k e r s ) b u t i s l e s s p r e v a l e n t a n d
a f a r r i s k i e r u n d e r t a k i n g f o r a l l s m a l l f i r m s ( 3 - 1 9 9 w o r k e r s ) , w h o h a v e f e w e r
e m p l o y e e s o v e r w h o m t o s p r e a d t h e r i s k o f c o s t l y c l a i m s .
S E L F F U N D I N G
•Fifty-four percent of covered workers in 2004 are in a plan that is completely or partially self-funded (Exhibits 10.1, 10.2).
• The percentage of covered workers in self-funded plans is similar to last year (52% in 2003 vs. 54% in 2004) (EXHIBIT 10.1).
• Covered workers in all small firms (3-199 workers) are less likely than covered workers in larger firms to be in a self-funded plan. Ten percent of covered workers in all small firms are in self-funded plans, compared to 50% of work-ers in midsize firms (200-999 workers) and 80% of work-ers in jumbo firms (5,000 or more workers) (EXHIBIT 10.1).
• The prevalence of self-funded plans is relatively high in PPO plans (64% of workers covered in PPOs) and rela-tively low in HMO plans (29% of workers covered in HMOs) (EXHIBIT 10.2).
n o t e s :
10 A self-funded plan is one in which the employer assumes direct responsibility for the costs of enrollees’ medical claims. Employers sponsoring self-funded plans typically contract with a third-party administrator or insurer to provide administrative services for the self-funded plan.
sec
tion
ten
Plan
Fu
ndin
g Employer Health Benefits 2004 Annual Survey
123
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
10
Percentage of Covered Workers in Partially or Completely Self-Funded Plans, by Firm Size, 1996-2004*
Exhibit 10.1
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998.
* Tests found no statistically different estimates from the previous year shown at p<.05.
Self-funded plan: A plan in which the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. Employers sponsoring self-funded plans typically contract with a third-party administrator or insurer to provide administrative services for the self-funded plan.
1996
1998
2000
2001
2002
2003
2004
0%
20%
40%
60%
80%
100%
10%
30%
50%
70%
90%
24
15
50
6663
5053
69*72*
49
1310 10
52
4850 50
71 72
80
4952
54
49
56
ALL FIRMSJUMBO FIRMS(5,000 OR MORE
WORKERS)
LARGE FIRMS(1,000–4,999
WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
6566
70
79*
58
1517
78*
67 67
1996
1998
2000
2001
2002
2003
2004
0%
20%
40%
60%
80%
100%
10%
30%
50%
70%
90%
24
15
50
6663
5053
69*72*
49
1310 10
52
4850 50
71 72
80
4952
54
49
56
ALL FIRMSJUMBO FIRMS(5,000 OR MORE
WORKERS)
LARGE FIRMS(1,000–4,999
WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
6566
70
79*
58
1517
78*
67 67
Employer Health Benefits 2004 Annual Survey
124
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
ten
Plan
Fu
ndin
g
10
Percentage of Covered Workers in Partially or Completely Self-Funded Plans, by Plan Type, 1988-2004
Exhibit 10.2
0%
20%
40%
60%
80%
100%
10%
30%
50%
70%
90%
55
74
CONVENTIONAL
74
64
49
43
27
6164
4952
5455
74
PPO
70
63*61
ALL PLANS
56
49*
^
22
POS
80
45* 4446
^
1988
1993
1996
2000
2002
2003
2004
29 29
^ ^^
HMO
19
23
40
58
0%
20%
40%
60%
80%
100%
10%
30%
50%
70%
90%
55
74
CONVENTIONAL
74
64
49
43
27
6164
4952
5455
74
PPO
70
63*61
ALL PLANS
56
49*
^
22
POS
80
45* 4446
^
1988
1993
1996
2000
2002
2003
2004
29 29
^ ^^
HMO
19
23
40
58
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; The Health Insurance Association of America (HIAA): 1988.
* Estimate is statistically different from the previous year shown at p<.05.
Information was not obtained for HMO plans in 1988 and 1993, or POS plans in 1988.
Self-funded plan: A plan in which the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. Employers sponsoring self-funded plans typically contract with a third-party administrator or insurer to provide administrative services for the self-funded plan.
sec
tion
ten
Plan
Fu
ndin
g Employer Health Benefits 2004 Annual Survey
125
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
10
Percentage of Covered Workers in Partially or Completely Self-Funded Conventional Plans, by Firm Size, 1996-2004
Exhibit 10.3
1996
1998
2000
2002
2003
2004
0%
20%
40%
60%
80%
100%
2116
57*
88 85
97
69
23
7279
96
86 90
64*
6 57
63
79
6758
28*
59*
4943
7474
ALL FIRMSJUMBO FIRMS(5,000 OR MORE
WORKERS)
LARGE FIRMS(1,000–4,999
WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
97 97
74
1996
1998
2000
2002
2003
2004
0%
20%
40%
60%
80%
100%
2116
57*
88 85
97
69
23
7279
96
86 90
64*
6 57
63
79
6758
28*
59*
4943
7474
ALL FIRMSJUMBO FIRMS(5,000 OR MORE
WORKERS)
LARGE FIRMS(1,000–4,999
WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
97 97
74
Percentage of Covered Workers in Partially or Completely Self-Funded HMO Plans, by Firm Size, 1996-2004
Exhibit 10.4
0%
10%
20%
30%
40%
50%
119
20
11*
29
19*
25
1620
4 4
13
35
23*
5
10
31
49
27
37
4440
29 29
1916
1821
27
38
ALL FIRMSJUMBO FIRMS(5,000 OR MORE
WORKERS)
LARGE FIRMS(1,000–4,999
WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
1996
1998
2000
2002
2003
2004
0%
10%
20%
30%
40%
50%
119
20
11*
29
19*
25
1620
4 4
13
35
23*
5
10
31
49
27
37
4440
29 29
1916
1821
27
38
ALL FIRMSJUMBO FIRMS(5,000 OR MORE
WORKERS)
LARGE FIRMS(1,000–4,999
WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
1996
1998
2000
2002
2003
2004
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998.
* Estimate is statistically different from the previous year shown at p<.05.
Self-funded plan: A plan in which the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. Employers sponsoring self-funded plans typically contract with a third-party administrator or insurer to provide administrative services for the self-funded plan.
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998.
* Estimate is statistically different from the previous year shown at p<.05.
Self-funded plan: A plan in which the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. Employers sponsoring self-funded plans typically contract with a third-party administrator or insurer to provide administrative services for the self-funded plan.
Employer Health Benefits 2004 Annual Survey
126
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
sec
tion
ten
Plan
Fu
ndin
g
10
Percentage of Covered Workers in Partially or Completely Self-Funded POS Plans, by Firm Size, 1996-2004
Exhibit 10.6
31
8*
82
67*
49*
10
71
45*
80
0%
20%
40%
60%
80%
100%
59
39
8 910
67 63 67
4044 46
78
95
78*
21*
42* 42
71
35*
7377
ALL FIRMSJUMBO FIRMS(5,000 OR MORE
WORKERS)
LARGE FIRMS(1,000–4,999
WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
1996
1998
2000
2002
2003
2004
31
8*
82
67*
49*
10
71
45*
80
0%
20%
40%
60%
80%
100%
59
39
8 910
67 63 67
4044 46
78
95
78*
21*
42* 42
71
35*
7377
ALL FIRMSJUMBO FIRMS(5,000 OR MORE
WORKERS)
LARGE FIRMS(1,000–4,999
WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
1996
1998
2000
2002
2003
2004
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998.
* Estimate is statistically different from the previous year shown at p<.05.
Self-funded plan: A plan in which the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. Employers sponsoring self-funded plans typically contract with a third-party administrator or insurer to provide administrative services for the self-funded plan.
Percentage of Covered Workers in Partially or Completely Self-Funded PPO Plans, by Firm Size, 1996-2004
Exhibit 10.5
0%
20%
40%
60%
80%
100%
36
23*
7770
80 8492
88
66
23
72
89 88
63*
13 1315
63
83
93
61 6460 63
85 8893 93
6170
ALL FIRMSJUMBO FIRMS(5,000 OR MORE
WORKERS)
LARGE FIRMS(1,000–4,999
WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
1996
1998
2000
2002
2003
2004
0%
20%
40%
60%
80%
100%
36
23*
7770
80 8492
88
66
23
72
89 88
63*
13 1315
63
83
93
61 6460 63
85 8893 93
6170
ALL FIRMSJUMBO FIRMS(5,000 OR MORE
WORKERS)
LARGE FIRMS(1,000–4,999
WORKERS)
MIDSIZE FIRMS(200–999 WORKERS)
ALL SMALL FIRMS(3–199 WORKERS)
1996
1998
2000
2002
2003
2004
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998.
* Estimate is statistically different from the previous year shown at p<.05.
Self-funded plan: A plan in which the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. Employers sponsoring self-funded plans typically contract with a third-party administrator or insurer to provide administrative services for the self-funded plan.
sec
tion
ten
Plan
Fu
ndin
g Employer Health Benefits 2004 Annual Survey
127
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10
Percentage of Covered Workers Under Different Funding Arrangements, by Industry, 2004
Exhibit 10.7
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimates are statistically different from All Industries at p<.05.
Fully insured plan: A plan where the employer contracts with a health plan to assume financial responsibility for the costs of enrollees' medical claims.
Self-funded plan: A plan in which the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. Employers sponsoring self-funded plans typically contract with a third-party administrator or insurer to provide administrative services for the self-funded plan.
Fully Insured Self-Funded (Coverage (Employer Bears Underwritten by Some or All of an Insurer) Financial Risk)
ALL PL ANS
Mining/Construction/Wholesale* 65% 35%
Manufacturing* 27 73
Transportation/Communication/Utility* 27 73
Retail 51 49
Finance* 58 42
Service* 59 41
State/Local Government 41 59
Health Care* 31 69
ALL INDUSTRIE S 46% 54%
96%
11.3$27.
95200+
129
Employer Health Benefits2004 Annual Survey
Retiree Health
Benefits
s e c t i o n
11
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
section eleven
130
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Retiree H
ealth B
enefits
1 1
RETIREE HEALTH BENEFITS
R e t i r e e h e a l t h b e n e f i t s a r e a k e y c o n s i d e r a t i o n f o r o l d e r w o r k e r s ( a g e s 5 5 - 6 4 )
m a k i n g t h e i r d e c i s i o n s a b o u t r e t i r e m e n t . F o r p e o p l e a g e 6 5 a n d o l d e r , r e t i r e e
h e a l t h b e n e f i t s p r o v i d e a n i m p o r t a n t s u p p l e m e n t t o M e d i c a r e . A l t h o u g h p a s s a g e
o f t h e 2 0 0 3 M e d i c a r e P r e s c r i p t i o n D r u g I m p r o v e m e n t a n d M o d e r n i z a t i o n A c t w i l l
a l l e v i a t e s o m e o f t h e c o s t t o r e t i r e e s o f p r e s c r i p t i o n d r u g s , r e t i r e e h e a l t h
p l a n s a r e c u r r e n t l y t h e l a r g e s t s o u r c e o f p r e s c r i p t i o n d r u g c o v e r a g e f o r t h e
r e t i r e d p o p u l a t i o n a n d a r e e s s e n t i a l f o r a f f o r d a b l e a c c e s s t o n e e d e d m e d i c i n e s . 11
T h e p e r c e n t a g e o f e m p l o y e r s o f f e r i n g r e t i r e e b e n e f i t s h a s f a l l e n s i g n i f i c a n t l y
o v e r t h e p a s t 2 5 y e a r s . O v e r t h a t t i m e p e r i o d , r e t i r e e c o s t s r o s e t o r e p r e s e n t
a s i g n i f i c a n t p o r t i o n o f h e a l t h e x p e n d i t u r e s t o m a n y b u s i n e s s e s , d u e i n l a r g e
p a r t t o t h e r i s i n g c o s t o f p r e s c r i p t i o n d r u g s . T h e i m p l e m e n t a t i o n o f t h e n e w
M e d i c a r e p r e s c r i p t i o n d r u g l a w m a y l e a d e m p l o y e r s t o r e c o n s i d e r t h e i r r o l e i n
p r o v i d i n g r e t i r e e s w i t h h e a l t h b e n e f i t s .
A V A I L A B I L I T Y O F
R E T I R E E B E N E F I T S
• The percentage of firms offering retiree coverage has declined significantly over time, although there was no significant change between 2003 and 2004. Thirty-six per-cent of all large firms (200 or more workers) offer retiree coverage in 2004, compared to 66% in 1988 (Exhibit 11.1).
• Retiree benefits vary substan-tially by firm size, industry and the presence of union workers.
• All large firms (200 or more workers) are much more likely to offer retiree benefits than all small firms (3-199 workers). Thirty-six percent of all large firms offer retiree benefits, compared to just five percent of all small firms (EXHIBIT 11.2).
• State and local governments are more likely than other firms to offer retiree benefits (EXHIBIT 11.2).
• All large firms (200 or more workers) with union work-ers are significantly more likely to offer retiree health benefits than all large firms without union workers—60% of all large firms with union employees offer retiree benefits, compared to 22% of all large firms that do not have union employees (EXHIBIT 11.3).
• Virtually all large firms (200 or more workers) that offer retiree benefits offer them to early retirees under the age of 65 (96%). A lower percent-age (75%) of all large firms offering retiree benefits offer them to Medicare-age retirees (Exhibits 11.4, 11.5).
n o t e s :
11 Twenty-eight percent of Medicare beneficiaries receive prescription drug coverage from an employer, a far higher number than receive coverage through a Medicare HMO (15%), Medigap (7%) or Medicaid (10%). Laschober et. al., Health Affairs, February 2002.
section eleven
Retiree H
ealth B
enefits
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1 1
Percentage of All Large Firms (200 or More Workers) Offering Retiree Health Benefits‡, 1988-2004*
Exhibit 11.1
0%
20%
40%
60%
10%
30%
50%
70%
80%
66%
1988 2000
35%
1995
40%
1998
40%
1999
40%
2001
37%
1993
36%
1991
46%
200420032002
36% 36%38%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002, 2003, 2004; KPMG Survey of Employer-Sponsored Health Benefits: 1991, 1993, 1995, 1998; The Health Insurance Association of America (HIAA): 1988.
* Tests found no statistically different estimate from the previous year shown at p<.05.
‡ Among firms that offer health benefits to active workers.
Employer Health Benefits 2004 Annual Survey
132
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
section eleven
Retiree H
ealth B
enefits
1 1
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate is statistically different from All Firms at p<.05.
‡ Among firms that offer health benefits to active workers.
Percentage of Employers Offering Retiree Health Benefits‡, by Firm Size, Region, and Industry, 2004
Exhibit 11.2
All Small Firms All Large Firms (3-199 Workers) (200 or More Workers)
FIRM SIZE
Small (3-24 Workers) 4% -
Small (25-49 Workers) 9 -
Small (50-199 Workers) 10 -
ALL SMALL FIRMS (3-199 W ORKERS) 5 -
Midsize (200-999 Workers) - 31%
Large (1,000-4,999 Workers) - 43
Jumbo (5,000 or More Workers) - 60*
REGION
Northeast 10% 37%
Midwest 8 41
South 2 39
West 2 26*
INDUSTRY
Mining/Construction/Wholesale 8% 27%
Manufacturing 4 32
Transportation/Communication/Utility 4 53
Retail 3 10*
Finance 2 43
Service 5 36
State/Local Government 27* 77*
Health Care 0* 22*
ALL FIRM SIZE S, REGIONS, 5% 36%
AND INDUSTRIE S
section eleven
Retiree H
ealth B
enefits
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133
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1 1
Percentage of All Large Firms (200 or More Workers) in Which Retirees Are Offered Health Insurance, by Whether or Not the Firm Has Union Workers, 2004
Exhibit 11.3
0%
20%
40%
60%
80%
10%
30%
50%
70%
90%
100%
FIRM HAS
UNION WORKERS
FIRM DOES NOT HAVE
UNION WORKERS
22%
60%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
Employer Health Benefits 2004 Annual Survey
134
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
section eleven
Retiree H
ealth B
enefits
1 1
Percentage of All Large Firms (200 or More Workers) Offering Health Benefits to Early and Medicare-Age Retirees, Among All Large Firms Offering Retiree Coverage, 1999-2004
Exhibit 11.4
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1999
2003
2002
2001
2000
2004
OFFER HEALTH BENEFITS
TO MEDICARE-AGE RETIREES
OFFER HEALTH BENEFITS
TO EARLY RETIREES
93%96%
89%
93%
71%73%
98%*
76% 78%75%76%
96%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002, 2003, 2004.
* Estimate is statistically different from the previous year shown at p<.05.
Early retiree: Workers retiring before age 65.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1999
2003
2002
2001
2000
2004
OFFER HEALTH BENEFITS
TO MEDICARE-AGE RETIREES
OFFER HEALTH BENEFITS
TO EARLY RETIREES
93%96%
89%
93%
71%73%
98%*
76% 78%75%76%
96%
section eleven
Retiree H
ealth B
enefits
Employer Health Benefits 2004 Annual Survey
135
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
1 1
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Estimate is statistically different from All Large Firms at p<.05.
Early retiree: Workers retiring before age 65.
NSD: Not Sufficient Data.
Percentage of All Large Firms (200 or More Workers) Offering Retiree Benefits to Early and Medicare-Age Retirees, Among All Large Firms Offering Retiree Coverage, by Firm Size, Region, and Industry, 2004
Exhibit 11.5
Percentage of Employers Percentage of Employers Offering Retiree Health Offering Retiree Health Benefits to Early Benefits to Medicare-Age Retirees Retirees
FIRM SIZE
Midsize (200-999 Workers) 96% 70%
Large (1,000-4,999 Workers) 93 81
Jumbo (5,000 or More Workers) 99* 88*
REGION
Northeast 97% 81%
Midwest 99 82
South 94 68
West 93 70
INDUSTRY
Mining/Construction/Wholesale 90% 88%
Manufacturing 98 82
Transportation/Communication/Utility 97 83
Retail NSD NSD
Finance 92 86
Service 98 67
State/Local Government 96 71
Health Care 75 66
ALL FIRM SIZE S, REGIONS, 96% 75%
AND INDUSTRIE S
59%
$20067.3
%3,942
137
Employer Health Benefits2004 Annual Survey
E m p l o y e r
A t t i t u d e s a n d
O p i n i o n s
s e c t i o n
12
Employer Health Benefits 2 0 0 4 A n n ua l S u rve y
section tw
elve
138
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Em
ployer Attitu
des and O
pinions
12
E m p l o y e r s p l a y a s i g n i f i c a n t r o l e i n h e a l t h i n s u r a n c e c o v e r a g e f o r A m e r i c a n s —
p r o v i d i n g h e a l t h b e n e f i t s t o m o r e t h a n t h r e e o u t o f e v e r y f i v e n o n e l d e r l y
A m e r i c a n s 1 2 — s o t h e i r a t t i t u d e s , k n o w l e d g e , a n d e x p e r i e n c e s a r e i m p o r t a n t
f a c t o r s i n h e a l t h p o l i c y d i s c u s s i o n s .
T h i s y e a r ’ s s u r v e y a s k e d e m p l o y e r s a n u m b e r o f q u e s t i o n s a b o u t t h e i r r e s p o n s e s
t o r i s i n g h e a l t h i n s u r a n c e p r e m i u m s , i n c l u d i n g w h e t h e r t h e y s h o p p e d f o r
n e w c o v e r a g e , h o w t h e y v i e w d i f f e r e n t a p p r o a c h e s t o c o n t a i n i n g c o s t i n c r e a s e s ,
a n d i f t h e y p l a n t o c h a n g e t h e i r h e a lt h b e n e f i t p l a n s i n t h e n e a r f u t u r e . W e a l s o
a s k e d f i r m s f o r t h e i r v i e w s a b o u t t h e i m p o r t a n c e o f p r o v i d i n g a s u b s t a n t i a l
c o n t r i b u t i o n t o w a r d s i n g l e a n d f a m i ly c o v e r a g e . W e f o u n d t h a t a s i g n i f i c a n t s h a r e
o f f i r m s s h o p p e d f o r c o v e r a g e i n t h e p a s t y e a r , t h a t F i r m s r e m a i n s o m e w h a t
s k e p t i c a l a b o u t t h e p o t e n t i a l e f f e c t i v e n e s s o f c u r r e n t ly a v a i l a b l e c o s t - c o n t a i n m e n t
s t r a t e g i e s , a n d t h a t a l l l a r g e f i r m s ( 2 0 0 o r m o r e w o r k e r s ) a r e l i k e ly t o i n c r e a s e
e m p l o y e e c o n t r i b u t i o n s i n t h e f u t u r e . A l l l a r g e f i r m s a r e m o r e l i k e ly t h a n a l l
s m a l l f i r m s ( 3 - 1 9 9 w o r k e r s ) t o b e l i e v e t h a t i t i s i m p o r t a n t t o m a k e a s u b s t a n t i a l
c o n t r i b u t i o n t o w a r d f a m i l y c o v e r a g e .
• Overall, 56% of firms offering health benefits say that they shopped for a new plan in the past year (Exhibit 12.1).
• Of those that shopped, 31% (or 17% of all firms) say that they switched carriers in the past year and 34% (or 19% of all firms) report that they changed the type of health plan they offer (EXHIBIT 12.1).13
• Among firms that reported shopping for a new health plan, jumbo firms (5,000 or more workers) are more likely than other firms to report switching carriers (46% of those that shopped; 17% of all jumbo firms) (EXHIBIT 12.1).
• Firms were asked to rate how effective several different strategies are in reducing the growth of health care costs.
Few firms rated any one strat-egy as “very effective” at con-trolling costs.
• Disease management was rated as “very effective” by the largest percentage of employers (15%), followed by consumer-driven health plans (11%), tighter managed care networks (9%) and higher cost sharing (9%). Over 40% of employers, however, report that disease
n o t e :12 Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured. Health Insurance Coverage in America,
2002 Data Update, December 2003.13 These answers are not exclusive: 11% of firms that shopped switched both carrier and type of health plan offered.
EMPLOYER ATTITUDES AND OPINIONS
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section tw
elve E
mployer A
ttitudes an
d Opinion
s
1 2
management, consumer-driv-en health plans, and higher cost sharing are “somewhat effective” at controlling costs (EXHIBIT 12.2).
• Most employers (59%) report that the percentage of employ-ees electing family coverage has not changed over the past several years (Exhibit 12.3).
• Twenty-two percent of all small firms (3-199 workers) and 29% of all large firms (200 or more workers) report that the proportion of covered workers enrolled in family cov-erage has increased over the last several years, while only 13% of all small firms and 19% of all large firms report that the percentage of workers enrolled in family coverage has decreased.
• Twelve percent of employers vary the contribution they make toward family coverage based on whether the spouse of an employee has health benefits available through another source. Only small percentages of employers say that they are “very likely” (2%) or “somewhat likely” (9%) to adopt such a policy in the near future (EXHIBITS 12.4, 12.5).
• Only three percent of employ-ers provide additional com-pensation (e.g., higher wages) or other benefits to employees if they elect single rather than family coverage. Few employ-ers expressed any interest in adopting this approach in the near future (EXHIBITS 12.4, 12.5).
• A more substantial percent-age of employers (17%), however, provide additional compensation or other ben-
efits to employees if they forgo health coverage altogether. While this approach to health benefits is fairly popular, rel-atively small percentages of employers report that they are “very likely” (1%) or “some-what likely” (14%) to adopt this approach in the near future (EXHIBITS 12.4, 12.5).
• Fifteen percent of employers say that they are “very likely” to increase the percentage of the premium that employees must pay for family cover-age in the next two years, and another 26% say that they are “somewhat likely” to do so. If premiums con-tinue to increase near double-digit rates and if employers increase the share of the premium borne by families, covered workers with family coverage may well see their contributions increase sharp-ly over the next several years (EXHIBIT 12.6).
• Employers were asked which of two statements best reflects their attitude about provid-ing family coverage: (1) It is important that the firm pay a significant portion of the cost of health benefits for our workers and their families; or (2) It is important that the firm pay a significant portion of the cost of health benefits for our workers, but the primary responsibility for funding the costs of family members lies with the worker. Among all large firms (200 or more workers), 73% say that it is important to pay a significant share of the cost of benefits for the family, while 26% say that the primary responsibility for the costs of the family lies with the worker. All small firms (3-199 workers) are less supportive
of family coverage than all large firms: only 43% support the first statement while 53% support the second statement (EXHIBIT 12.7).
• Each year we ask employ-ers whether they expect to change the contributions, cost sharing or eligibility for health benefits in the next year. Generally, all large firms (200 or more workers) are more likely than all small firms (3-199 workers) to say that they intend to increase employee costs (Exhibit 12.9).
• About half (52%) of all large firms (200 or more workers) say that they are “very like-ly” to increase the amount employees pay for health insurance next year, com-pared to 15% of all small firms (3-199 workers) (EXHIBIT 12.9).
• All large firms (200 or more workers) are more likely than all small firms to say that they are “very likely” to increase deductibles (14% vs. 8%), increase cost sharing for office visits (14% vs. 5%) and increase employee costs for prescription drugs (18% vs. 5%) (EXHIBIT 12.9).
• Employer interest in tiered networks for physicians or hos-pitals remains limited; only two percent of employers say that they are “very likely” to offer a tiered network in 2005, while 19% say that they are “somewhat likely” to offer a tiered network (EXHIBIT 12.9).
• As observed in previous years, relatively few employers report that are likely to restrict eligi-bility or drop coverage alto-gether (EXHIBIT 12.9).
Employer Health Benefits 2004 Annual Survey
140
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
section tw
elve E
mployer A
ttitudes an
d Opinion
s
12
Percentage of Firms That Shopped for a New Plan, and the Percentage of These Firms Reporting That They Changed Health Plan Types or Insurance Carriers in the Last Year, by Firm Size, 2004
Exhibit 12.1
0%
10%
20%
30%
40%
50%
60%
ALL FIRMSJUMBO FIRMS(5,000 OR MORE
WORKERS)
LARGE FIRMS(1,000-4,999
WORKERS)
MID-SIZE FIRMS(200-999 WORKERS)
ALL SMALL FIRMS(3-199 WORKERS)
50%
37% 37%
57% 56%
PERCENTAGE OF FIRMS THAT SHOPPED FOR A NEW PLAN
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
CHANGED INSURANCE CARRIER
CHANGED HEALTH PLAN TYPE
0%
10%
20%
30%
40%
50%
ALL FIRMSJUMBO FIRMS(5,000 OR MORE
WORKERS)
LARGE FIRMS(1,000-4,999
WORKERS)
MID-SIZE FIRMS(200-999 WORKERS)
ALL SMALL FIRMS(3-199 WORKERS)
31%34% 32%
34%
28%
21%*
25%
31%34%
46%*
AMONG FIRMS THAT SHOPPED FOR A NEW PLAN, PERCENTAGE REPORTINGTHAT THEY CHANGED INSURANCE CARRIER AND/OR HEALTH PLAN TYPE ‡
CHANGED INSURANCE CARRIER
CHANGED HEALTH PLAN TYPE
0%
10%
20%
30%
40%
50%
ALL FIRMSJUMBO FIRMS(5,000 OR MORE
WORKERS)
LARGE FIRMS(1,000-4,999
WORKERS)
MID-SIZE FIRMS(200-999 WORKERS)
ALL SMALL FIRMS(3-199 WORKERS)
31%34% 32%
34%
28%
21%*
25%
31%34%
46%*
AMONG FIRMS THAT SHOPPED FOR A NEW PLAN, PERCENTAGE REPORTINGTHAT THEY CHANGED INSURANCE CARRIER AND/OR HEALTH PLAN TYPE ‡
* Estimate is statistically different from All Firms at p<.05.
‡ These answers are not exclusive; 11% of firms that shopped switched both carrier and type of health plan offered.
section tw
elve E
mployer A
ttitudes an
d Opinion
sEmployer Health Benefits 2004 Annual Survey
141
T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
1 2
Distribution of Firms’ Opinions on the Effectiveness of the Following Cost Containment Strategies, 2004
Exhibit 12.2
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
VERY EFFECTIVE
SOMEWHAT EFFECTIVE
NOT TOO EFFECTIVE
NOT AT ALL EFFECTIVE
DON'T KNOW
TIGHTER MANAGEDCARE NETWORKS
16% 14%29%32%9%
CONSUMER-DRIVENHEALTH PLANS
(EX. HIGH-DEDUCTIBLE PLANWITH A PERSONAL OR HEALTH
SAVINGS ACCOUNT)
20% 16% 11%42%11%
HIGHER EMPLOYEECOST SHARING 6%20% 18%47%9%
DISEASEMANAGEMENT 14%16% 12%42%15%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
VERY EFFECTIVE
SOMEWHAT EFFECTIVE
NOT TOO EFFECTIVE
NOT AT ALL EFFECTIVE
DON'T KNOW
TIGHTER MANAGEDCARE NETWORKS
16% 14%29%32%9%
CONSUMER-DRIVENHEALTH PLANS
(EX. HIGH-DEDUCTIBLE PLANWITH A PERSONAL OR HEALTH
SAVINGS ACCOUNT)
20% 16% 11%42%11%
HIGHER EMPLOYEECOST SHARING 6%20% 18%47%9%
DISEASEMANAGEMENT 14%16% 12%42%15%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
Employer Health Benefits 2004 Annual Survey
142
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Percentage of Firms Reporting Changes in the Proportion of Covered Workers Enrolled in Family Coverage Over the Last Several Years, 2004
Exhibit 12.3
INCREASED
DECREASED
STAYED THE SAME
DON’T KNOW
0%
10%
20%
30%
40%
50%
60%
70%
ALL LARGE FIRMS
(200 OR MORE WORKERS)
ALL SMALL FIRMS
(3-199 WORKERS)
13%
6%
45%
7%
29%
19%
22%
59%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Insurance: 2004.
INCREASED
DECREASED
STAYED THE SAME
DON’T KNOW
0%
10%
20%
30%
40%
50%
60%
70%
ALL LARGE FIRMS
(200 OR MORE WORKERS)
ALL SMALL FIRMS
(3-199 WORKERS)
13%
6%
45%
7%
29%
19%
22%
59%
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1 2
Distribution of Firms Reporting the Use of the Following Contribution Approaches for Health Benefits, 2004
Exhibit 12.4
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
YES
NO
DON’T KNOW
ADDITIONAL COMPENSATIONOR BENEFITS PROVIDED
IF EMPLOYEES ELECTSINGLE RATHER THAN
FAMILY COVERAGE
ADDITIONAL COMPENSATION OR BENEFITS PROVIDED
IF EMPLOYEES ELECT NOTTO PARTICIPATE IN FIRM’S
HEALTH BENEFITS
VARY CONTRIBUTIONFOR FAMILY COVERAGE IF
FAMILY MEMBER HAS OTHERINSURANCE COVERAGE OPTION
3%94%3%
3%80%17%
5%83%12%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
YES
NO
DON’T KNOW
ADDITIONAL COMPENSATIONOR BENEFITS PROVIDED
IF EMPLOYEES ELECTSINGLE RATHER THAN
FAMILY COVERAGE
ADDITIONAL COMPENSATION OR BENEFITS PROVIDED
IF EMPLOYEES ELECT NOTTO PARTICIPATE IN FIRM’S
HEALTH BENEFITS
VARY CONTRIBUTIONFOR FAMILY COVERAGE IF
FAMILY MEMBER HAS OTHERINSURANCE COVERAGE OPTION
3%94%3%
3%80%17%
5%83%12%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Insurance: 2004.
Employer Health Benefits 2004 Annual Survey
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Distribution of Firms Reporting the Likelihood of Adopting the Following Contribution Approaches for Health Benefits, 2004
Exhibit 12.5
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
VERY LIKELY
SOMEWHAT LIKELY
NOT TOO LIKELY
NOT AT ALL LIKELY
DON’T KNOW
ADDITIONAL BENEFITS PROVIDEDTO EMPLOYEES IF THEY ELECT
SINGLE RATHER THANFAMILY COVERAGE
3%6%
<1%
ADDITIONAL BENEFITS PROVIDEDTO EMPLOYEES IF THEY
ELECT NOT TO PARTICIPATE INFIRM’S HEALTH BENEFITS
56%14%
1%
VARY CONTRIBUTIONFOR FAMILY COVERAGE IF
FAMILY MEMBER HAS OTHERINSURANCE COVERAGE OPTION
4%
65%
48%9%
25%
29%
36%
2%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
VERY LIKELY
SOMEWHAT LIKELY
NOT TOO LIKELY
NOT AT ALL LIKELY
DON’T KNOW
ADDITIONAL BENEFITS PROVIDEDTO EMPLOYEES IF THEY ELECT
SINGLE RATHER THANFAMILY COVERAGE
3%6%
<1%
ADDITIONAL BENEFITS PROVIDEDTO EMPLOYEES IF THEY
ELECT NOT TO PARTICIPATE INFIRM’S HEALTH BENEFITS
56%14%
1%
VARY CONTRIBUTIONFOR FAMILY COVERAGE IF
FAMILY MEMBER HAS OTHERINSURANCE COVERAGE OPTION
4%
65%
48%9%
25%
29%
36%
2%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Insurance: 2004.
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Percentage of Firms Reporting the Likelihood of Increasing Employees’ Share of Premiums for Family Coverage in the Next Two Years, 2004
Exhibit 12.6
0%
5%
10%
15%
20%
25%
30%
40%
35%
DON’T KNOWNOT AT ALL
LIKELY
NOT TOO LIKELYSOMEWHAT
LIKELY
VERY LIKELY
15%
26%
22%
31%
6%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Insurance: 2004.
Employer Health Benefits 2004 Annual Survey
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Percentage of Firms Reporting the Following Attitudes Toward Coverage for Workers and Dependent Family Members, 2004
Exhibit 12.7
ALL SMALL FIRMS(3-199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
0%
10%
20%
30%
40%
50%
60%
80%
70%
IT IS IMPORTANT THAT THE FIRM PAYS A SIGNIFICANT PORTION OF THE COST OF HEALTH BENEFITS FOR OUR WORKERS, BUT THE PRIMARY
RESPONSIBILITY FOR FUNDING THE COSTS OF FAMILY MEMBERS LIES WITH THE WORKER*
IT IS IMPORTANT THAT THE FIRM PAYS A SIGNIFICANT PORTION OF THE COST OF HEALTH
BENEFITS FOR OUR WORKERS AND THEIR FAMILIES*
73%
26%
53%
43%
ALL SMALL FIRMS(3-199 WORKERS)
ALL LARGE FIRMS(200 OR MORE WORKERS)
0%
10%
20%
30%
40%
50%
60%
80%
70%
IT IS IMPORTANT THAT THE FIRM PAYS A SIGNIFICANT PORTION OF THE COST OF HEALTH BENEFITS FOR OUR WORKERS, BUT THE PRIMARY
RESPONSIBILITY FOR FUNDING THE COSTS OF FAMILY MEMBERS LIES WITH THE WORKER*
IT IS IMPORTANT THAT THE FIRM PAYS A SIGNIFICANT PORTION OF THE COST OF HEALTH
BENEFITS FOR OUR WORKERS AND THEIR FAMILIES*
73%
26%
53%
43%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Insurance: 2004.
* Estimate is statistically different by firm size within each category at p<.05.
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Percentage of Firms Whose Covered Workers Have Access to Quality of Care Information Through Internet Websites, and Firms’ Rating of the Quality of That Information, 2004
Exhibit 12.8
DON’TKNOW13%
NO17%
YES71%
PERCENTAGE OF FIRMS WHOSE COVERED WORKERS HAVE ACCESS TOQUALITY OF CARE INFORMATION THROUGH INTERNET WEBSITES
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Insurance: 2004.
0%
10%
20%
30%
40%
50%
60%
AMONG FIRMS WHOSE EMPLOYEES HAVE ACCESS TO QUALITY OF CARE INFORMATIONTHROUGH INTERNET WEBSITES, FIRMS’ RANKING OF THE QUALITY OF THAT INFORMATION
VERY GOOD SOMEWHATGOOD
SOMEWHATPOOR
VERY POOR DON’T KNOW
54%
5%
20%
<1%
21%
Employer Health Benefits 2004 Annual Survey
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Distribution of Firms Reporting The Likelihood of Making the Following Changes in the Next Year, by Firm Size, 2004
Exhibit 12.9
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
VERY LIKELY
SOMEWHAT LIKELY
NOT AT ALL LIKELY
DON'T KNOWDON'T KNOW
NOT TOO LIKELY
INCREASE THE AMOUNT EMPLOYEESPAY FOR HEALTH INSURANCE
ALL SMALL FIRMS
ALL LARGE FIRMS
RESTRICT EMPLOYEEELIGIBILITY FOR COVERAGE
ALL SMALL FIRMS
ALL LARGE FIRMS
INCREASE THE AMOUNT EMPLOYEESPAY FOR PRESCRIPTION DRUGS
ALL SMALL FIRMS
ALL LARGE FIRMS
ALL SMALL FIRMS
INCREASE THE AMOUNT EMPLOYEES PAY FOR OFFICE VISIT COPAYS OR COINSURANCE
ALL LARGE FIRMS
ALL SMALL FIRMS
INTRODUCE TIERED COST SHARING FOR DOCTOR VISITS AND HOSPITAL STAYS
ALL LARGE FIRMS
*
*
*
*
INCREASE THE AMOUNT EMPLOYEESPAY FOR DEDUCTIBLES
ALL SMALL FIRMS
ALL LARGE FIRMS
DROP COVERAGE ENTIRELY
ALL SMALL FIRMS
ALL LARGE FIRMS
*
*
15% 29% 25% 28% 3%
1%52% 31% 9% 7%
5% 33% 34% 22% 6%
18% 37% 32% 12% 1%
8% 34% 29% 21% 8%
14% 38% 32% 16% 1%
5% 37% 28% 25% 6%
14% 38% 33% 14% 1%
2% 19% 39% 34% 6%
2% 24% 39% 34% 2%
1% 8% 28% 61% 2%
2% 7% 37% 53%
4% 1% 14% 81% 1%
1% 4% 94% <1%
s o u r c e :
Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2004.
* Distributions are statistically different by firm size.
All Small Firms: 3-199 workers
All Large Firms: 200 or more workers
Note: Data for All Firms are nearly identical to data reported for All Small Firms.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
VERY LIKELY
SOMEWHAT LIKELY
NOT AT ALL LIKELY
DON'T KNOWDON'T KNOW
NOT TOO LIKELY
INCREASE THE AMOUNT EMPLOYEESPAY FOR HEALTH INSURANCE
ALL SMALL FIRMS
ALL LARGE FIRMS
RESTRICT EMPLOYEEELIGIBILITY FOR COVERAGE
ALL SMALL FIRMS
ALL LARGE FIRMS
INCREASE THE AMOUNT EMPLOYEESPAY FOR PRESCRIPTION DRUGS
ALL SMALL FIRMS
ALL LARGE FIRMS
ALL SMALL FIRMS
INCREASE THE AMOUNT EMPLOYEES PAY FOR OFFICE VISIT COPAYS OR COINSURANCE
ALL LARGE FIRMS
ALL SMALL FIRMS
INTRODUCE TIERED COST SHARING FOR DOCTOR VISITS AND HOSPITAL STAYS
ALL LARGE FIRMS
*
*
*
*
INCREASE THE AMOUNT EMPLOYEESPAY FOR DEDUCTIBLES
ALL SMALL FIRMS
ALL LARGE FIRMS
DROP COVERAGE ENTIRELY
ALL SMALL FIRMS
ALL LARGE FIRMS
*
*
15% 29% 25% 28% 3%
1%52% 31% 9% 7%
5% 33% 34% 22% 6%
18% 37% 32% 12% 1%
8% 34% 29% 21% 8%
14% 38% 32% 16% 1%
5% 37% 28% 25% 6%
14% 38% 33% 14% 1%
2% 19% 39% 34% 6%
2% 24% 39% 34% 2%
1% 8% 28% 61% 2%
2% 7% 37% 53%
4% 1% 14% 81% 1%
1% 4% 94% <1%
149T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
Benefits Acupuncture 106, 107
Adult physicals 104, 106, 107
Annual ob/gyn visit 104, 106, 107
Chiropractic 106, 107
Inpatient mental health 106, 107, 113, 120
Oral contraceptives 104, 106, 107
Outpatient mental health 104, 106, 107, 113, 120
Prenatal care 104, 106, 107
Prescription drugs 6, 10, 11, 88, 104, 106, 107, 112, 113, 114, 115, 117, 119, 130, 139
Well-baby care 104, 106, 107
Brand name drugs 112, 114, 115, 116, 117
Coinsurance Hospital 5, 89, 90, 98,
100
Office visits 88, 97, 98
Prescription drugs 11, 112, 114-117
Contributions Employee/worker 2, 4, 7, 11, 56,
63, 72-74, 76-78, 138, 139
Employer/firm 4, 8, 56, 63, 138, 139, 143, 144
Consumer-driven health plans 6, 56, 57, 138, 139, 141
Conventional plans 6, 10, 16, 21, 26, 28-31, 58, 68, 70, 77, 78, 82-85, 90, 92, 93, 97, 98, 101, 104, 107, 120, 125
Copayment (copay) Hospital 5, 89, 90, 99,
100
Office visits 5, 7, 88, 90, 95, 96, 98, 148
Prescription drugs 5, 7, 11, 88, 90, 112, 114-117
Cost containment strategies 138, 141
Coverage 1-6, 8, 46-49, 51-53, 143, 144
Deductibles Hospital 5, 89, 90, 98-
100
Plan 1-2, 4-7, 16, 56, 64-66, 88-94, 104, 139
Drop coverage 6, 7, 35, 139, 148
Eligibility For coverage 6, 7, 10, 43,
46, 47, 49, 50, 52, 53
Restrictions 6, 35, 139, 148
Enrollment 6, 10, 68-70
Family coverage 2, 3, 8, 11, 16, 26, 72, 74, 75, 78, 81, 82, 84, 85, 92, 93, 105, 138, 139, 142, 145
Formulary 114-117
Four-tier drugs 112-117
Funding arrangements Fully insured 2, 16, 22, 23,
127
Self-funded 2, 16, 22, 23, 122-127
Generic drugs 5, 112-118
Health plan changes Changed plan type 140
Changed insurance carriers 6. 138, 140
Health savings account 1, 2, 6, 56, 57, 64-66
S U B J E C T I N D E X
150T H E K A I S E R F A M I LY F O U N D AT I O N - A N D - H E A LT H R E S E A R C H A N D E D U C AT I O N A L T R U S T
High-deductible health plan 1, 2, 6, 56, 57, 64-66
Historical data 12
HMO plans 2, 4, 6, 10, 16, 21, 22, 28-31, 56, 58, 62, 68-70, 75-78, 82-85, 88-93, 96-99, 108, 109, 118, 119, 122, 124, 125, 130
Hospital 5, 6, 10, 88-93, 98-101, 139
Internet access to quality information 147
Lifetime limit 104
Low-wage workers 38
Mail order discount for drugs 113, 119
Mandatory use of generics 113, 118
Mental health maximums Inpatient 120
Outpatient 120
Nonpreferred drugs 5, 112-117
Nonpreferred provider 4, 5, 88, 91-94, 97
Nontraditional partnership benefits 42, 43
Offer rate 1, 5, 10, 34, 46
Part-time workers 11, 34, 35, 38, 40
Per diem 89, 100
Plan choice 10, 56
Plan enrollment 6, 68-70
POS plans 2, 4, 6, 10, 16, 17, 21, 22, 28-31, 56, 58, 62, 68-70, 75-78, 82-85, 88-93, 95, 97-99, 101, 104, 107-109, 113, 118-120, 124, 126
PPO plans 2, 4-6, 10, 16, 17, 21, 22, 28-31, 56, 58, 62, 68-70, 75-78, 82-85, 88-95, 97-99, 101, 104, 107-109, 113, 118-120, 122, 124, 126
Preferred drugs 5, 112-117
Preferred providers 4, 5, 10, 88-95, 97, 98,
Premiums Family 2-4, 11, 16, 19-
21, 23-27, 72-77, 80, 83, 90, 139, 145
Increases 1, 2, 6-8, 16-25, 35, 138, 148
Single 2, 3, 16, 26, 27, 72, 74-77, 83, 90
Prescription drugs 6, 7, 10, 11, 88, 104. 106, 107, 112-114, 117, 119, 130, 139, 148
Response rate 10
Retiree coverage Early retirees 6, 130, 134, 135
Medicare-age retirees 6, 130, 134, 135
Offer rate 130-133, 135
Survey sample 13
Take-up 47, 49, 50
Temporary workers 34, 35. 41
Tiered cost sharing Hospital 7, 89, 101, 148
Prescription drugs 112, 114
Providers 89, 101
Turnover (attrition) 38, 39
Union workers 34, 38, 73, 130, 133
Waiting period 6, 47, 52, 53
Graphic design and production: Words Pictures Ideas, San Francisco, CA
(www.wpiweb.com)
The Henry J. Kaiser Family Foundation2400 Sand Hill Road
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Washington Office:
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Phone: 202-347-5270 Fax: 202-347-5274
www.kff.org
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Multiple copies may be obtained from HRET by calling 1-800-242-2626 (order #097512).
The Kaiser Family Foundation is a nonprofit, private operating foundation dedicated to providing information and
analysis on health care issues to policymakers, the media, the health care community, and the general public.
The Foundation is not associated with Kaiser Permanente or Kaiser Industries.
September 2004
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