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Employer Health Benefits KFF/HRET 2008 Survey
Health Benefits in 2008: Premiums Increase Modestly as
CDHP Grows and Deductibles Rise Sharply
Jon GabelNational Opinion Research Center
AtThe University of Chicago
Employer Health Benefits KFF/HRET 2008 Survey
Percentage Decline in the Adjusted Price of Major Investor-Owned Health Insurers,
October, 2007-February, 2009
-43%
-61%
-74%
-27%
-40%-44%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
Aetna CIGNA Coventry Humana United Wellpoint
Employer Health Benefits KFF/HRET 2008 Survey
Presentation Objectives
To document the state of employer-based health benefits, 2008, in the USA and California To examine the historical experience of employer-based insurance during an economic downturn.To review recent CBO analysis of potential avenues of cost savings
Employer Health Benefits KFF/HRET 2008 Survey
• Telephone survey of 1,927 randomly selected public and private employers•National Research conducts interviews with employee benefit managers from Jan. 2008 to May 2008• Response rate of 48 percent in 2008• Survey conducted by HIAA 1987-1991 and KPMG 1991-1998• Use of statistical weights• Employer-based statistics• Employee-based statistics
KFF/HRET Health Benefits Survey
Employer Health Benefits KFF/HRET 2008 Survey
California Health Care Foundation (CHCF)/NORC California Employer Health Benefits Survey
•Survey of 796 randomly selected private firms with three or more workers.•Sampling error of 3.5 percent•Questions similar but not identical to KFF/HRET survey.•KFF sponsored survey from 1999-2003. CHCF from 2004-2008.
Employer Health Benefits KFF/HRET 2008 Survey
14.0%
8.5%7.70%
6.10%5%
12.0%
18.0%
9.2% *
0.8%
11.2% *
5.3% *
8.2% *
10.9% *
12.9% *
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Health Insurance PremiumsOverall InflationWorkers Earnings
Increases in Health Insurance Premiums Compared to Other Indicators, 1988-2008
* Estimate is statistically different from the previous year shown at p<0.05. No statistical tests were conducted for years prior to 1999.† Estimate is statistically different from the previous year shown at p<0.1. No statistical tests were conducted for years prior to 1999.
Note: Data on premium increases reflect the cost of health insurance premiums for a family of four.
Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 1999-2008; 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), 1988-2008; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April), 1988-2008.
13.9%†
Employer Health Benefits KFF/HRET 2008 Survey
Increases in California Health Insurance Premiums Compared to Overall Inflation,
1999-2008
8.3%8.3%8.7%
6.7%
4.8%
8.2% *
11.4% *
15.8% *
13.4% *
10.0% *
3.0%3.4%4.2%3.9%
1.7%
2.8%4.3%
2.8%3.5%
2.7%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Health Insurance Premiums Overall California Inflation
Health insurance premiums in California grew by 8.3% in 2008, statistically unchanged in recent years.
Premium increases in California in 2008 were more than twice the California inflation rate of 3.0%
Sources: CHCF/NORC California Employer Health Benefits Survey: 2007-2008; CHCF/HSC California Employer Health Benefits Survey: 2005-2006; CHCF/HRET California Employer Health Benefits Survey: 2004; Kaiser/HRET California Employer Health Benefits Survey: 1999-2003; California Division of Labor Statistics and Research, Consumer Price Index, California Average of Annual Inflation (April – April) 1999–2008.
Chart #8
* Estimates are statistically different from the previous year shown.
Employer Health Benefits KFF/HRET 2008 Survey
Cumulative Changes in Health Insurance Premiums, Overall Inflation, and Workers’
Earnings 2000 - 2008
0%
11%
25%
43%
60%
73%
87%
98%
0%
7%10%
14%18%
20% 21%
0%
7%10%
12%15%
20%24% 25%
3% 5%
4%
0%
20%
40%
60%
80%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008
Health Insurance Premiums Overall Inflation Workers' Earnings
Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 2001-2008; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 2001-2008; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April), 2001-2008.
Employer Health Benefits KFF/HRET 2008 Survey
Average Monthly Premiums, by Plan Type, 2008, USA and California
Chart #13
Source: CHCF/NORC California Employer Health Benefits Survey: 2008; Kaiser/HRET Employer Health Benefits Survey: 2008
* Estimates are statistically different between California and US.
•Premiums in California were generally comparable to premiums nationally.
•California PPOs were more costly and HMOs slightly less costly than the nation.
374
474
1,251
992
392 400 387327
1,0781,028
843
1,108
1,049
1,119
360396409
1,0571,093
396
0
200
400
600
800
1,000
1,200
1,400
All P
lans
*
HMO*
PPO*
POS
HDHP/SO
All P
lans
HMO
PPO*
POS
HDHP/SO
California U.S.
Single Family
Employer Health Benefits KFF/HRET 2008 Survey
Health Plan Enrollments for Covered Workers,
by Plan Type, 2001 - 2008
4%
7%
1%
20%
21%
20%
21%
25%
24%
27%
24%
52%
47%
50%
49%
50%
52%
54%
54%
58%
57%
60%
61%
55%
54%
52%
46%
33%
35%
34%
34%
36%
29%
30%
25%
12%
13%
13%
15%
15%
17%
18%
23%
11%
13%
14%
17%
12%
17%
16%
21%
5%
4%
4%
4%
2%1%
1%
1%
5%
5%
3%
3%
3%
2% 8%
0% 20% 40% 60% 80% 100%
2008*
2007
2006
2005*
2004
2003*
2002*
2001
2008*
2007*
2006
2005*
2004*
2003
2002*
2001
Conventional HMO PPO POS HDHP/SO
The percentage of covered workers enrolled in HMOs in California was considerably higher than nationally. Conversely, enrollment in PPOs in 2008 remained far lower in California than nationally.
Enrollment in high-deductible plans with a savings option among California workers has remained the same from 4 percent in 2007 to 4 percent in 2008, whereas it increased from 5 percent to 8 percent nationally.
California
U.S.
Chart #37
Sources: CHCF/NORC California Employer Health Benefits Survey: 2007-2008; CHCF/HSC California Employer Health Benefits Survey: 2005-2006; CHCF/HRET California Employer Health Benefits Survey: 2004; Kaiser/HRET California Employer Health Benefits Survey: 2001-2003; Kaiser/HRET Employer Health Benefits Survey: 2001-2008.
Note: Conventional plan enrollment in California in 2001, 2005 and 2007 is less than 1%. Due to the addition of HDHP in 2006, no test was conducted comparing 2006 with 2005.
* Distribution is statistically different from previous year shown.
Employer Health Benefits KFF/HRET 2008 Survey
Average Monthly Worker Contribution, 1988-2008
852
129
28
135
30 47 51
226
52 58
273
60
280
27
149*
201*
42*
222*248*
$0$40$80
$120$160$200$240$280$320
Single Coverage Family Coverage
1988
1999
2000
2001
2003
2004
2005
2006
2007
2008* Estimate is statistically different from the previous year shown at p<.05. No statistical tests were conducted for years prior to 1999.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2006; Health Insurance Association of America (HIAA), 1988.
11%
29%27%
14%
26%
14%
26%
16%
27%
16%
28%
16%
26%
16%
27%
16%
28%
16%
27%
14%
0%
5%
10%
15%
20%
25%
30%
35%
Single Coverage Family Coverage
1988
1999
2000
2001
2003
2004
2005
2006
2007
2008
Percentage of Premium Paid by Covered Workers, 1988-2008
* Estimate is statistically different from the previous year shown at p<.05. No statistical tests were conducted for years prior to 1999.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2008; Health Insurance Association of America (HIAA), 1988.
Employer Health Benefits KFF/HRET 2008 Survey
Increases in Overall Deductibles (All Plans),in Dollars, 2005-2008
$266$296
$340
$441
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
2005 2006 2007 2008
Includes plans with and without deductibles
Source: Kaiser/HRET Employer-Sponsored Health Benefits Survey, 2005-2008
Employer Health Benefits KFF/HRET 2008 Survey
*Distribution is statistically different from distribution for the previous year shown (p<.05).
‡No statistical tests are conducted between 2003 and 2004 or between 2006 and 2007 due to the addition of a new category.
Note: Fourth-tier drug cost sharing information was not obtained prior to 2004.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2000-2008.
Distribution of Covered Workers Facing Different Cost-Sharing Formulas for Prescription Drug Benefits, 2000-2008
7%
7%
5%
4%
70%
68%
69%
70%
65%
63%
55%
41%
27%
15%
16%
16%
15%
20%
23%
30%
41%
49%
4%
6%
8%
8%
10%
13%
13%
18%
22%0%
0%
0%
0%
3%
0%
0%
0%
0%
0%
0%
0%2%
3%
2%
1%
1%
2%
2%
1%
2%
1%
1%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2008*
2007
2006
2005*
2004
2003*
2002*
2001*
2000
Four or More TiersThree TiersTwo TiersPayment is the same regardless of type of drugNo cost sharing after deductible is metOther
‡
‡
Employer Health Benefits KFF/HRET 2008 Survey
65% 68% 68% 66% 65% 63%59% 60% 59%
62%
99% 99% 99% 98% 98% 99% 98% 98% 99% 99%
56% 57% 58% 58% 55% 52%47% 48% 45%
49%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
All Small Firms (3-199 Workers)
All Large Firms (200 or More Workers)
3-9 Workers
Percentage of Firms Offering Health Benefits, 1999-2008
*Tests found no statistical differences from estimate for the previous year shown (p<.05).
Note: Estimates presented in this exhibit are based on the sample of both firms that completed the entire survey and those that answered just one question about whether they offer health benefits.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2008.
Employer Health Benefits KFF/HRET 2008 Survey
55%57%
58%
54% 53%
50%
53%
50%52%
66% 67%69% 69%
68% 68%66%
63%65%
66%
62%63%
65%63%
62%61%
59% 59% 60%
50% #
60% #
40%
45%
50%
55%
60%
65%
70%
75%
80%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
All Small Firms (3-199 Workers)
All Large Firms (200 or More Workers)
All Firms
Percentage of Workers Covered by Their Employer’s Health Benefits, in Firms Both Offering and Not Offering Health
Benefits, by Firm Size, 1999-2008
# Year-to-year estimates are not significantly different at p<.05. However, there is a significant change between 2000 and 2005 for All Firms and All Small Firms at p<.05.
Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 1999–2008.
Employer Health Benefits KFF/HRET 2008 Survey
* Estimate is statistically different from estimate for All Non-HDHP/SO Plans (p<.05).
‡ When those firms that do not contribute to the HSA (28% for single and family coverage) are excluded from the calculation, the average firm contribution to the HSA for covered workers is $1,139 for single coverage and $2,067 for family coverage. For HDHP/HRAs, we refer to the amount that the employer commits to make available to an HRA as a contribution for ease of discussion. HRAs are notional accounts, and employers are not required to actually transfer funds until an employee incurs expenses. Thus, employers may not expend the entire amount that they commit to make available to their employees through an HRA. Therefore, the employer contribution amounts to HRAs that we capture in the survey may exceed the amount that employers will actually spend.
§ In order to compare spending for HDHP/SOs to all other plans that are not HDHP/SOs, we created composite variables excluding HDHP/SO data.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2008.
Average Annual Premiums and Contributions to Savings Accounts For Covered Workers in HDHP/HRAs or HSA-Qualified
HDHPs, Compared to All Non-HDHP/SO Plans, 2008
HDHP/HRAHSA-Qualified
HDHPNon-HDHP/SO
Plans§
Single Family Single Family Single Family
Total Annual Premium $4,468 $11,571* $3,527* $9,101* $4,769 $12,892
Worker Contribution to Premium $533* $3,455 $420* $2,332* $742 $3,397
Firm Contribution to Premium $3,935 $8,117 $3,107* $6,769* $4,027 $9,495
Annual Firm Contribution to the HRA or HSA‡ $1,249 $2,073 $838 $1,522 NA NA
Total Annual Firm Contribution (Firm Share of Premium Plus Firm Contribution to HRA or HSA)
$5,184* $10,190 $3,945 $8,291* $4,027 $9,495
Total Annual Cost (Total Premium Plus Firm Contribution to HRA or HSA, if Applicable)
$5,717* $13,645 $4,365* $10,623* $4,769 $12,892
Employer Health Benefits KFF/HRET 2008 Survey
Distribution of Firms’ Opinions on the Effectiveness of the Following Cost Containment Strategies, 2007
*Distributions are statistically different between All Small Firms and All Large Firms within category (p<.05).
Note: Distributions are among all firms both offering and not offering health benefits.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2007.
Tighter Managed Care Networks*
35%
28%
14%
12%
17%
15%
4%
16%
50%
43%
47%
46%
52%
53%
42%
39%
9%
12%
26%
18%
19%
13%
35%
4%
13%
12%
19%
8%
12%
17%
15%
4%
11%19%
5%
2%
4%
2%
2%
7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
All Large Firms
All Small Firms
All Large Firms
All Small Firms
All Large Firms
All Small Firms
All Large Firms
All Small Firms
Very Effective Somewhat Effective Not Too Effective Not At All Effective Don't Know
Higher Employee Cost Sharing*
Consumer-Driven Health Plans
Disease Management Programs*
Employer Health Benefits KFF/HRET 2008 Survey
Employee Cost Sharing Grows Dramatically During Economic Downturn of 2001-2004
$30
$150$201
$407
$47
$222$275
$558
$0
$100
$200
$300
$400
$500
$600
Worker Contr.,Single
Work Contrib,Family
PPO Ded.,Preferred
PPO Deductible,Non-Preferred
2001 2004
Employer Health Benefits KFF/HRET 2008 Survey
Congressional Budget Office’s Perspective on Cost Savings
Disease Management -- “Evidence about cost-reduction in the private sector have been inconclusive, and programs in the Medicare population have not shown cost reductions either.”Comparative Effectiveness – “It would take several years before new research on comparative effectiveness would reduce health care spending substantially.”Preventive Services – (Quoting study by Tufts) “Only 20 percent of preventive services that have been accessed yielded savings.”Malpractice – “CBO has not found consistent evidence that changes in the malpractice environment would have a measurable impact on health care spending.”
Employer Health Benefits KFF/HRET 2008 Survey
Malpractice Claims, 2003
Did a Severe Injury Occur
Was the Injury Due to Negligence
Percent of Medical Encounters
Thousand of Malpractice Claims Filed
%of Encounters Resulting in a Malpractice Claim
No NA 98.6% 11 .003
Yes No 0,9% 15 4.26
Yes Yes 0.5% 30 16.77
All Sometimes 100% 57 .15
D.M. Stoddart, Health Affairs, 2007
Employer Health Benefits KFF/HRET 2008 Survey
Summary
•Premium increases (5.0 percent) moderated to the lowest level since 1999 – but this is due to changed method of calculation.– But nearly twice the rate of increase in wages
•Since 2000, premiums have risen 103 percent compared to 21 percent overall inflation and 25 percent increase in workers earnings.•CDHP enrollment grew strongly among small firms.•Cost sharing increases were comparatively strong over the past few years.•Economic downturns lead to lagged increase in cost-sharing and reduction in coverage.