The Kaiser/HRET 2002 National Survey of Employers: What Are Its Implications for Health Insurance? Jon Gabel Vice President, Health System Studies Health Research and Educational Trust
Objectives Review recent changes in job-based insurance Examine consumer-driven health care Forecast likely changes in next few years
KFF/HRET Health Benefits Survey Telephone survey of 3,262 randomly selected public and private employers Interviews with employee benefit managers from Jan. 2002 to May 2002. Response rate of 50 percent in 2002 Survey conducted by HIAA 1987-1991 and KPMG 1991-1998
Chart #1 Increases in Health Insurance Premiums Compared to Other Indicators, 1988-2002 20% 18% 16% 18.0% Health Insurance Premiums Workers Earnings Overall Inflation 14% 12% 12.0% 14.0% 12.7% 10% 8% 6% 4% 2% 0% 11.0% 8.5% 8.3% 4.8% 3.4% 1.6% 0.8% 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Source: KFF/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1989, 1990, 1993, 1996. Note: Data on premium increases reflect the cost of health insurance premiums for a family of four.
Chart #5 Average Annual Premium Costs for Covered Workers, by Plan Type, 2002 All Plans Single Family Conventional Single Family $3,060 $3,582 $7,954 $8,479 HMO Single $2,764 Family $7,541 PPO Single Family $3,119 $8,037 POS Single Family $3,175 $8,173 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 Estimate is statistically different from All Plans by coverage type. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2002.
Chart #6 Average Monthly Worker Contribution, 1988-2002 $200 $160 $120 $80 $40 $0 $8 $34 $37 $28 $30 $38 $52 $124 $122 $138 $150 $174 1988 1993 1996 2000 2001 2002 Single Coverage Family Coverage Estimate is statistically different from the previous year shown: 1996-2000, 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996 Percentage of Premium Paid by Covered Workers, 1988-2002 Percentage 35% 30% 25% 20% 15% 10% 5% 11% 20% 21% 15% 14% 16% 29% 32% 28% 27% 27% 27% 1988 1993 1996 2000 2001 2002 0% Single Coverage Family Coverage Estimate is statistically different from the previous year shown: 1996-2000, 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996.
Chart #7 Health Plan Enrollments for Covered Workers, by Plan Type, 1988-2002 1988 73% 16% 11% 1993 46% 21% 26% 7% 1996 27% 31% 28% 14% 1998 14% 27% 35% 24% 1999 9% 28% 38% 25% 2000 8% 29% 41% 22% 2001 7% 23% 48% 22% 2002 5% 26% 52% 18% 0% 20% 40% 60% 80% 100% Conventional HMO PPO POS Distribution is statistically different from the previous year shown: 1996-1998, 1998-1999, 1999-2000, 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996.
Chart #12 Percentage of Firms Offering Health Benefits, by Firm Size, 1996-2002 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 59% 54% 67% 65% 61% All Small Firms (3-199 Workers) ^ 1996 1998 2000 2001 2002 99% 100% 99% 99% 99% All Large Firms (200+Workers) Note: Nationwide, there are about 6,290,665 firms with 3-199 workers and 85,448 with 200+ workers. Estimate is statistically different from the previous year shown: 1996-1998, 1998-2000, 2000-2001, 2001-2002. ^ Estimate is statistically different from the previous year shown: 2000-2002 at p<0.1. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998. 14
Chart #17 Average Annual Deductibles for Single Coverage in PPO and POS Plans, 1996-2002 $500 $400 $300 $276 $488 $407 $406$413 $361 $367 $313 $324 $200 $201 $181$187 $100 $71 $79 $84 $59 $0 PPO IN-PLAN PPO OUT-PLAN POS IN-PLAN POS OUT-PLAN 1996 2000 2001 2002 Estimate is statistically different from the previous year shown: 1996-2000, 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer Sponsored Health Benefits: 1996. 19
Chart #19 $30 $25 $20 $15 Average Copayments for Generic Drugs, Preferred Drugs, and Non-Preferred Drugs, 2000, 2001, and 2002 $14 $16 $15 $20 $17 $26 $10 $8 $8 $9 $5 $0 2000 2001 2002 Generic Drugs Preferred Drugs Non-Preferred Drugs Estimate is statistically different from the previous year shown by drug tier: 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002. 21
Chart #21 Among Firms Offering Retiree Health Benefits, Percentage of Large Firms (200 or more workers) Reporting the Following Changes in the Past Two Years, 2002 Increased the Retiree Share of Premium 40% Introduced Three-Tiered Cost-Sharing for Drugs 30% Increased the Amount Retirees Pay for Prescription Drugs 26% Eliminated Retiree Health Benefits for New Employees Who Have Not Yet Retired 9% 0% 10% 20% 30% 40% 50% Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2002. 24
Chart #25 Likelihood Employers Will Switch to Defined Contribution 1 in the Next Five Years, by Firm Size, 2002 1% All Firms 6% 17% 21% 56% 1% All Small Firms (3-199 workers) 6% 17% 20% 56% 2% 2% All Large Firms (200+ workers) 14% 26% 56% 0% 20% 40% 60% 80% 100% Very Likely Somewhat Likely Somewhat Unlikely Very Unlikely Don't Know Note 1 : Firms were asked whether or not they are likely to switch to a type of defined contribution where employees are given cash to buy health insurance on their own rather than selecting among plans the employer contracts for. Tests found no statistically different distribution by Firm Size. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2002. 29
The Immediate Future More of the Same Double-digit increases in premiums Increased employee contributions, copays, deductibles and coinsurance Heavily managed care as a niche product Consumer-driven care as a niche product A soft economy will make employees more vulnerable to rising costs More uninsured Americans
Consumer Driven Health Care Three models MSA type plans Personalized plans i.e., Vivius Customized plans i.e., Health Partners More than start-ups today Cash-out is a non-starter Tiered networks are showing up in our survey of employers.
Chart #18 Percentage of Covered Workers Facing Different Cost Sharing Formulas for Prescription Drugs, 2000, 2001, and 2002 2000 29% 49% 19% 4% 2001 36% 37% 22% 5% 2002 57% 28% 13% 2% 0% 20% 40% 60% 80% 100% Three Tier = One payment for generic drugs, another for preferred drugs, and a third for non-preferred drugs Two Tier = One payment for generic drugs and one for name brand Payment the same regardless of type of drugs Other/ Don t know Distribution is statistically different from the previous year shown: 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002. 20