employer health benefits kff/hret 2008 survey health benefits in 2008: premiums increase modestly as...

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


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


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


• 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


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.


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%†


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.


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.


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


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.


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.


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


*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

‡

‡


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.


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.


* 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


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*


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


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.”


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


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.

employer health benefits kff/hret 2008 survey health benefits in 2008: premiums increase modestly as...

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