Jennifer Morales
EMBARGOED FOR RELEASE UNTIL:
Thursday, October 28, 1999, 9:00 a.m. EDT
NEW ANNUAL SURVEY OF EMPLOYER HEALTH BENEFITS SHOWS
HEALTH INSURANCE PREMIUMS RISING;
COVERAGE AND CHOICE REMAIN ABOUT THE SAME
Cost Increases Hit Small Businesses Especially Hard
Most Employers Favor Hotly Debated Patient Protections
MENLO PARK, CA -- A new annual employer health benefits tracking survey
released today by the Kaiser Family
Foundation and the Health Research and Educational Trust (HRET) reveals
that health insurance premiums rose faster than in
previous years -- though still by relatively modest amounts -- but
with premium increases hitting small businesses especially
hard. Despite the best economy in three decades, there were no real
changes in the number offirms offering health insurance
coverage and the number of employees who had a choice of more than
one health plan. The survey also found that a majority
of employers favor hotly debated patient protections, including the
right to sue health plans.
The survey found that health insurance premiums increased 4.8% from
the Spring of 1998 to Spring of 1999. While still a
relatively modest increase compared with the past era of double digit
health cost increases, this is the biggest annual increase
since 1994 and is more than double the economy-wide inflation rate
of 2.1%. Small businesses, defined as firms with 3-199
workers, experienced substantially higher premium increases than larger
businesses, defined as firms with 200 or more workers
(6.9% compared to 4.1%). The smallest of firms, those with 3-9 workers,
reported the highest increase in premiums (9.2%).
Even in this strong economy, the number of uninsured Americans continues
to grow -- to 44.3 million, according to recently
released Census Bureau figures -- and the availability of employer
health coverage shows no signs of increasing. The survey
found little change over the last two years in the percentage of employers
offering coverage to their workers. While virtually all
large employers continue to offer coverage, just 60% of small businesses
do so.
At the same time, more employers are taking actions to control the cost
of retiree health insurance. Of the 41% of large firms
that offered retiree health coverage in 1999, 35% report capping the
maximum amount they contribute to a retiree’s health plan
within the last two years. Just 8% of firms with fewer than 200 workers
provide retiree health benefits.
"Premium increases are hitting the smallest of businesses the hardest,
most of whom already have a difficult time affording health
insurance. These increases will make it even harder for small businesses
to provide health insurance for their employees in the
future," said Drew Altman, Ph.D., president of the Kaiser Family Foundation.
PREMIUM INCREASES ARE BIGGER FOR SOME AND LESS FOR OTHERS
Premium cost increases depend not only on the size of the employer,
but also on the type of funding arrangement and coverage
provided. Employers who fund their own health insurance (self-funded
plans), which represent about half of all covered
workers, had substantially lower premium increases (3.7%) than those
firms that purchased health insurance from insurance
companies (5.8%). For all employers, Health Maintenance Organizations
(HMOs) (5.7%) and conventional
(fee-for-service/indemnity) plans (5.6%) had the highest rate of premium
increases, followed by Preferred Provider
Organizations (PPOs) (4.3%) and Point-of-Service (POS) plans (3.6%).
"For many years, insurance companies have under-priced their health
plans to get a bigger share of the market. But after three
years of financial losses, health insurers are restoring their profitability
through catch-up pricing," says Jon R. Gabel, vice
president for Health System Studies, Health Research and Educational
Trust. Mr. Gabel directed the Annual Survey of
Employer-Sponsored Health Benefits at KPMG Peat Marwick before moving
to HRET and is a lead researcher on the
project.
PLAN CHOICE AND ENROLLMENT
Choice of Plans: While the extent of plan choices available to
employees remains stable -- 65% of covered workers are
offered a choice of two or more plans -- it continues to vary substantially
by the size of the employer. In 1999, 88% of firms
with 5,000 or more workers offered a choice of two or more health plans,
while just 10% of firms with 3-199 workers offered
a choice of plans.
HMOs (56%) and PPOs (62%) were the most common types of plans that employees
could choose from in 1999.
Conventional plans were the least frequently offered type of plan,
with only 26% of employees being offered them in 1999,
down from 52% in 1996.
Plan Enrollment: Employers report PPOs as having the highest
rate of enrollment (38%), followed by HMOs (28%), POS
plans (25%), and conventional insurance (9%). Since 1988, PPO enrollment
among workers has more than tripled (from 11%
to 38%) while HMO enrollment has increased more slowly (from 16% to
28%).
"Whether or not you get health insurance on the job, and the kinds of
choices you have if you get it, depends on where you
work. The disparities between large and small companies are likely
to get even worse as small businesses are hit with big
premium increases," said Larry Levitt, director of the Changing Health
Care Marketplace Project at the Kaiser Family
Foundation and a principal analyst on the project.
CHANGES IN BENEFITS OFFERED
In general the level of benefits offered to employees remained relatively
stable from 1998 to 1999. However, there were some
changes in key areas:
Pre-Existing Condition Exclusions: Since
the passage of the Health Insurance Portability and Accountability Act
(HIPAA) in 1996, the use of pre-existing condition
clauses has declined considerably for all types of plans. For example,
the percentage of workers in PPO plans with
pre-existing condition exclusions dropped from 64% in 1996 to 42% in
1999.
Reproductive Health Services: Most
employees have coverage for oral contraceptives, though fewer are covered
for
all forms of reversible contraception. Employees
in HMOs (80%) are more likely to have oral contraception coverage
than those in conventional (54%), PPO (64%
), or POS (67%) plans. In contrast, 37% of employees with job-based
health insurance are covered for abortion
services. Employees in large firms are three to four times more likely
to be
covered for abortion services than employees
in small firms.
Mental Health Services: Mental health
benefits have declined over the last several years. Today only 21% of
employees in large firms have mental health
benefits with unlimited outpatient visits, compared to 36% in 1991.
EMPLOYER SUPPORT FOR PATIENTS' RIGHTS
Mirroring public views, the survey found that a majority of employers
support key provisions in the patients' rights debate.
Eighty-five percent (85%) of all employers support the "prudent layperson"
definition for emergency care, and 94% support the
right for patients to get an independent review when denied coverage.
Sixty percent (60%) support the right to sue a health
plan, an increase since 1998 when 46% supported the provision. Support
for consumer protections is generally higher among
small employers, particularly for the right to sue -- support among
small firms is 61%, in contrast to the 52% of large firms who
oppose the measure.
The survey also revealed that state legislation and voluntary efforts
by health plans and employers appear to have improved
patient protections in some areas. For example, the percentage of employees
enrolled in HMO plans who can designate an
OB-GYN as their primary care physician increased from 49% to 67% over
the past year. About one-quarter of employees in
HMOs are now able to designate a specialist other than an OB-GYN as
their primary care physician if they are chronically ill.
CONCERNS OVER COST AND QUALITY
The cost of health care is more worrisome to employers than the quality
of care. When asked about their concerns for the
following year:
Efforts to accredit health plans and provide data comparing the
quality of different plans continue to play a relatively minor role
in the selection of plans by employers. Only 18% of covered workers
are in firms that cited a plan's accreditation status by the
National Committee for Quality Assurance (NCQA) as being "very important"
to the health plan selection process; 10% of
covered workers are in firms that cited performance measures such as
the Health Plan Employer Data and Information Set
(HEDIS) as "very important." By contrast, about two-thirds of covered
workers are in firms that said the cost of a health plan
and the size and reputation of the physician network are "very important"
when selecting a health plan.
Copies of the full report are available online at www.kff.org
or by calling the Kaiser Family Foundation Publications Request
Line at 1-800-656-4533 (ask for document #1538). Multiple copies
of the report (three or more) can be ordered through
HRET by calling 1-800-242-2626 (ask for catalog number 097501).
Methodology
The 1999 Annual Employer Health Benefits Survey, formerly conducted
by KPMG Peat Marwick, is now a joint product of
the Kaiser Family Foundation and HRET. The survey was designed and
analyzed by researchers at HRET and the Kaiser
Family Foundation and administered by National Research LLC. The survey
findings are based on a national random sample of
1,939 telephone interviews with human resource and benefit administrators
in firms with 3 to 5,000 or more workers from
February to June of 1999. An additional 755 firms were interviewed
solely to determine whether they offered health insurance
coverage to their workers. The sample was drawn from the Dun &
Bradstreet list of the nation’s private and public employers
with three or more workers. The overall response rate was 60%. The
margin of error for responses among all employers is +/-
3%. For results based on subsets of respondents, the margin of error
is higher.
For the purposes of reporting the data, firm sizes were aggregated into
the following subgroups: Small firms were defined as
those with 3-199 workers; 25% of all workers covered by employer-sponsored
health insurance are in firms of this size. Small
firms were split out further into the following categories: 3-9 workers
(6% of all covered workers); 10-24 workers (4% of
covered workers); 24-49 workers (4% of covered workers); and 50-199
workers (10% of covered workers). Large firms
were defined as those with 200 or more workers; 75% of all covered
workers are in firms of this size. Large firms were split
out further into the following categories: 200-999 workers (19% of
covered workers); 1,000-4,999 (17% of covered
workers); and, 5,000 or more workers (40% of covered workers). To analyze
changes in employer-sponsored health plans,
the survey report compares data from KPMG's 1993, 1996 and 1998 Annual
Surveys of Employer-Sponsored Health
Benefits and from a similar survey conducted by the Health Insurance
of Association of America in 1988.
The Kaiser Family Foundation, based in Menlo Park, California,
is an independent national health care philanthropy and is
not associated with Kaiser Permanente or Kaiser Industries.
The 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.
(from Kaiser Family Foundation web site)