Transcript Trustee Orientation Slides

Employment-Based Health
Benefits Among Mid-Sized
and Large Employers
Paul Fronstin, Ph.D.
Director, Health Research & Education Program
Employee Benefit Research Institute
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The information contained herein is not to be construed as an attempt to
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Employment-Based
Coverage is Most
Common
(Americans Under Age 65 in 2003)
millions
300
252.7
250
200
159.2
150
100
50
42.5
44.7
Public program
Uninsured
17.0
0
Total population Employmentbased
Non group
market
Source: EBRI estimates of the March 2004
CPS.
2
Mid-Size and Large Account
for Half of EmploymentBased Market
(Workers Ages 18-64, 2003)
Self-employed
7%
Public Sector
17%
Private < 100
28%
Private 500+
36%
Source: EBRI estimates of the March
2004 CPS.
Private 100-499
12%
3
Employee Wage/Health
Benefit Trade-Off
Satisfied with mix of
health benefits and
pay
56%
Prefer more health
benefits and lower
pay
27%
Prefer fewer health
benefits and higher
pay
Don’t know/Refused
11%
6%
Source: EBRI/MGA 2004 Health Confidence
Survey.
4
Types of Health Plans
• FFS: Fee-for-service or traditional
indemnity coverage.
– No provider networks, reimbursement based on
UCR.
• HMO: Owns its health care facility and
employs providers on a salaried basis.
– Typically low or no cost sharing, limited
provider network.
• POS: HMO with option for members to
use out of network providers.
• PPO: Panel of providers who individually
contract with insurers/employers.
– Limited network with out of network benefits.
Similar to FFS in many respects.
• Consumer Driven Health Plans (See
below)
5
Enrollment, by Firm
Size, 2004
FFS
5000+ 3%
HMO
28%
PPO
POS
54%
15%
1000-4999 3%
24%
64%
9%
200-999 5%
23%
59%
13%
3-199 7%
22%
0%
20%
52%
40%
60%
19%
80%
100%
Source: Kaiser Family Foundation.
6
Regulation of employee
benefits is two-tiered:
ERISA
• ERISA is the primary regulator of
private-sector employee benefit
plans.
– Sets forth standards on reporting and
information disclosure, claims appeal
procedures, remedies for wrongfully
denied benefits, and fiduciary
standards.
• ERISA preempts all state laws that
relate to employee benefit plans.
• ERISA specifically preserve state
rights to regulate the ‘business of
insurance’
7
Health Benefit Plan
Regulation
• Self-funded plans: employer pays for
the health care claims of its
participants directly out of its own
income or assets.
– Regulated exclusively at the federal
level
• Fully-insured plans: employer pays
premiums to purchase a commercial
insurance product.
– Regulated directly at the federal level
and indirectly at the state level.
– State regulation includes mandated
benefits, premium taxes, and other
regulation of insurance companies.
8
Percentage of Covered
Workers in Partially or Fully
Self-Funded Plans, by Firm
Size, 2000 & 2004
100%
2000
80%
2004
78%
69%
60%
80%
72%
53% 50%
40%
20%
15%
10%
0%
3-199
Source: Kaiser Family Foundation.
200-999
1000-4999
5000+
9
Health Insurance Portability
and Accountability Act of
1996 (HIPAA)
• Created national standards:
–
–
–
–
Portability and access to care
Preexisting conditions
Discrimination based on health status
Timely disclosure regarding
information
– Electronic transmission of health
information
– Rights to privacy
– Medical savings accounts
10
Other Federal Mandates
• COBRA (1985)
• Newborns’ and Mothers’ Health
Protection Act (1996)
• Mental Health Parity Act (1996)
• Post-mastectomy surgery
mandate (1998)
11
Annual Premiums, by Firm
Size, 2004
Employee
Only
Coverage
Family
Coverage
3-199
Workers
$3,732
$9,737
200 or
More
Workers
$3,678
$10,046
Source: Kaiser Family Foundation.
12
Offer Rates, by Firm
Size, 2004
100%
80%
99% 99% 98% 98% 99%
2000 2001 2002 2003 2004
68% 68% 66% 65%
63%
60%
40%
20%
0%
3-199
200+
Source: Kaiser Family Foundation.
13
Coverage Rates, by
Firm Size, 2004
80%
70%
60%
2000 2001 2002 2003 2004
57% 58%
54% 54%
67% 69% 69% 68% 68%
50%
50%
40%
30%
20%
10%
0%
3-199
Source: Kaiser Family Foundation.
200+
14
Percent of Employers
Providing Choice of Plans,
by Firm Size, 2004
One Plan
100%
3%
11%
Two Plans
24%
80%
50%
60%
40%
3 or More Plans
72%
33%
86%
26%
43%
20%
16%
24%
0%
3-199
200-999
1000-4999
12%
5000+
Source: Kaiser Family Foundation.
15
Average Annual
Deductibles, EmployeeOnly, by Firm Size, 2004
$900
$800
$700
$600
$500
$400
$300
$200
$100
$-
3-199
PPO In-Network
Source: Kaiser Family
Foundation.
200-999
1000-4999
PPO Out-ofNetwork
POS In-Network
5000+
POS Out-ofNetwork
16
Hospital Cost Sharing,
by Firm Size, 2004
3-199
200+
Average Hospital
Deductible/Copay
$279
$208
Average Hospital
Coinsurance
18%
16%
Average Hospital Annual
Deductible
$685
$312
Source: Kaiser Family Foundation.
17
Drug Plan Incentives for
PPO, Large Employers,
1998 & 2003
Combination of Generic and Mail
Order Incentive
1998
2003
Lower copayment
32%
78%
Higher coinsurance
1%
1%
Pay difference between
generic & brand name
2%
6%
22%
6%
No Generic or Mail Order
Incentive
Source: Hewitt
Associates.
18
Tiered Provider
Networks
• Hospitals & doctors.
• Tiers vary with cost & quality.
– Similar to PPO (in vs. out)
– Similar to Rx tiers.
• Cost sharing distinctions
– Co-payment per hospital day.
– Coinsurance rate per stay.
– Overall deductible per stay.
19
Health Reimbursement
Arrangement (HRA)
• Employer provided notional account that
allows for pre-tax reimbursement of
medical expenses.
• Typically combined with a high-deductible
health plan.
• Employee contributions not permitted.
20
HRA Prototype
•Employer Funds Only
•Notional Account
•Section 105 Plan
•Participant
responsibility
•Balance rolls over year
to year
•Can fund thru
Flexible Spending
Account (FSA)
Insura
nce
Deductible Gap
•Employer controls
growth %
•Employer controls exit
rules
•Vesting
•COBRA
•Retiree medical
•Qualified longterm care
•Ensures good
health
•Neutralizes
“hoarding”
Personal Account
Preventive Care
•Consumer
education
•Chronic
disease
management
•Health
Promotion
•Online tools
•Telephonic
support
Education and DecisionSupport Tools
21
Source:
PriceWaterhouseCoopers.
Health Savings Account
(HSA)
• Allows for tax-free accumulation of
savings.
– Tax free contribution.
– Tax free accumulation.
– Tax free withdrawals for health care services,
COBRA and LTCI premiums, retiree health
premiums for Medicare-eligible retirees.
• Qualified health plan.
– Self-only: Minimum $1,000 deductible, $5,100
OOP max.
– Family coverage: Minimum $2,000 deductible,
$10,200 OOP max.
• Contributions
– Self-only: limited to level of deductible up to
$2,650 max.
– Family coverage: limited to level of deductible
up to $5,250 max.
• Catch-up contributions allowed once age
55 of $1,000.
22
Large Employer Interest in
HSAs:
Likelihood of Offering a
High-Deductible Health Plan
with an HSA
60%
54%
By 2005 By 2006
56%
50%
40%
35%
28%
30%
19%
20%
10%
8%
0%
Very likely
Somewhat likely
Not likely
Source: Mercer Human Resources Consulting,
23
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