Group Coverage

Employer-based Coverage

In March 217, there were 181.036 million with employer-based coverage (Table 1). The actuarial value of employer-provided coverage is typically about 84 or 85%, meaning the plan itself covers that fraction of the annual expenses of a typical member, leaving the balance to be paid out-of-pocket either in the form of deductibles, coinsurance or copayments.

• Chapter 4 – Employer-Sponsored Health Coverage (Alliance for Health Reform)
• Insurance-Employer-based System (Health Affairs topic page)
• Bureau of Labor Statistics. Employer Costs for Employee Compensation. This survey, released quarterly, provides detailed information on employer costs per hour worked for all components of employee compensation–including health benefits–and costs as a percent of total compensation. Break-downs are provided by major occupation, industry group, union membership status, full-time/part-time work status, employer size and geographic region.
• Journal of Commerce – Viewers can sign up for a free four-week trial subscription to the journal which includes full access to it’s internet archives during that time.
• “A Reappraisal of Private Employers’ Role in Providing Health Insurance” (1/14/99, NEJM) A recent study found that employers coverage has been overstated.
• Employer-Based Insurance Covers Fewer Minority Workers
• “Job Lock” Not Diminished by New HIPAA Law, EBRI Reports (Employee Benefit Research Institute
• Employer-Sponsored Coverage
• Note that technically, employers are permitted to charge age-based premiums for any health insurance offered, as long as this is actuarially based (Finkelstein, 2003, 7). However, it is much more common to use community rating: thus young workers typically pay the same premiums as older workers etc.

Self-Funded ERISA Plans

The federal ERISA law preempts states from regulating such plans offered by private employers (federal, state and local health benefits are not covered by ERISA), thereby allowing such firms to offer standardized benefits across state lines and avoiding having to comply with costly state regulations such as benefits mandates and premium taxes (Pierron: 3).

Self-funded plans covered 55% of those with employer-based coverage in 2008 (Kaiser/HRET: Exhibit 10.1), up from 39% in 1995 (EBRI).

• Covered Workers. All told, 32.8% of workers are covered by self-funded plans, a total of 47.6 million workers in 2008 (author calculations from Kaiser/HRET exhibits 3.1, 10.1 and M.2). But leaving aside 8.6 million state and local workers in such plans, there were 39.1 million private workers in such plans in 2008.
• Covered Lives. Using the reported distribution of coverage by 1-person, 2-person and family among firms with 3-199 workers (Kaiser/HRET: Exhibit 3.10), total estimated lives covered by private self-funded plans was estimated to be 80 million in March 2008.

• Bureau of Labor Statistics. Employee Benefits in Medium and Large Private Establishments

Insured ERISA Plans

• All employer plans are ERISA plans, but the ERISA preemption of state regulation has been held to apply only to self-insured plans. It does not preempt states from applying regulations to fully insured plans offered by health insurers to employers. Thus, even though such an offered plan is considered an ERISA plan, it nevertheless must conform to whatever state regulations would apply to that identical plan sold in the non-group market, for example.
• Thus, leaving aside health benefits provided through self-funded private plans, federal, state or local employer groups or in the small group market, the remaining employer-based plans which are fully insured tend to be offered by medium-sized employers.
• Total Workers.  Using methods described for self-funded ERISA plans, the small group, and state/local government employees, there’s an estimated 42.8 million workers in this market. Of these, nearly half (19.0 million) work for employers with 50-199 workers, while another 13.3 million work for firms with 200-999 employees.
• Covered Workers. Just under half of these workers (19.3 million) obtain coverage through their own employer.
• Covered Lives. Including dependents, a total of 39.0 million members are covered by insured employer plans outside the small group market.
• Bureau of Labor Statistics. Employee Benefits in Medium and Large Private Establishments

Small Group Market

All states except Washington DC regulate the small group market, with all but a handful defining the upper end of this market at 50 employees (MO, ND and OR use 25, LA uses 35, and NH uses 100).

• Total Workers. Average monthly employment in 2008 was 145.362 million (BLS: Table A-1). Using the national distribution of employment by firm size (Kaiser/HRET: Table M-1), there were 37.2 million workers in firms with 3-50 workers.
• Covered Workers. Of these, 17.5 million were covered by their employer plan (author’s calculations using Kaiser/HRET: Exhibit 3.1). Excluding those in self-insured plans leaves 15.4 million workers (author’s calculations using Kaiser/HRET: Exhibit 10.1).
• Covered Lives. Using the reported distribution of coverage by 1-person, 2-person and family among firms with 3-199 workers (Kaiser/HRET: Exhibit 3.10), total estimated lives covered in the small group market in 2008 (excluding those self-insured) is 30.7 million.

• Small Business Health Insurance Coverage Drops

References

• BLS. Employment and Earnings Report. January 2009; 56(1). [Full Text (pdf)]
• Buchmueller, Thomas and Alan Monheit, Employer-Sponsored Health Insurance and the Promise of Health Insurance Reform (NBER Working Paper 14839).
• DeNavas-Walt, Carmen, Bernadette D. Proctor, and Jessica C. Smith. U.S. Census Bureau, Current Population Reports, P60-236, Income, Poverty, and Health Insurance Coverage in the United States: 2008, U.S. Government Printing Office, Washington, DC, 2009.  [Full Text (pdf)]
• Kaiser/HRET. Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2008. The Kaiser Family Foundation/Health Research & Educational Trust, September 24, 2008. [Full Text (pdf)]
• Pierron, William and Paul Fronstin. ERISA Pre-emption: Implications for Health Reform and Coverage. Employee Benefit Research Institute, EBRI Issue Brief #314, February 2008. [Full Text (pdf)]
• McDevitt, R., J. Gabel, R. Lore, J. Pickreign, H. Whitmore, and T. Brust, Group Insurance: A Better Deal for Most People Than Individual Plans. Health Affairs, Vol. 29, No. 1, January 2010, pp. 156–164.