Plan choice, health insurance cost and premium sharing.

We develop a model of premium sharing for firms that offer multiple insurance plans. We assume that firms offer one low quality plan and one high quality plan. Under the assumption of wage rigidities we found that the employee's contribution to each plan is an increasing function of that plan's premium. The effect of the other plan's premium is ambiguous. We test our hypothesis using data from the Employer Health Benefit Survey. Restricting the analysis to firms that offer both HMO and PPO plans, we measure the amount of the premium passed on to employees in response to a change in both premiums. We find evidence of large and positive effects of the increase in the plan's premium on the amount of the premium passed on to employees. The effect of the alternative plan's premium is negative but statistically significant only for the PPO plans.

Here it comes: defined contribution health care.

The Patient Protection and Affordable Care Act includes provisions to make the individual health insurance marketplace one where all Americans, including those with preexisting health conditions, can obtain affordable coverage. At the same time, the act has failed to address, in any significant way, many of the underlying flaws in the current U.S. health care system that have caused costs to spiral out of control. The combination of persistent U.S. health care cost increases and a viable individual health insurance marketplace will cause a sea change in employer-sponsored health care offerings that is similar to that seen among employer-sponsored retirement benefit plans: movement away from defined benefit approaches and toward defined contribution designs. Although the authors show parallels between the evolution of employers' health care and retirement offerings, they explain why certain key developments will need to occur before defined contribution approaches become as prevalent in employer-sponsored health care plans as they are in today's employer-sponsored retirement plans.

Health benefits in 2008: premiums moderately higher, while enrollment in consumer-directed plans rises in small firms.

Our annual Employer Health Benefits Survey contains findings from interviews with 1,927 public and private employers surveyed during the first five months of 2008. Average annual premiums in 2008 are $4,704 for single coverage and $12,680 for family coverage. These amounts are about 5 percent higher than premiums were last year. Enrollment in high-deductible health plans with a savings option increased to 8 percent of covered workers, up from 5 percent in 2007. Deductibles in preferred provider organizations, the plan type with the largest enrollment, increased from 2007 levels. This paper also provides new insights into firms' offering wellness programs and retiree health benefits.

Effect of premium, copayments, and health status on the choice of health plans.

OBJECTIVE: Explore effects of comorbidity and prior health care utilization on choice of employee health plans with different levels of cost sharing. DATA SOURCES/STUDY SETTING: Mayo Clinic employees in Rochester, Minnesota (MCR) under age 65 in January 2004; N = 20,379. STUDY DESIGN: Assessment of a natural experiment where self-funded medical care benefit options were changed to contain costs within a large medical group practice. Before the change, most employees were enrolled in a plan with first dollar coverage, while 18% had a plan with copays and deductibles. In 2004, 3 existing plans were replaced by 2 new options, one with lower premiums and higher out-of-pocket costs and the other with higher premiums, a lower coinsurance rate, and lower out-of-pocket maximums. DATA COLLECTION/EXTRACTION METHODS: Data on employees were merged across insurance claims, medical records, eligibility files, and employment files for 2003 and 2004. PRINCIPAL FINDINGS: As the number of chronic comorbidities among family members increased, the probability of choosing high-premium option also increased. Seventy-two percent of employees with at least 1 family member with comorbidity chose the high-cost option versus 54.7% of employees with no comorbidities. High-premium and low-premium plans seem to subdivide population into discrete risk categories, which may adversely affect the future stability of the insurance plan options. CONCLUSIONS: Various factors affect decision making of employees regarding the choice of plan with different levels of cost-sharing. In a natural experiment setting where all options were redesigned, the health status of employees and their dependents played a very significant role in plan choice.

Effects of a consumer driven health plan on pharmaceutical spending and utilization.

OBJECTIVES: To compare pharmaceutical spending and utilization in a consumer driven health plan (CDHP) with a three-tier pharmacy benefit design, and to examine whether the CDHP creates incentives to reduce pharmaceutical spending and utilization for chronically ill patients, generic or brand name drugs, and mail-order drugs. STUDY DESIGN: Retrospective insurance claims analysis from a large employer that introduced a CDHP in 2001 in addition to a point of service (POS) plan and a preferred provider organization (PPO), both of which used a three-tier pharmacy benefit. METHODS: Difference-in-differences regression models were estimated for drug spending and utilization. Control variables included the employee's income, age, and gender, number of covered lives per contract, election of flexible spending account, health status, concurrent health shock, cohort, and time trend. Results. CDHP pharmaceutical expenditures were lower than those in the POS cohort in 1 year without differences in the use of brand name drugs. We find limited evidence of less drug consumption by CDHP enrollees with chronic illnesses, and some evidence of less generic drug use and more mail-order drug use among CDHP members. CONCLUSIONS: The CDHP is cost-neutral or cost-saving to both the employer and the employee compared with three-tier benefits with no differences in brand name drug use.

Health benefits in 2007: premium increases fall to an eight-year low, while offer rates and enrollment remain stable.

This paper reports findings from a survey of 1,997 public and private employers with three or more workers, conducted during the first five months of 2007. Premiums increased 6.1 percent from spring 2006 to spring 2007--the lowest rate of increase since 1999. Enrollment in different types of health plans did not change significantly, and high-deductible health plans with a savings option did not experience major growth in enrollment. Despite the comparatively modest increase in premiums during a period of strong economic growth, the percentage of workers obtaining coverage from their employer remained statistically unchanged.

Low-income employees' choices regarding employment benefits aimed at improving the socioeconomic determinants of health.

OBJECTIVES: Socioeconomic factors are associated with reduced health status in low-income populations. We sought to identify affordable employment benefit packages that might ameliorate these socioeconomic factors and would be consonant with employees' priorities. METHODS: Working in groups (n = 53), low-income employees (n = 408; 62% women, 65% Black) from the Washington, DC, and Baltimore, Md, metropolitan area, participated in a computerized exercise in which they expressed their preference for employment benefit packages intended to address socioeconomic determinants of health. The hypothetical costs of these benefits reflected those of the average US benefit package available to low-income employees. Questionnaires ascertained sociodemographic information and attitudes. Descriptive statistics and logistic regression analysis were used to examine benefit choices. RESULTS: Groups chose offered benefits in the following descending rank order: health care, retirement, vacation, disability pay, training, job flexibility, family time, dependent care, monetary advice, anxiety assistance, wellness, housing assistance, and nutrition programs. Participants varied in their personal choices, but 78% expressed willingness to abide by their groups' choices. CONCLUSIONS: It is possible to design employment benefits that ameliorate socioeconomic determinants of health and are acceptable to low-income employees. These benefit packages can be provided at the cost of benefit packages currently available to some low-income employees.

Personal responsibility in health benefits: looking backward, looking forward.

Consumerism and care management continue to make inroads as cost-containment strategies for employers, as well as for employees who have endured the steady rise in benefit cost-shifting. The latest statistics and trends point the way to a new era of personal responsibility in health benefits. The author describes how this trend has grown, and where it is leading.

Differences in beneficiary assessments of health care between TRICARE prime and TRICARE prime remote.

OBJECTIVES: We examined differences in health care ratings and reported health care experiences for active duty uniform services personnel using health care plans other than military treatment facilities. METHODS: We used a cross-sectional mail survey of a stratified sample of 3,871 beneficiaries enrolled in TRICARE Prime (TP) and TRICARE Prime Remote (TPR). The adjusted plan mean composite and global ratings were compared between TP and TPR participants. RESULTS: There were few significant differences between the two groups. Patient satisfaction was higher when patients chose their providers (TPR), and use of some preventive services was higher in managed-care plans (TP). Respondents in metropolitan locations differed significantly from those in nonmetropolitan locations in ratings of plans, quality of health care received, and access to services. CONCLUSIONS: The military health system is achieving some success in delivering uniform benefits but faces challenges in delivering high-quality uniform benefits in rural communities.

Generosity and adjusted premiums in job-based insurance: Hawaii is up, Wyoming is down.

This paper reports national and state findings on the generosity or actuarial value of U.S. employer-based plans and adjusted premiums in 2002. The basis for our calculations is simulated bill paying for a large standardized population. After adjusting for the quality of benefits, we find from regression analysis that adjusted premiums are 18 percent higher in the nation's smallest firms than in firms with 1,000 or more workers. They are 25 percent higher in indemnity plans and 18 percent higher in preferred provider organizations than in health maintenance organizations. The generosity of coverage increased from 1997 to 2002.

A closer look at the managed care backlash.

BACKGROUND: Much anecdotal evidence exists regarding the managed care backlash of the late 1990s, but limited empirical evidence is available. OBJECTIVES: Using a unique series of employer surveys, we examined trends in enrollment rates in health maintenance organizations (HMOs) and other plan types between 1997 and 2003. RESEARCH DESIGN: We present enrollment rates in employer-sponsored health plans by plan type. These plan-level enrollment rates are disaggregated by whether or not enrollees had a choice of plan types and by firm size and year. SUBJECTS: Employees who were enrolled in employer-sponsored health insurance in private sector establishments. RESULTS AND CONCLUSIONS: Although we found evidence of a decline in the popularity of HMOs, it occurred later than indicated in earlier studies. In our data, HMO enrollment rates fell from roughly 32% to 26% between 1997 and 2003, with most of the decline occurring after 2001. Earlier studies reported that the decline in HMO enrollment rates occurred between 1996 and 1998, and between 2000 and 2001. In addition, an interesting story emerged when we examined trends by firm size. We found evidence of a decline in the HMO enrollment rate for large employers starting in 1998. However, this was offset by an increase in the HMO enrollment rate in small employers, which explains the stability in our figures before 2002. Our data also indicated that when workers were given a choice between an HMO and other plan types, workers increasingly opted for the non-HMO plan during this time period.

Employer choices of family premium sharing.

In 1997, nearly two-thirds of married couples with children under age 18 were dual-earner couples. Such families may have a variety of insurance options available to them. If so, declining a high employee premium contribution may be a mechanism for one spouse to take money wages in lieu of coverage while the other spouse takes coverage rather than high wages. Employers may use these preferences and the size of premium contributions to encourage workers to obtain family coverage through their spouse. The purpose of this paper is to explore the effects of labor force composition, particularly the proportion of dual-earner couples in the labor market, on the marginal employee premium contribution (marginal EPC) for family coverage. We analyze data from the 1997-2001 Medical Expenditure Panel Survey--Insurance Component (MEPS-IC) List Sample of private establishments. We find strong evidence that the marginal EPC for family coverage is higher when there is a larger concentration of women in the workforce, but only in markets with a higher proportion of dual-earner households.