A Summary of Insurance Coverage Chapter 2

2 Overview Extent and nature of coverage Extent and nature of coverage Employer sponsored Employer sponsored Individually purchased Individually purchased Medicare Medicare Medicaid Medicaid The uninsured The uninsured

3 The Extent of Coverage Current Population Survey (CPS) Current Population Survey (CPS) 50,000 households surveyed in waves 50,000 households surveyed in waves Employee Benefits Research Institute Employee Benefits Research Institute Roughly, 83 percent of the U.S. resident population in 2006 had some form of health insurance coverage Roughly, 83 percent of the U.S. resident population in 2006 had some form of health insurance coverage

4 Table 2-1 Number and Percentage of Americans under Age 65 by Source of Insurance, 1994 and Millions%Millions% Employer Sponsored Individual Medicare Medicaid Military Uninsured Total Source: data from Fronstin (2006, Figure 1)

5 Employer-Sponsored Coverage Obtained as part of the compensation that workers receive Obtained as part of the compensation that workers receive Single Coverage Single Coverage Worker + 1 or Worker + 2 Worker + 1 or Worker + 2 Family Coverage Family Coverage Approximately half of those with this coverage have it through their own employer, the rest as dependents Approximately half of those with this coverage have it through their own employer, the rest as dependents

6 Age Distribution of Employer-Sponsored Coverage, 2004 Source: data from Fronstin (2005)

7 Source: data from Fronstin (2006, Figure 10)

8 Source: data from Claxton et al. (2006b, Exhibit 2.2)

9 Employer Coverage Typically offered to full-time workers Typically offered to full-time workers Only 31 percent of firms offer coverage to part-time workers Only 31 percent of firms offer coverage to part-time workers Approximately 78 percent of workers are eligible for coverage when offered Approximately 78 percent of workers are eligible for coverage when offered However, of these, only about 82 percent take coverage However, of these, only about 82 percent take coverage

10 Choice of Health Plans The number of plans offered by employers varies significantly by firm size The number of plans offered by employers varies significantly by firm size Of those with 5,000+ employees Of those with 5,000+ employees 29 percent offer three or more plans 29 percent offer three or more plans 42 percent offer two plans 42 percent offer two plans Of those with <200 employees Of those with <200 employees Only 10 percent offer more than one plan Only 10 percent offer more than one plan

11 Premiums Average 2006 monthly premium: Average 2006 monthly premium: $354 for single coverage $354 for single coverage $957 for family coverage $957 for family coverage Average 2006 employee premium contribution: Average 2006 employee premium contribution: $52 for single coverage $52 for single coverage $248 for family coverage $248 for family coverage Premium contributions have been a constant percentage of total premium for the last decade Premium contributions have been a constant percentage of total premium for the last decade

12 Coverage Virtually all employer-sponsored health insurance plans cover: Virtually all employer-sponsored health insurance plans cover: Hospitalization, physician visits, prescription drugs, ambulatory and inpatient mental health services Hospitalization, physician visits, prescription drugs, ambulatory and inpatient mental health services Extent of coverage differs substantially Extent of coverage differs substantially Copays and deductibles are common Copays and deductibles are common 57 percent of those with an HMO paid $15 or $20 copay 57 percent of those with an HMO paid $15 or $20 copay Deductible for in-plan PPO usage averaged $473 Deductible for in-plan PPO usage averaged $ percent of plans use “multitiered” prescription drug copays 90 percent of plans use “multitiered” prescription drug copays Plans differ with respect to utilization management Plans differ with respect to utilization management

13 Table 2-2 Percentage of Insured Workers in Larger Firms Enrolled in Plans Using Utilization Management Techniques Hospital Preadmission Certification 92%80% Ambulatory Surgery Precertification 52%52% High Cost Case Management 81%91% Disease Management 67% Source: data from Gabel et al. (2005)

14 Consumer-Directed Health Plans Provide insurance coverage after a relatively large deductible is paid. Provide insurance coverage after a relatively large deductible is paid. HRET/Kaiser Survey said that 4 percent of employees were offered such plans in 2004 HRET/Kaiser Survey said that 4 percent of employees were offered such plans in 2004 Average single coverage deductible: $1,900 Average single coverage deductible: $1,900 Average contribution made to health savings account: $553 Average contribution made to health savings account: $553

15 Table 2-1 Number and Percentage of Americans under Age 65 by Source of Insurance, 1994 and Millions%Millions% Employer Sponsored Individual Medicare Medicaid Military Uninsured Total Source: data from Fronstin (2006, Figure 1)

16 Individual Coverage Not purchased through a group Not purchased through a group Currently plays a minor role Currently plays a minor role Policy advocates see a major role Policy advocates see a major role Consumer-directed health plans Consumer-directed health plans Elimination of employer-sponsored coverage Elimination of employer-sponsored coverage Individual tax credits Individual tax credits

17 Source: data from Fronstin (2005, Figures 21 and 22)

18 Table 2-1 Number and Percentage of Americans under Age 65 by Source of Insurance, 1994 and Millions%Millions% Employer Sponsored Individual Medicare Medicaid Military Uninsured Total Source: data from Fronstin (2006, Figure 1)

19 Medicare Covers some 6.3 million under age 65 Covers some 6.3 million under age 65 Medicare disability Medicare disability Dependents of Medicare eligibles Dependents of Medicare eligibles Covers virtually all residents over age 65 Covers virtually all residents over age 65 Approximately 60 million people Approximately 60 million people

20 Medicare Coverage Part A Part A Hospital, skilled nursing, and home health coverage Hospital, skilled nursing, and home health coverage Paid for by payroll taxes Paid for by payroll taxes Part B Part B Physician services and durable medical equipment Physician services and durable medical equipment Paid for by general taxes and monthly premium Paid for by general taxes and monthly premium Part C Part C Medicare Advantage (Medicare managed care) Medicare Advantage (Medicare managed care) Covers approximately 13 percent of beneficiaries Covers approximately 13 percent of beneficiaries Part D Part D Voluntary prescription drug coverage Voluntary prescription drug coverage Paid for by an additional monthly premium Paid for by an additional monthly premium

21 Figure 2-6 Percentage of Medicare Beneficiaries with Supplemental Insurance Coverage, 2003 Source: data from AARP (2006)

22 Table 2-1 Number and Percentage of Americans under Age 65 by Source of Insurance, 1994 and Millions%Millions% Employer Sponsored Individual Medicare Medicaid Military Uninsured Total Source: data from Fronstin (2006, Figure 1)

23 Medicaid Joint federal-state program Joint federal-state program The 13.5 percent is an underestimate of coverage The 13.5 percent is an underestimate of coverage Ignores those over age 65 who have nursing home coverage Ignores those over age 65 who have nursing home coverage Suspicion that the CPS misses a number of Medicaid eligibles—perhaps 5.8 million Suspicion that the CPS misses a number of Medicaid eligibles—perhaps 5.8 million

24 Source: data from Congressional Budget Office (2006), Table 1

25 Table 2-1 Number and Percentage of Americans under Age 65 by Source of Insurance, 1994 and Millions%Millions% Employer Sponsored Individual Medicare Medicaid Military Uninsured Total Source: data from Fronstin (2006, Figure 1)

26 Military TRICARE TRICARE Military retirees and dependents of active duty, retired, and deceased service members Military retirees and dependents of active duty, retired, and deceased service members CHAMPVA CHAMPVA Civilian Health and Medical Program of the VA Civilian Health and Medical Program of the VA Disabled dependents and certain survivors of veterans Disabled dependents and certain survivors of veterans

27 Table 2-1 Number and Percentage of Americans under Age 65 by Source of Insurance, 1994 and Millions%Millions% Employer Sponsored Individual Medicare Medicaid Military Uninsured Total Source: data from Fronstin (2006, Figure 1)

28 Source: data from Fronstin (2005, Figures 21 and 22)

29 Source: data from Fronstin (2005, Figure 14)

30 Discussion Questions Why would employers choose to provide health insurance to their employees? Why would employers choose to provide health insurance to their employees?

31 Discussion Questions What factors do you think a two-earner couple should take into consideration when they choose jobs and health insurance coverage? What factors do you think a two-earner couple should take into consideration when they choose jobs and health insurance coverage?

32 Discussion Questions Why do you think so many Medicare beneficiaries obtain some supplemental form of coverage? Why do you think so many Medicare beneficiaries obtain some supplemental form of coverage?

33 Discussion Questions Suppose the Medicaid program were to be expanded. What effects would this have on the number of uninsured? On the number with employer-sponsored coverage? Suppose the Medicaid program were to be expanded. What effects would this have on the number of uninsured? On the number with employer-sponsored coverage?