EMPLOYER-BASED INSURANCE: 60% Favor Right to Sue
A new survey of trends in employer health benefits from the Kaiser Family Foundation (KFF) and the Health Research and Educational Trust (HRET) reveals that little has changed since last year in terms of employer-based coverage and health plan choice. Although health insurance premiums rose by 4.8% from spring 1998 to spring 1999 -- more than twice the national rate of inflation and the largest annual increase since 1994 -- "there are no clear signs that the percentage of employers offering insurance is going up or down," Larry Levitt, director of KFF's Changing Health Care Marketplace Project, said at a press briefing yesterday. (To view a video "webcast" of the conference, click here). According to the study, nearly all large firms provided employee coverage, compared to only 60% of small businesses with 3 to 199 employees. Despite the static figure, overall, the portion of the population insured through the work place actually increased by 1.6%, as more people have gained employment thanks too a strong job market. The increase in the number of uninsured Americans -- hovering around 44.3 million, according to a recent Census Bureau report -- is mostly attributable to a decline in those covered by Medicaid (-1.7%) and private non-group plans (-.7%).
In addition, the survey indicated that the majority of employers -- 65%, compared to 53% a decade ago -- offer workers a choice between at least two plans, with PPOs and HMOs the most common options." There is no single bigger predictor of employees' satisfaction with their health plans" then whether they had an option, Jon Gabel, HRET vice president for health systems studies, said. While PPO and POS coverage accounted for a combined 68% of employees and HMOs served 28% of workers in 1999, conventional plans continued losing their once-dominant market share, sinking to a low of 9%; in 1988 conventional plans comprised 73% of all job-based health plans. Gabel predicted that many business owners will continue to shift away from indemnity coverage toward PPO plans but added that rising health care costs could help HMOs gain even more support from employers.
Benefits Have Increased, Not Decreased?
The Kaiser/HRET study also tracked changes in benefits, finding that, despite the public's perception that insurers have drastically cut benefits of late, there were few differences overall from 1998 to 1999, with 84% of employees reporting no change in covered services. In fact, Levitt said, many insurers, especially HMOs, "have actually dramatically increased coverage for [preventive] benefits," such as adult physicals and well baby care, and almost always include prescription drug benefits. Additionally, HMOs are "more likely to cover reproductive health benefits," such as oral contraception for employees, he noted. However, "no matter what type of plan" workers have, they are "more likely" to be covered for contraception than abortion, which is only insured for 37% of those with job-based coverage. Employees also reported less restrictions in coverage for pre-existing conditions. The most troubling decline in coverage came in mental health benefits, with only 21% of large firm employees allowed unlimited outpatient visits, compared to 36% in 1991.
Small Employers Struggle
Despite the modest cost increase and changes in coverage last year, coverage provided by small employers remains "fragile," according to Drew Altman, KFF president. "It's the small guys who, at the moment, are getting especially hard hit" with health care costs, he said. While large companies saw premiums costs rise by 4.1%, small businesses were hit with a 6.9% increase, and the smallest firms -- those with only three to nine workers -- reported premium hikes of 9.2%. Altman noted that "these increases will make it even harder for small businesses to provide health insurance for their employees in the future." The study also revealed serious discrepancies between small and large companies in choice and benefits coverage. Ninety percent of small firms offer only one health plan option, usually an HMO, and the likelihood that employees at "mom and pop operations" will receive coverage is "barely better than 50-50," Levitt claimed, adding that those with low wages are also less likely to have job-based health insurance. He explained that such choice "disparities between large and small companies are likely to get even worse" down the road. Additionally, depending on the type of plan, large firm employees are three to four times more likely than small business workers to receive coverage for abortion services. Gabel blamed the variances on the "different baragaing and purchasing power that small firms have when dealing with health plans."
In: Right to Sue; Out: Quality Over Cost
Despite the financial burden, 60% of small employers express support for patients' right to sue their managed care plans, even though many in the industry claim such a law would drive up costs further. Altman said he was somewhat surprised by these results but pointed out that many small employers are frustrated by health plans. They "don't like the government at all, but it may be they like [insurance companies] even less," he said. Only 26% of large employers said they favored the right to sue, perhaps, hypothesized Levitt, because they may be concerned about company liability. Altman added, however, that previous surveys have indicated that support would drop off if cost-conscious employers knew definitely that costs would rise as a result of the right to sue. Almost three-quarters of employers said they were "somewhat" or "very" worried that rising health care costs will be more than they can afford, and 65% indicated they are "somewhat" or "very" worried they will be forced to switch plans due to rising costs. In comparison, only 26% reported being concerned they will have to change health plans due to quality of care, with larger firms more attuned to the issue. That preoccupation with cost translates into bad new for retirees, who are beginning to see their conventional plans dropped in favor of managed care and are dealing with caps on their former employer's maximum contribution.
The future of employer-based health care is uncertain, Levitt, Altman and Gabel agreed. Levitt said that the nation has "hit the high water mark of our employer system's ability to cover the uninsured." Altman concurred, noting, "The system is at a crossroads ... This is probably as good as it gets. It's not going to get any better than this ... There are no signs that employers are going to offer more coverage for workers." Gabel echoed the sentiments, saying that, based on his studies, he is very "pessimistic about the future of employee-based health care." This cynicism and frustration with the employer-based system, concluded Altman, is "fueling renewed interest" in alternative approaches to health insurance and earning the issue "new prominence on the national agenda" (Heather Weaver, American Health Line, 10/28).