Number of Employers Offering Coverage Increases, New Survey Finds
A new employer survey released today shows that a "strong economy and tight labor market" led 60% of California's employers to offer health insurance coverage last year, up from 48% in 1999, but job-based coverage still remains lower in the state than the nationwide average, the Sacramento Bee reports. Nationwide, the rate of employer-sponsored insurance rose from 61% in 1999 to 67% in 2000 (Rapaport, Sacramento Bee, 3/27). The survey, conducted by the Health Research and Educational Trust and the Kaiser Family Foundation, also found that health care expenses rose in 2000 for California employers, but remained "substantially lower" than costs in the country as a whole. "In California, like the rest of the country, employers are using health insurance to recruit and retain employees by absorbing cost increases rather than passing the buck to workers. But if the economy continues to sputter, employers' willingness to cushion employees from higher premiums may well become a thing of the past," Drew Altman, president of the Kaiser Family Foundation, said. Other findings from the survey include:
- The size and wages of a firm factor into the "likelihood" that it will offer health insurance. For example, "virtually all" California companies with 200 or more employees offer coverage, while 76% of firms with 10 to 50 workers offer insurance and 53% of firms with between three and nine employees provide coverage.
- While coverage increased overall across the state, certain groups, including temporary and part-time workers, are not covered by employer sponsored insurance. Only 4% of companies that offer coverage extend the benefits to temporary employees, and 23% provide part-time workers with coverage.
- California employers are less likely to offer retiree health benefits than firms across the country, as 29% of larger California firms offer such coverage, compared to 37% nationally (KFF release, 3/27).
- The types of coverage offered by employers differ between California and the rest of the nation. Most California workers with employer-sponsored coverage -- 55% -- are enrolled in HMOs, compared to 29% of workers nationwide. While PPOs are the "most common" form of insurance nationally, with 41% of employees enrolled, only 25% of California workers have PPO coverage (KFF/HRET study, March 2001).
The cost of offering insurance rose nationwide, but expenses in California remained lower, rising 6% in 2000. However, like the rest of the county, California employers did not pass the costs onto employees. And compared to their national counterparts, California employees pay less for coverage. California employees pay an average monthly premium of $20 for single coverage and $113 for family insurance; nationally, workers pay an average of $28 and $138 respectively. Jon Gabel, HRET's vice president for health system studies, said, "The cost of coverage remains lower in California than the national average in part because of the heavy HMO penetration across the state and also because of the large number of insurers and HMOs competing in local markets." While costs are rising, the survey found that employers believe they "play an important role" in providing coverage for their employees (KFF release, 3/27). According to the survey, 63% of California employers are "very or somewhat unlikely" to switch to a defined contribution approach. In addition, the survey found that employers believe that workers would have a "harder time" finding insurance on their own than purchasing it through an employer (KFF/HRET study, March 2001).
The report flagged some "warning signs," according to the San Diego Union-Tribune. Though a "vibrant economy" spurred last year's growth in coverage, the fact that the "gains came late -- after years of economic expansion" -- suggests that employers resisted offering such benefits until a "tight labor market virtually forced them" to provide health insurance, Larry Levitt, Kaiser Family Foundation researcher and lead study author, said. Levitt suggested that the data also indicate that if the economy continues to slow, employers may stop offering health benefits or pass along higher costs. "I'm afraid it's going to be a one-year blip," Peter Lee, president of the Pacific Business Group on Health, a statewide health insurance purchasing coalition with more than three million members, said (Fong, San Diego Union-Tribune, 3/27). To obtain a full copy of the survey, go to http://www.kff.org/content/2001/3108/ or call 800-656-4533.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.