Trends and Indicators in the Changing Health Care Marketplace Section 4: Trends in Health Insurance Benefits
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Trends and Indicators in the Changing Health Care Marketplace
Exhibit 4.1: Percent of Covered Workers With Selected Benefits, by Firm Size, 2004
Today, most employer-sponsored health plans cover preventive services such as prenatal care and physicals, in addition to prescription drug and mental health coverage. Fewer plans cover acupuncture and chiropractic care.
All Small Firms (3-199 Workers)
All Large Firms (200 or More Workers)
All Firms
ALL PLANS
Adult Physicals
96%
94%
95%
Prescription Drugs
100
100
100
Outpatient Mental
95
99
98
Inpatient Mental
96
99
98
Annual OB/GYN Visit
99
98
98
Prenatal Care
97
100*
99
Oral Contraceptives
87
89
89
Well-Baby Care
95
98
97
Acupuncture
41
50
47
Chiropractic Care
79*
91*
87
Note: *Estimate is statistically different from All Firms at p<.05.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 02/02/05
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 4.2: Percentage of Covered Workers With Coverage of Well-Baby Care and Adult Physicals, by Type of Plan, 1988, 1996, 2003, and 2004
While HMOs have consistently covered preventive services, including well-baby care and adult physicals, PPO plans have not. However, PPOs have dramatically increased their coverage of well-baby care and adult physicals since 1988. In 2004, 97% of workers in PPOs had well-baby care (compared to 61% in 1988) and 94% had coverage for adult physicals (compared to 39% in 1988).
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Source: Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits, 2004 Annual Survey, September 2004, Exhibit 8.3, p. 107, at http://www.kff.org/insurance/7148/sections/ehbs04-8-3.cfm, and unpublished data.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 02/02/05
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 4.3: Percentage of Covered Workers With the Following Types of Cost Sharing for Health Benefits, 2005
Most workers with employer-sponsored health coverage are required to share the costs of their health insurance premiums and benefits with their employers. In 2005, over three-quarters of workers contributed toward their monthly premiums (91% for family coverage, 79% for single coverage), and higher percentages of workers contributed to cost sharing for office visits (95%), and tiered cost sharing for prescription drugs (89%). Lower percentages faced plan deductibles (56%), separate hospital cost sharing (52%), and separate deductibles for prescription drugs (10%).
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‡The percentage of covered workers with a plan deductible is calculated for workers with single coverage. For PPO and POS plans, deductibles are for in-network services.
§Covered workers with separate hospital cost sharing includes those with a hospital deductible or copay, coinsurance, both a coinsurance and a deductible or copay, a charge per day, or an annual deductible.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/26/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 4.4: Average Annual Deductibles for Covered Workers With Single Coverage, by Plan Type, 1988-2005
About half (56% in 2005) of covered workers with single coverage face annual deductibles that they must pay before insurance benefits begin (see Exhibit 4.3). In 2005, the average annual deductible for single coverage in PPO plans (the most common type of plan) was $323, up from $204 in 2001.
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*Estimate is statistically different from the previous year shown at p<.05. No statistical tests were conducted for years prior to 1999.
^Information was not obtained for HMO single coverage prior to 2003, or for POS plans in 1988.
Note: Average deductibles for PPO and POS plans are for in-network services. Averages include covered workers who do not have a deductible. If covered workers who do not face a deductible are excluded from the analysis, the average deductibles are higher. The average deductibles for single coverage among covered workers who face a deductible are as follows: conventional - $671, HMO - $568, PPO - $455, POS - $495.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2005; KPMG Survey of Employer-Sponsored Health Benefits, 1996; The Health Insurance Association of America (HIAA), 1988. From Exhibit 7.2, at http://www.kff.org/insurance/7315/sections/ehbs05-7-2.cfm.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/26/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 4.5: Average Annual Deductibles for Covered Workers With Family Coverage, by Plan Type, 1988-2005
Covered workers enrolled in family coverage experience more expensive deductibles than those in single coverage plans. In 2005, the average annual deductible for family coverage in PPO plans (the most common type of plan) was $679. Covered workers in HMO plans had an average annual deductible of $141, up from $65 in 2003.
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*Estimate is statistically different from the previous year shown at p<.05. No statistical tests were conducted for years prior to 1999.
^Information was not obtained for HMO family coverage prior to 2003, or for PPO and POS family coverage prior to 2005.
Note: Average deductibles for PPO and POS plans are for in-network services. Averages include covered workers who do not have a deductible. If covered workers who do not face a deductible are excluded from the analysis, the average deductibles are higher. The average deductibles for family coverage among covered workers who face a deductible are as follows: conventional - $1,405, HMO - $1,105, PPO - $952, POS - $1,065.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2005; KPMG Survey of Employer-Sponsored Health Benefits, 1996; The Health Insurance Association of America (HIAA), 1988. From Exhibit 7.3, at http://www.kff.org/insurance/7315/sections/ehbs05-7-3.cfm.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/26/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 4.6: Distribution of Covered Workers with the Following Types of Cost Sharing for Physician Office Visits and Hospital Admissions, 2005
When visiting a physician, most covered workers (95%) face some type of cost sharing, typically a fixed dollar copayment (see Exhibit 4.3). For hospital admissions, just over half (52%) of covered workers have some type of separate cost sharing, typically either a deductible or copayment.
Percentage of Covered Workers With the Following Types of Cost Sharing for Physician Office Visits, 2005
Copay Only
Coinsurance Only
Both Copay and Coinsurance‡
Neither
OFFICE VISITS
Conventional Plans
43%
32%
1%
24%
HMO Plans*
96
<1
1
3
PPO In-network Provider
78
13
2
7
POS In-network Provider
93
1
3
3
ALL PLANS
83%
10%
2%
5%
Percentage of Covered Workers With the Following Types of Cost Sharing for a Hospital Admission, 2005^
Deductible or Copay
Coinsurance Only
Both Copay and Coinsurance
Charge Per Day
Annual Deductible
None
HOSPITAL ADMISSIONS
Conventional Plans
25%
14%
1%
0%
6%
54%
HMO Plans
55
3
1
4
0
37
PPO Plans
26
13
3
1
1
55
POS Plans
46
6
4
4
0
40
ALL PLANS
36%
10%
1%
2%
1%
48%
*Distribution is significantly different from All Plans at p<.05. ‡This category includes less than 0.5% of covered workers who face either a copayment or a coinsurance – whichever is greater. ^Tests found no statistically different distributions from All Plans at p<.05.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/26/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 4.7: Distribution of Covered Workers Facing PPO In-Network Copayments for Physician Office Visits, 2004-2005
More than three-quarters (80%) of covered workers enrolled in PPOs were required to pay copayments for physician office visits with in-network providers in 2005 (see Exhibit 4.6). Most workers who face a copayment pay either $15 or $20 per visit, with almost one in four workers paying $15 (25%). Fewer than one in fifty covered workers (<1%) paid $5 per visit.
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*Distribution is statistically different from previous year shown at p<.05.
‡In calculating the distribution of copayments across all plan types, the copayments applicable to in-network services were used for PPO plans.
Note: The distribution of copayments for physician office visits does not include covered workers who do not have a copayment.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/26/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 4.8: Distribution of Covered Workers Facing HMO Copayments for Physician Office Visits, 1996-2005
Almost all (97%) of covered workers enrolled in HMOs were required to pay copayments for physician office visits in 2005 (see Exhibit 4.6). The copayment amounts that covered workers face have been increasing in recent years. In 2005, the most common copayment was $15 (34% of covered workers, up from 10% in 1996). A growing number of covered workers face a $20 copayment (27%, up from 1% in 1996). The percentage of covered workers paying $5 per visit decreased from 24% in 1996 to 5% in 2005.
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*Estimate is statistically different from the previous year shown at p<.05.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/26/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 4.9: Percentage of Covered Workers with Various Annual Outpatient and Inpatient Mental Health Maximums, 2004
Although most covered workers had inpatient and outpatient mental health benefits in 2004 (98%, see Exhibit 4.1), they typically faced limits on the number of outpatient mental health visits (81%) and the number of inpatient mental health days (79%) covered by their health plans. For outpatient visits, the limit was most typically 30 visits or fewer (63%), with 32% of covered workers having maximums of 20 or fewer visits. The limit on inpatient days was most typically 21-30 days (45%), with 14% of covered workers having maximums of 20 or fewer days.
Percentage of Covered Workers With Various Annual Outpatient Mental Health Visit Maximums, by Plan Type, 2004*
Conventional
HMO
PPO
POS
All Plans
20 Visits or Fewer
25%
48%
26%
32%
32%
21 to 30 Visits
26
26
34
28
31
31 to 50 Visits
5
6
11
8
9
More than 50 Visits
9
5
9
14
9
Unlimited Visits
35
15
19
17
19
Percentage of Covered Workers With Various Annual Inpatient Mental Health Day Maximums, by Plan Type, 2004*
Conventional
HMO
PPO
POS
All Plans
10 Days or Fewer
5%
4%
7%
5%
6%
11 to 20 Days
8
9
8
6
8
21 to 30 Days
44
47
45
46
45
31 or More Days
17
21
18
26
21
Unlimited
27
18
22
17
21
Notes: *Tests found no statistically different distributions from All Plans at p<.05.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 02/02/05
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 4.10: Distribution of Covered Workers Facing Different Cost-Sharing Formulas for Prescription Drug Benefits, 2000-2005
The use of three-tier cost-sharing arrangements for prescription drug coverage, where a worker faces one copayment for generic drugs, a higher copayment for preferred drugs (such as brand name drugs with no generic substitutes), and an even higher copayment (or sometimes coinsurance) for nonpreferred drugs (such as brand name drugs with generic substitutes), has become the most prevalent prescription drug cost-sharing formula in the recent years, rising from 27% of covered workers in 2000 to 70% in 2005. Two-tier arrangements and payment regardless of drug type both declined from 2004 to 2005 (the former from 20% to 15%, the latter from 10% to 8%). Four percent of firms reported using a four-tier arrangement in 2005, a new type of cost-sharing arrangements that typically build additional layers of higher copayments or coinsurance for specifically identified types of drugs, such as lifestyle drugs or biologics.
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*Distribution is statistically different from the previous year shown at p<.05. No statistical tests were conducted between 2003 and 2004 due to the addition of a new category, four-tier.
Note: Four-tier drug copay information was not obtained prior to 2004.
Generic drugs: A drug product that is no longer covered by patent protection and thus may be produced and/or distributed by multiple drug companies.
Preferred drugs: Drugs included on a formulary or preferred drug list; for example, a brand name drug without a generic substitute.
Nonpreferred drugs: Drugs not included on a formulary or preferred drug list; for example, a brand name drug with a generic substitute. Nonpreferred drugs: Generally, a drug product that is covered by a patent and is thus manufactured and sold exclusively by one firm. Cross-licensing occasionally occurs, allowing an additional firm to market the drug. After the patent expires, multiple firms can produce the drug product, but the brand name or trademark remains with the original manufacturer’s product.
Four-tier drugs: New types of cost sharing arrangements that typically build additional layers of higher copayments or coinsurance for specifically identified types of drugs, such as lifestyle drugs or biologics.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/26/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 4.11: Average Copayments for Generic Drugs, Preferred Drugs, Nonpreferred Drugs, and Four-Tier Drugs, 2000-2005
Between 2000 and 2005, the average copayment for preferred drugs in three-tier formularies rose 69% (from $13 to $22). The average copayment for nonpreferred drugs rose 106% (from $17 to $35). Four-tier drug copayments averaged $74 in 2005.
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*Estimate is statistically different from previous year at p<.05.
‡The average copayments for generic, preferred, and nonpreferred drugs are calculated by combining the weighted average copayments for those types of drugs among firms with a single copayment amount or a multi-tier cost sharing structure. Because in some cases drugs covered as fourth-tier drugs may be covered by health plans through other portions of their coverage (e.g., as part of major medical coverage), the average copayment for four-tier drugs is calculated using information from only those plans that have a four-tier copayment amount.
^Four-tier drug copay information was not obtained prior to 2004.
Generic drugs: A drug product that is no longer covered by patent protection and thus may be produced and/or distributed by multiple drug companies. Average copayments for generic drugs are $7.42 in 2000, $8.05 in 2001, $8.74 in 2002, $9.07 in 2003, $10.46 in 2004, and $10.33 in 2005.
Preferred drugs: Drugs included on a formulary or preferred drug list; for example, a brand name drug without a generic substitute.
Nonpreferred drugs: Generally, a drug product that is covered by a patent and is thus manufactured and sold exclusively by one firm. Cross-licensing occasionally occurs, allowing an additional firm to market the drug. After the patent expires, multiple firms can produce the drug product, but the brand name or trademark remains with the original manufacturer’s product.
Four-tier drugs: New-types of cost sharing arrangements that typically build additional layers of higher copayments or coinsurance for specifically identified types of drugs, such as lifestyle drugs or biologics.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/26/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 4.12: Number of States with Mandated Benefits and Consumer Protection Laws, 2004
Over the last few years, an increasing number of states have enacted mandated benefits and consumer protection laws, and the scope of these laws has expanded. One of the most significant protections is mandated external review of health plan decisions, required by 45 states (including the District of Columbia) in 2004. By contrast, only a handful of states (10) have laws specifying circumstances under which health plans can be sued by patients (health plan liability).
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Notes: Number of states (including the District of Columbia) with cancer screening by type of cancer: breast (50), cervical (27), prostate (26), colorectal (19), ovarian (3). Mental health parity requires insurers to provide benefits for mental illnesses that are equal to the benefits provided for physical illnesses, including copayments, deductibles, inpatient days, outpatient visits, and annual and lifetime benefits. *Includes the District of Columbia. ‡These requirements apply to managed care organizations only.
Source: Kaiser Family Foundation, State Health Facts, at www.statehealthfacts.kff.org, using data as of December 31, 2004 from the Health Policy Tracking Service, a service of Thomson West.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 02/08/06
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number: 7031
