The Kaiser Family Foundation and the Health Research and Educational Trust (KFF/HRET) conduct this survey of employer-sponsored health benefits. For many years the international consulting and accounting firm, Bearing Point (formerly known as KPMG), supported the study. In 1998, KPMG divested itself of its Compensation and Benefits Practice, and part of that divestiture included donating the annual survey of health benefits to HRET. HRET is a nonprofit research organization affiliated with the American Hospital Association. The Kaiser Family Foundation provides financial support and conducts this survey in partnership with HRET. The Foundation provides independent research and analysis on health policy issues, and is not affiliated in any way with the Kaiser Permanente health plan.
Kaiser/HRET asked each participating company as many as 400 questions about its largest conventional or indemnity, health maintenance organization (HMO), preferred provider organization (PPO) and point-of service (POS) health plans. This year’s survey included questions on the cost of health insurance, offer rates, coverage, eligibility, health plan choice, enrollment patterns, premiums, employee cost sharing, covered benefits, prescription drug benefits, retiree health benefits and general policy perceptions and activities. Throughout this report, we use the term ‘in-network’ to refer to services received from a preferred provider and ‘out-of-network’ to refer to services received from a nonpreferred provider. This year Kaiser/HRET survey added two additional sections to the questionnaire to collect information about high-deductible health plans (HDHP) that are offered along with a health reimbursement account (HRA) or are health savings account (HSA) qualified.1 Questions in these sections were asked of all firms offering these plan types, regardless of enrollment.
Kaiser/HRET retained National Research LLC (NR), a Washington, D.C.-based survey research firm, to conduct telephone interviews with human resource and benefits managers. NR conducted interviews from January to May 2005.
Response Rate
Kaiser/HRET drew its sample from a Dun & Bradstreet list of the nation’s private and public employers with three or more workers. To increase precision, Kaiser/HRET stratified the sample by industry and the number of workers in the firm. Kaiser/ HRET attempted to repeat interviews with prior years’ survey respondents (with at least ten employees) who also participated in 2003 and/or 2004. As a result, 1,122 firms in this year’s total sample of 2,013 firms participated in either the 2003 and 2004 surveys.2 The overall response rate was 48%. Exhibit M.1 shows the respondent status by region and state.
The vast majority of questions are asked only of firms that offer health benefits. A total of 1,832 responding firms indicated that they offered health benefits. The overall response rate of firms that offer health benefits was 51%.
From previous years’ experience, we have learned that firms that decline to participate in the study are more likely not to offer health benefits. Therefore, we asked one question to all firms in the study with which we made phone contact where the firm declined to participate. The question was, “Does your company offer or contribute to a health insurance program as a benefit to your employees?” A total of 2,995 firms responded to this question (including 2,013 who responded to the full survey and 982 who responded to this one question). Their responses are included in our estimates of the percentage of firms offering health benefits.3 The response rate for this question was 72%.
Firm Size Definitions, Rounding, and Imputation
Throughout the report, exhibits categorize data by industry, size of firm, and region. Firm size definitions are as follows: 3-199, All Small; and 200 or more workers, All Large. Occasionally, firm size categories will be broken into finer groups. The All Small group may be categorized by: 3-24 workers and 25-199 workers; or 3-9 workers, 10-24 workers, 25- 49 workers, and 50-199 workers. The All Large group may be categorized by: 200-999 workers, midsize; 1,000-4,999 workers, large; and 5,000 or more workers, jumbo. Exhibit M.2 shows detailed characteristics of the sample.
Exhibit M.3 displays the distribution of the nation’s firms, workers, and covered workers (of employees receiving coverage from their employer). Among the over three million firms nationally, approximately 60% are firms employing 3-9 workers. In contrast, jumbo firms, defined as firms with 5,000 or more workers, employ and cover about 35% of employees. Therefore, the smallest firms dominate any national statistics about what employers in general are doing. In contrast, jumbo employers are the most important employer group in calculating statistics regarding covered workers, since they employ the largest percentage of the nation’s workforce.
Some exhibits in Health Benefits 2005 do not sum up to totals due to rounding effects. Also due to rounding, numbers in the text may be slightly different from those in the exhibits. Throughout the report, while overall totals as well as totals for size and industry are statistically valid, some breakdowns may not be available due to limited sample sizes. In instances where the sample size is less than 30, exhibits include the notation NSD (Not Sufficient Data).
To control for item nonresponse bias, Kaiser/HRET has identified a set of variables as needing complete information from all surveyed firms. These variables include percentage changes in premium costs for family coverage, premium amounts, worker contribution amounts, self-insurance status, level of benefits, prescription drug cost sharing, copay and coinsurance amounts for prescription drugs, and firm workforce characteristics such as average income and part-time status. On average, less than five percent of these observations are imputed for any given variable. The imputed values are determined based on the distribution of the reported values within stratum defined by firm size and region.
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