The Kaiser Family Foundation and the Health Research and Educational Trust (Kaiser/HRET) conduct this annual survey of employer-sponsored health benefits. For many years the international consulting and accounting firm KPMG Consulting, Inc. (now Bearing Point) 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, a nonprofit research organization, is an affiliate of the American Hospital Association. The Kaiser Family Foundation designs, analyzes, and conducts this survey in partnership with HRET, and also pays for the cost of the survey. HRET subcontracts with researchers at National Opinion Research Center (NORC) at the University of Chicago, who work with Foundation and HRET researchers in conducting the study. 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 using the Kaiser/HRET survey instrument. From January to May 2007 NR completed interviews with 1,997 firms.
As in past years, Kaiser/HRET asked each participating company as many as 400 questions about its largest health maintenance organization (HMO), preferred provider organization (PPO), point-of-service (POS) plan, and high-deductible health plan with a savings option (HDHP/SO).1 We continue to ask firms whether or not they offer a conventional health plan and, if so, how much their premium for conventional coverage increased in the last year. However, we do not ask respondents additional questions about the attributes of the conventional plans they offer. Because we have limited information about conventional health plans, we must make adjustments in calculating all plan averages or distributions. In cases where a firm offers only conventional health plans, no information from that respondent is included in all plan averages. The exception is for the rate of premium growth and whether or not the plan is self-funded, for which we have information. If a firm offers a conventional health plan and at least one other plan type, for categorical variables we assign the values from the health plan with the largest enrollment (other than the conventional plan) to the workers in the conventional plan. In the case of continuous variables, covered workers in conventional plans are assigned the weighted average value of the other plan types in the firm.
Last year Kaiser/HRET began asking employers if they had a health plan that was an exclusive provider organization (EPO), – this question is asked again this year. We treat EPOs and HMOs together as one plan type and report the information under the banner of “HMO”; if an employer sponsors both an HMO and an EPO, they are asked about the attributes of the plan with the larger enrollment.
As in past years, this year’s survey included questions on the cost of health insurance, offer rates, coverage, eligibility, enrollment patterns, premiums,2 employee cost sharing, covered benefits, prescription drug benefits, retiree health benefits, utilization management, and employer opinions. 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 non-preferred provider. Family coverage is defined as health coverage for a family of four.
Each year, the survey asks two different questions regarding family premiums. One asks each firm, for each plan type it has, the percentage increase or decrease in premiums in the past year. The responses are used to estimate the average annual premium increase (for example, 6.1% for 2007). The other question asks for the premium dollar amount for each plan type the firm offers, and the responses to this question are used to estimate average annual premiums (for example, $12,106 for family coverage in 2007). The percentage increases in premiums from year to year and cumulative percentage increases are calculated from the estimated average annual percentage premium increases (i.e., reflecting responses to the first question). We use these estimates because respondents change from year to year, and the plan with the largest enrollment may have changed or the firm may not have offered the plan type in the prior year. As a result, the two measures are not necessarily consistent. Calculating the percentage increase from the average premiums also results in larger standard errors than the standard errors associated with the percentage increase calculated from the percentage increase question.
Each year, the survey asks firms for the percentage of their employees that earn less than a specified amount. This year, we changed the income threshold from $20,000 per year, as it has been the last several years, to $21,000 per year. This threshold is based on the 25th percentile of workers’ earnings as reported by the Bureau of Labor Statistics using data from the National Compensation Survey (2005), the most current data available at the time of the survey design. The threshold is then adjusted to account for the change in workers’ earnings from 2005 to 2006.
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