Most workers pay a portion of the premium cost for job-based coverage. In 2003, workers contributed on average $508 per year of the $3,383 annual cost of single coverage and $2,412 of the $9,068 cost of premiums for family coverage (Exhibit B). The percentage of premiums paid by workers is statistically unchanged over the last two years, at 16% for single coverage and 27% for family coverage. The contribution level today for single coverage remains substantially lower than the 21% share of the premium workers were paying in 1996, but the percentage of family premiums paid by employees has been consistent over time.

Exhibit B

In addition to their premium contributions, most workers also make additional payments when they use health care services. Nearly 4 in 5 workers face a deductible before health care expenses are covered under their plan. For PPOs, the most common plan type, in-network deductibles average $275 for single coverage, although deductibles for workers in small firms are considerably higher ($492). More than 2 in 5 workers face a separate deductible, copayment or coinsurance when they are admitted to a hospital, averaging about $200 per admission. Virtually all workers face a copayment or coinsurance for physician office visits, and the vast majority of workers are in a plan that has a tiered cost-sharing arrangement for prescription drugs.

The cost-sharing amounts paid by workers and their families have been increasing in recent years, and this trend continued in 2003. In PPO plans, the average deductible for services received from non-preferred providers is now $561, an increase of 20%. In HMOs, almost one-half of workers now face a copayment for outpatient physician services of $15 or more, up from 37% last year. Co-payments for prescription drugs continue to edge upward, averaging $9 for generic drugs, $19 for preferred drugs (brand name drugs with no generic substitutes), and $29 for non-preferred drugs (brand name drugs with generic substitutes). In addition, 15% of covered workers are in firms that increased out-of-pocket limits on cost-sharing in 2003, which means that these workers now pay more out-of-pocket before their health plan picks up all of their health care costs.

Coverage
For now, the weakened economy and escalating premiums do not appear to have caused a drop in the percentage of employers offering health insurance coverage from last year, but the percentage of firms offering coverage is lower than its pre-recession high in 2000. In 2003, 66% of all firms offered health coverage to their workers.

Employer decisions to offer health benefits continue to vary substantially by firm size: health benefits are offered by only 55% of the smallest companies (three to nine workers) while 76% of firms with 10 to 24 workers, and 84% of firms with 25 to 49 employees, and nearly all firms with 50 or more workers offer health benefits. Firms with many part-time workers are less likely to offer health benefits -- only 32% of firms with a high percentage (35% or more of the workforce) offer health coverage to their employees, compared with 70% of firms with fewer part-time workers. Most firms that employ union workers offer health benefits (91%).

Even when a firm offers health insurance, not all workers get covered. Some employees are not eligible to enroll as a result of waiting periods or minimum work-hour rules, and others choose not to enroll because they must pay a share of the premium or can get coverage through a spouse. In firms that offer coverage, 81% of workers are eligible for coverage, and 83% of those eligible elect to take it. Overall, among firms offering health benefits, 68% of workers have job-based health insurance coverage through their own employer.

Retiree Coverage
The debate over expanding Medicare to cover prescription drug benefits has brought retiree coverage to the forefront of policy considerations in 2003. While virtually all Medicare beneficiaries with retiree benefits have coverage for prescriptions, the availability of employer-provided retiree health benefits has fallen significantly. In 2003, 38% of all large firms (200 or more workers) offer retiree health coverage, virtually the same percentage as last year, but down from 66% in 1988.

Health Plan Enrollment and Choice
PPOs continue to be the most common plan in 2003, enrolling just over one-half of all employees with health coverage. HMO enrollment remained stable this year, enrolling 24% of covered workers. Conventional (or indemnity) insurance has all but disappeared, enrolling just 5% of employees.

Most workers with health coverage through their employers continue to have a choice of health plans, with just under one-half having a choice of three or more plans. PPO coverage is available to 77% of workers offered health benefits while the percentage of covered workers with an HMO option has declined in recent years, from 68% in 1993 to 47% this year. The percentage of workers with an option to enroll in a Point of Service (POS) plan or a conventional plan remains statistically unchanged in 2003, at 30% and 14% respectively. Small firms (3-199 workers) are much less likely to offer workers a choice of health plans than larger companies -- 69% of all small firms that provide coverage offer just one health plan compared to 20% of the largest businesses with 5,000 or more workers.

Health Benefits
Most workers experienced no change in benefits in 2003, although 13% of covered workers were in firms that reported benefit cuts in the last year and while 7% of covered workers were in firms that experienced benefit increases. In general, larger firms offer somewhat more generous benefits than smaller firms, and HMO and POS plans tend to offer the most comprehensive benefits packages. For example, HMOs are most likely to cover preventive care: 98% of adults in HMOs have coverage for physical examinations, compared to 92% of those with PPO coverage.

This year's survey also added questions about whether the firm offers dental benefits or a flexible spending account. Overall, 39% of firms offer dental benefits, with nearly all jumbo firms (5,000 or more workers) offering dental coverage (91%). Flexible spending accounts (FSAs)--which allow employees to set aside pre-tax dollars for health-related expenses--are also more available among the largest firms. In 2003, 83% of jumbo firms (5,000 or more workers) offered an FSA to their workers, compared to 69% of jumbo firms in 1999, while only 14% of small firms (with 3-199 workers) offer an FSA option.