Together, Medicare and Medicaid provide health coverage to about 90 million Americans. To help explain the two programs, the Kaiser Family Foundation issued a new primer on the Medicare program and an updated version of its primer on the Medicaid program. Prepared by Kaiser staff, the primers provide an overview of the programs, who they serve, how the programs work and how they are financed.

Medicare: A Primer

Medicaid: A Primer

A study in the March/April 2007 issue of Health Affairs analyzes the impact of state tort reforms on physician malpractice claims. The study finds that the tort law changes have had a measurable but limited impact on physician malpractice claims, depending on the type and strength of the tort reform.

Commissioned by Kaiser, the study was authored by Teresa M. Waters of the University of Tennessee, and Peter P. Budetti of the University of Oklahoma, and Gary Claxton and Janet P. Lundy of the Kaiser Family Foundation.

Health Affairs Article: “Impact of State Tort Reforms on Physician Malpractice Payments” (Free access)

Abstract

Full Text

Help us spread the word about the “Change the Course of HIV Challenge” by hosting an online Public Service Announcement on your website.  Together with mtvU, MTV’s 24-hour college network, we have launched this competition for college students to develop a game that informs other young people about HIV/AIDS. 

Gamers, activists or anyone with a great idea is invited to submit a viral video game concept that will help inform other young people about HIV/AIDS in the U.S. and promote personal action in response.

Featuring an ad on your site will help raise awareness about this exciting new initiative.

Download one of the animated or flat .gifs below for your website and link it to: http://www.mtvu.com/on_mtvu/activism/hivchallenge/game/.

Please email emp@kff.org to let us know that you’re displaying an ad on your website.

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Considerable attention has been paid in recent years to the rapid growth of health insurance premiums and its impact on coverage affordability. Premium growth has far outpaced growth in workers earnings, which means that workers have to spend more of their income each year on health care to maintain current coverage levels.

Less attention has been given to the disconnection between the growing cost of health insurance and eligibility for health care subsidies in public programs. It is clear that lower income people cannot afford health insurance without some assistance, and various federal and state programs exist to provide or subsidize health insurance for people with limited means. In many cases eligibility for subsidized coverage is based on the relationship of a person’s or family’s income to the federal poverty level (FPL). For example, children in families with incomes below 200 percent of FPL are generally eligible for subsidized coverage through state Medicaid or SCHIP programs. Another example is a new program in Massachusetts, which requires people to purchase health insurance. The program provides free coverage to adults with family incomes under poverty and subsidizes a portion of premiums (a declining share as income rises) for adults with family incomes between 100 and 300 percent of FPL.¹ People in families with incomes of more than 300 percent of FPL generally are expected to pay the full cost of health insurance.

Ideally, the eligibility and subsidy structure in a public program should relate the amount of assistance that a person receives to their ability to afford the good being subsidized (in this case, health insurance). When policymakers in Massachusetts, for example, provide partial premium subsidies to families with incomes at 200 percent of FPL and no subsidies for families with incomes over 300 percent of FPL, they are saying, at least implicitly, that the families at 200 percent of FPL generally have enough income to afford to pay a share of the premium and that the families at 300 percent of FPL generally can afford health insurance without financial assistance. This subsidy arrangement tells us how policymakers view the affordability of health insurance for people with different incomes. Unfortunately, if the cost of health insurance rises faster than the eligibility thresholds for subsidies over a sustained period, the subsidy arrangement may not maintain a consistent level of financial protection.

Figure 1 shows the cumulative increases in private health insurance premiums and the FPL over a nine-year period (1996 to 2004).²

Figure 1Cumulative Change in Single and Family HealthInsurance Premiums and Federal Poverty Level, 1996 – 2004

Private premiums for family coverage doubled and premiums for single coverage increased by 86% during the period, while the FPL increased only about 20%. This dynamic matters very little for people who receive full subsidies for health insurance, because the amount that they have to pay does not change. For a family whose income is just over the eligibility threshold, however, the share of family income required to purchase health insurance would rise over the period by about 55% for single coverage and by about 68% for family coverage.³ Take as an example a single person with income at 300 percent of FPL, which was about $23,220 in 1996 and about $27,930 in 2004. A health insurance plan that cost the person $1,200 in 1996 would consume just 5.2% of income. With premium inflation, that plan would cost over $2,230 in 2004, or about 8.0% of income for a person with income at 300 percent of FPL. This share of income going to health insurance would continue to rise over time as long as health insurance premiums rise faster than FPL.⁴

This dynamic has important implications for policymakers. As long as health insurance premiums continue to rise more quickly than the costs of other goods and services,⁵ eligibility thresholds tied to FPL (or a multiple of FPL) will not maintain a consistent level of financial protection against rising health insurance costs. If policymakers want to protect low and moderate income families from spending too high a percentage of their income on health insurance, they will need to consider subsidy structures that reach an expanding income range over time. Options might include increasing income thresholds for subsidies at the same rate as the cost of health insurance or making periodic adjustments in thresholds to account for the rapid growth in health insurance premiums relative to incomes and other costs.

Notes:

1. Children in families with income up to 300% of FPL are covered through Medicaid.

2. Premium increases are the year-to-year change in average premiums for single and family coverage for employer-sponsored health insurance reported in the Medical Expenditure Panel Survey. Federal Poverty Level increases are the year-to-year change in the Federal Poverty Level as measured by the U.S. Department of Health and Human Services Poverty Guidelines. Seehttp://aspe.hhs.gov/poverty/figures-fed-reg.shtml. The growth in FPL is based on the change in federal poverty guideline for a single person. Because of rounding, the annual changes for a family of four would differ slightly, with the cumulative growth between 1996 and 2004 being 20.8% rather than 20.3%.

3. The calculation for a person with a partial premium subsidy depends on how the subsidy program is structured. If, for example, a program is designed to subsidize a percentage of the premium (e.g., 25% subsidy for people with incomes of 275% of FPL), then a person at that level of poverty will have to pay a greater share of their income each year toward the 75% of the premium that they are required to pay. If, however, the premium subsidy is designed as a percentage of income that the person must pay (e.g., no more than 4% of income at 250% of FPL), then the program bears the increasing cost of insurance relative to FPL.)

4. A person could reduce the share of income going to health insurance by buying a health plan with less coverage. This example assumes the average rate of increase for employer-sponsored single coverage over the period, which implicitly includes any coverage changes that occurred on average in the market.

5. The HHS federal poverty guidelines are a simplified version of the federal poverty threshold determined by the U.S. Census Bureau. Annual increases in the Census poverty thresholds are based on increases in general inflation. See http://www.census.gov/hhes/www/poverty/povdef.html.

KNOW HIV/AIDS Research

Survey of African Americans About HIV/AIDS Media Campaigns

A new national survey of African Americans reviews aspects of the Rap It Up and KNOW HIV/AIDS campaigns, which are ongoing HIV/AIDS public education partnerships conducted by the Kaiser Family Foundation with Black Entertainment Television (BET) and Viacom, Inc., respectively. The survey seeks to look at the reach and impact of the campaigns. Rap It Up is the single largest public education effort on HIV/AIDS and related issues directed toward the African American community.

Assessing Public Education Programming on HIV/AIDS: A National Survey of African Americans

Survey Toplines

The fact sheet summarizes the health coverage of low-income parents, including recent trends, and discusses the current policy challenges related to expanding care for this population.

Fact Sheet (.pdf)

The Kaiser Family Foundation’s updated version of Key Facts: Race, Ethnicity and Medical Care, 2007 Update, serves as a quick reference source on health disparities, presenting the best available data and analysis.

This report includes data on the uninsured and access to care by race/ethnicity as well as information about the disproportionate effect that specific conditions such as diabetes, HIV/AIDS, and asthma have on racial and ethnic minority populations in the U.S. New in the 2007 Key Facts are demographic data on the racial/ethnic minority population in each state and the U.S. territories. This edition of Key Facts also includes data from the National Healthcare Disparities Report, examining changes in health care disparities over time.

This brief analyzes health coverage data and determines that 25% of the nation’s uninsured population is eligible for either Medicaid or SCHIP. The brief goes on to describe the characteristics of the population.

Issue Brief (.pdf)

How to Link to the Children’s Health Insurance Timeline

The Kaiser Family Foundation encourages non-profit organizations, government agencies, academic institutions, and other organizations to link to its online information. To link to the timeline, please use the following graphic, title and url.

Title: Children’s Health Insurance Timeline URL: http://www.kff.org/childrenstimeline/ Graphic:

(right click on the graphic and select “Save Picture As” to save it to your computer)

Thank you for your interest. Please let us know when you have posted the link. Email kcmu@kff.org when the link is live or if you have any questions.

One of the many reasons an individual may be uninsured is that she or he decides an employer’s offer of health insurance is too expensive. Several studies have noted the likelihood that a worker will decline an employer’s offer of health insurance increases with the amount he or she is required to contribute. Alternatively, employees may obtain coverage through a spouse, opt for publicly provided coverage if eligible, or decide to do without coverage entirely. This issue brief looks at the connection between premiums and the percent of workers who enroll in employer plans using the two most recent years of the Kaiser/HRET Employer Health Benefits Survey (EHBS). Several of these analyses suggest that the required worker share of the premium can be an obstacle to coverage that raises concerns about the affordability of private health coverage.

The rapid rise in health insurance premiums in the last six years has focused public attention on the cost of health insurance in the United States. Annual premiums for employer-sponsored health insurance for 2006 average $4,242 for single coverage and $11,480 for family coverage.¹  Employees contribute an average of $627 annually for single coverage and $2,973 annually for family coverage, with significant variation around these averages. It is reasonable to assume that the likelihood that a worker will accept (or “take up”) an offer of insurance at work is related to the amount that the worker must contribute toward the cost of coverage. For some workers, a high contribution requirement may be more than they are willing to pay for insurance; for others, a high contribution requirement may make other insurance options, such as coverage offered by a spouse’s employer, a more attractive option. This paper examines how the take-up rate for workers within firms varies with the level of premium contributions in those firms.²

Over 155 million nonelderly individuals obtain health insurance coverage through their own or a family member’s employer.³ The increasing cost of insurance has implications for who and how many individuals obtain insurance coverage through this channel. Higher premium costs have contributed to a decline in the number of firms offering insurance as well as encouraged firms to hire part-time or contract workers or to raise eligibility requirements. Indeed, from 2000 to 2006, the number of firms offering health insurance benefits fell from 69 to 61 percent.⁴ Faced with these costs, many firms also increase worker cost sharing for premiums, which can put stress on family budgets – particularly for low-income workers. The affordability of premium payments offers a partial explanation for the 5.8 percent fall in the take-up rate of employer-sponsored insurance for low-income workers from 1999 to 2002.⁵  By comparison, over this same period, the decline in take-up for individuals above 200 percent of poverty was 1.5 percent.

This analysis is based on pooled data from the 2005 and 2006 Kaiser/HRET Employer Health Benefits Surveys (EHBS). The EHBS is an annual survey of public and private firms (excluding the federal government) with three or more employees.⁶  We limit the sample to workers in firms that offer health benefits.  Because we are interested in the decisions of workers choosing to enroll in plans offered by their employers, we weight the data by number of workers in each firm offering coverage.

The EHBS provides information on the number of workers in each responding firm that is eligible for coverage and the number of eligible workers that become covered.  The ratio of those two numbers is the take-up rate for the firm.  We look at how each firm’s overall take-up rate is related to the contribution that workers must make for single and for family coverage.  We also expand the analysis to examine differences by industry, firm size, and a crude measure of the wages of workers.

The analysis here examines how the single contribution and the family contribution each relate to the overall take-up rate for each firm.  We consider the single contribution and the family contribution as alternative measures of the cost of insurance for workers in a firm.  Unfortunately, the EHBS does not provide information on the family status of eligible workers in firms,⁷ so we cannot calculate the percentage of workers with families who were eligible to take up family coverage but who instead elected single coverage.  Similarly, the EHBS cannot tell us whether eligible workers who do not take up coverage have families or not.  We cannot, therefore, separately examine the impact of contribution levels for single coverage on the take-up of single coverage and the impact of contribution levels for family coverage on the take-up of family coverage.  We also note that the findings here look at the take-up of insurance at the firm level; we cannot say from these data whether workers who do not take up are uninsured or have coverage elsewhere, such as through a spouse.

Findings

Take-up Rates by Contribution Levels

Figure 1 shows the mean take-up rate for health insurance in firms by the percentage contribution that workers must make toward single coverage.  The contribution categories, with the exception of the first category, represent ranges of premium contributions and are calculated so that there are approximately the same number of workers in each category.  The first category contains workers with no (zero) premium share.⁸ The figure shows that the take-up rate generally falls as the worker premium contribution increases, with a difference in the take-up rates of just over 20 percentage points between the first and last categories.  The take-up percentages beginning in the fourth contribution category (11.5 to 15.2 percent) through the last category (37.0 percent or more) are each statistically different from the 89 percent take-up percentage for the first category.

Figure 1Firm Health Insurance Take-Up Rate by Percentage Contribution For Single Coverage

Figure 2, which shows the mean take-up rate for health insurance in firms by the percentage contribution that workers must make for family coverage, presents a similar pattern as that of Figure 1. As with Figure 1, take-up generally falls as the worker premium contribution increases, with a difference between the first and last categories of 13 percentage points. The take-up percentages beginning in the third contribution category (11.7 to 17.4 percent) through the last category (56.3 percent or more) are each statistically different from the 90 percent take-up rate in the first category.

Figure 2Firm Health Insurance Take-Up Rate by Percentage Contribution For Family Coverage

As expected, take-up rates are highest when workers must contribute only a small share of the total premium, and fall as the share of the premium that workers must pay rises. Take-up falls more when the single coverage contribution rate is used to measure worker costs than when the family contribution rate is used.  It is possible that workers with families facing high contribution levels default to single coverage rather than forgoing coverage at their firm altogether.  This would make take-up rates appear less sensitive to family premium contributions than single, since it is the latter which may influence the decision not to insure for both workers with families who find family coverage unaffordable as well as single individuals.  A somewhat surprising finding is that 11 percent of workers do not take up coverage even when single coverage is available to them for no (zero) contribution.  These workers may have more attractive insurance options from another source, such as coverage available through a spouse, or may be able to get other benefits from their employer if they forgo health insurance.⁹

Take-up Rates by Contribution Levels and Firm Characteristics

This section looks at how the basic findings on take-up rate and contribution levels vary with firm characteristics including employer size, industry, and concentration of low-wage workers.  Because the sample is being divided by firm characteristics, the number of contribution categories is reduced to five in order to assure that we have a sufficient number of observations at each point of interest.¹⁰ We focus primarily on the contribution for single coverage rather than family coverage because the single coverage level appeared to have a larger effect than the family level in Figures 1 and 2.  Similar analyses looking at the contribution level for family coverage are shown in Appendix A.

Firm Size

Figure 3 shows take-up rate information from Figure 1 (i.e., take-up rate by worker contribution for single coverage) broken out for small and large firms.  Small firms are firms with three to 199 workers, and large firms are firms with 200 or more workers.  Take-up rates fall as contribution percentage rises for workers in both small and large firms, with small firms having significantly lower take-up than large firms in three of the five contribution categories.  The lower take-up in small firms may reflect the relatively lower wages in small firms, or may indicate that, within these coverage categories, workers in small firms find the single coverage offered to them somewhat less attractive, relative to alternatives, than workers in larger firms.  We note that the same pattern does not hold when categories for contributions for family coverage are considered (Figure 6 in Appendix A), where we see no significant differences in take-up by firm size.

Figure 3Firm Take-Up Rate by Percentage Contribution For Single Coverage and Firm Size

Concentration of Low Wage Workers

The EHBS asks firms to report the percentage of full-time workers who are paid less than $20,000 per year, or about $10 per hour.  We divided firms into two groups:  “lower wage” firms, in which more than 35 percent of workers earn $20,000 or less, and “higher wage” firms, where 35 percent or fewer workers earn $20,000 or less.  Figure 4 shows the take-up rate information from Figure 1 (i.e., take-up rate by worker contribution for single coverage) divided between lower-wage and higher-wage firms.  For both higher-wage and lower-wage firms, take-up is higher in the lowest contribution categories and is lower in the categories where workers pay large premium shares.  Within contribution categories, take-up is significantly higher in higher-wage firms than in lower-wage firms in four of the five categories, likely reflecting the difficulty that lower wage workers have paying premium shares.  Other explanations may be that lower wage workers tend to have less interest in purchasing health care or that they are more likely to be eligible for public coverage.  The pattern in Figure 4 is similar when contribution categories for family coverage are considered (Figure 7 in Appendix A).

Figure 4Firm Take-Up Rate by Percentage Contribution For Single Coverage and Wage

Industry

The EHBS also classifies firms by industry category.  We selected the four industry groups that had sufficient observations for analysis.  Two industry groups had relatively high overall take-up rates (Manufacturing and Transportation/Utilities/Communications) and two industries with relatively low overall take-up rates (Retail and Service) based on prior EHBS surveys.  Even with a sample that combines two years, however, some industries do not have a reasonable number of observations in each of the contribution categories; for example, state and local government historically has had a high take-up rate in the EHBS surveys but does not have very many observations in the higher contribution categories.

Figure 5Firm Take-Up Rate by Percent Contribution For Single Coverage and Industry

Figure 5 shows mean take-up information from Figure 1 (i.e., take-up rate by worker contribution for single coverage) broken out for the selected industries.  Take-up rates generally fall within industries as the worker contribution percentage rises, but there are exceptions for the low contribution categories within Manufacturing and Retail.¹¹ Workers in the Transportation/Utilities/ Communications industry grouping have significantly higher take-up than workers in the Service industry in four of the contribution categories and significantly higher take-up than workers in the Retail industry in three of the contribution categories.  The pattern for Manufacturing is a little different: the take-up among workers in Manufacturing firms is not statistically different from workers in Retail or Service firms in the first two (lower) contribution categories, but is higher for the next three categories where workers pay higher shares of the premium.  Consistent with our previously discussed findings, take-up is lower in the high-contribution categories for workers in the industries where we would expect to find lower wages (Retail and Service) than in the higher-wage industries (Manufacturing and Transportation/Utilities/Communications).

Conclusion

The negative relationship between premium shares and take-up rates in nearly all of the above figures is evident.  They show how the size of the premium workers are asked to pay for health insurance is relevant to health insurance enrollment decisions, even though some workers refuse coverage when no contribution is required on their part.  While alternative coverage options are unknown for these groups of workers, enrollment patterns also seem to differ by wage level and variables associated with wages, such as firm size and industry.  This pattern suggests that the worker share of the premium is a factor when considering the affordability of health insurance options.  For some low-income workers, higher premium shares and lack of alternative coverage options may increase the likelihood that they become uninsured.

Appendix

This appendix contains three figures that show the variation in mean take-up rate by percentage worker contribution for family coverage, adjusted for the following firm characteristics: firm size, concentration of lower-wage workers, and industry.  These charts correspond to Figures 3, 4, and 5, but use categories based on worker contributions for family coverage rather than for single coverage.

Figure 6 shows that take-up falls as contribution rates for family coverage rise in both small and large firms.  There are no significant differences between small and large firms for any of the contribution categories.  This differs from the pattern shown Figure 3 (based on contributions for single coverage), where small firms had significantly lower take-up rates in three of five contribution categories.

Figure 6Firm Take-Up Rate by Percentage Contribution For Family Coverage and Firm Size

Figure 7 shows that take-up falls as contribution rates for family coverage rise in both lower-wage and higher-wage firms.  The take-up rate is significantly lower for lower-wage firms than for higher-wage firms in every coverage category.  This is similar to the pattern shown in Figure 4 (based on contributions for single coverage), where the difference between lower-wage and higher wage firms was significant in four of the five contribution categories.

Figure 7Firm Take-Up Rate by Percentage Contribution For Family Coverage and Income of Employees

Figure 8 shows the relationship between take-up and contribution rates for family coverage broken out by four industry groupings.  The general direction across industries is downward sloping, but the sample sizes are small for several of the industries (there are very few Retail firms in the sample with low contribution rates for family coverage and few firms in the Transportation/Utilities/Communications industry grouping with large contribution rates for family coverage), so very few of the differences between industries are statistically significant.

Figure 8Firm Take-Up Rate by Percentage Contribution For Family Coverage and Industry

Notes:

1. Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits 2006 Annual Survey.  Available online at:  http://www.kff.org/insurance/7527/.  Family premiums are for a family of four.

2. The take-up rate for health insurance is defined by the number of workers enrolled in a health insurance plan in a given firm divided by the number of workers offered (i.e., eligible for) at least one plan.  For a fuller discussion of the effect of premium prices on insurance coverage, see, e.g.: Gilmer T., Kronick R., “It’s the premiums, stupid: Projections of the uninsured through 2013.” [Web Exclusive] Health Affairs, April 5, 2005.  Available online at: http://www.healthaffairs.org.

3. Kaiser Family Foundation, Kaiser Commission of Medicaid and the Uninsured, Health Insurance Coverage in America, 2004 Data Update, November 2005. Available online at:http://www.kff.org/uninsured/7415.cfm.

4. Most of this decline was due to small firm decisions not to offer insurance, and thus the cumulative number of workers without an offer has not changed as dramatically.  Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits 2006 Annual Survey.  Available online at: http://www.kff.org/insurance/7527/.

5. Blumberg, Linda J. and John Holahan, “Work, Offers, and Take-Up: Decomposing the Source of Recent Declines in Employer-Sponsored Insurance,” Urban Institute: Health Policy Online, No. 9, May 17, 2004.  Accessed on December 14, 2006 at: http://www.urban.org/url.cfm?ID=1000645.  For a more recent exposition, see:  Clemans-Cope, Lisa, Bowen Garrett and Catherine Hoffman, “Changes in Employees’ Health Insurance Coverage, 2001-2005,” Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured, October 2006.  Accessed on December 14, 2006 at: http://www.kff.org/uninsured/7570.cfm.

6. More information about the 2006 and 2005 EHBS can be found online at:http://www.kff.org/insurance/7527/ and http://www.kff.org/insurance/7315.cfm (respectively).

7. The survey asks employers how many workers are eligible for health insurance, but does not ask what percentage are eligible for single coverage or family coverage.

8. The first category represents about 44 million workers, and each of the other categories has between 18.3 and 18.8 million workers, based on two years of pooled data.

9. Kaiser Family Foundation and the Health Research and Educational Trust, Employer Health Benefits, 2004 Annual Survey.  Available online at: http://www.kff.org/insurance/7148.cfm.

10. Similar to the approach for Figure 1, the first contribution category contains workers who face no (zero) contribution for single coverage.  The remaining categories are calculated to contain the same number of (weighted) workers.

11. There are fairly large confidence intervals (95%) around the point estimates for Manufacturing (70%-91%) and Retail (74%-91%) compared to Transportation/Utilities/Communication (97%-100%) and Service (84%-89%).