How to Link to the Children’s Health Insurance Timeline

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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%).

Covering the Uninsured: Growing Need, Strained Resources

This summary of key findings provides an overview of studies examining trends in health coverage and federal spending on the health care safety net.

Fact Sheet (.pdf)

Kaiser Family Foundation: Public Health Information Campaigns

Kaiser develops and helps run large-scale public health information campaigns in the U.S. and around the world. These currently focus on HIV/AIDS, with an emphasis on reaching young people. Kaiser campaigns are based on a new model of public service programming pioneered by the Foundation —direct partnerships with major media companies and a comprehensive “multi-platform” communications strategy that goes far beyond traditional “PSAs.” Current partners in the U.S. include MTV, BET, Univision, Viacom/CBS, and Fox. Together, Kaiser’s campaigns reach tens of millions of people annually, and have won mutliple Emmy and Peabody awards in recent years.

The partnerships take a comprehensive communications approach, combining targeted public service messages with longer-form special programming, the integration of information and messaging into popular shows, extensive use of new media, and places to go for more information such as toll-free hotlines, information brochures, and websites. Kaiser establishes a contractual relationship with each of its media partners, and works collaboratively to provide both expert substantive guidance and management of production and operations. Kaiser has also helped launch broadcast media initiatives around the world in Russia and India, as well as coordinated first-of-their-kind regional initiatives in Africa and the Caribbean now involving more than 100 broadcasters working together in almost 50 countries.

Over the past two decades, Kaiser has also maintained a major program in South Africa with the aim of helping South Africans establish a more equitable national health system and build a successful democracy. Our program currently focuses on the devastating HIV epidemic in South Africa, and in 1999 Kaiser helped a consortium of leading South African public health organizations launch loveLife —a comprehensive, nationwide HIV prevention campaign focused on youth. The loveLife campaign combines service and outreach programs with a sustained multimedia HIV awareness and education campaign. The South African Broadcasting Corporation (SABC) is loveLife’s exclusive broadcast partner, providing substantial radio and television airtime as well as co-production funding.

Maintaining and expanding health coverage for children and parents will likely be in the forefront of health care policy debates in Washington and state capitols in 2007. With states generally in better financial shape since the fiscal crisis earlier in the decade, many have expressed interest in improving access to their Medicaid and State Children’s Health Insurance Programs (SCHIP). A new 50-state survey shows that one-third of states (17) increased access to health coverage in 2006, and no state cut income eligibility in Medicaid and SCHIP for the first time in four years.

Presentation Slides (.pdf)

Resuming the Path to Health Coverage for Children and Parents

Enrolling Uninsured Low-Income Children in Medicaid and SCHIP

State Children’s Health Insurance Program (SCHIP) at a Glance

Health Coverage For Low-Income Children

A Decade of SCHIP: Experience and Issues for Reauthorization

Citizenship Documentation Requirements in Medicaid

A fact sheet that provides an overview of how the State Children’s Health Insurance Program is administered and financed, who is eligible, what services are covered, and what the policy issues are for the program’s reauthorization.

Fact Sheet (.pdf)

Health Coverage For Low-Income Children

This fact sheet profiles the low-income children population, describes sources of health insurance coverage for the population, and summarizes trends and issues about their health coverage.

Fact Sheet (.pdf)

Kaiser Family Foundation: Health News and Information

Kaiser both provides health policy news and information — giving free access to health policy news to level the playing field for access to information — and assists working journalists to improve the coverage of health in the mainstream media.

Through Kaiser Health News (KHN), a nonprofit news organization dedicated to in-depth coverage of health care policy and politics, we provide high-quality, coverage of health policy issues and developments at the federal and state levels, in the health care marketplace and health care delivery system. KHN provides new opportunities for health care journalists to produce in-depth work and a new vehicle to distribute it through collaborations with major news organizations and on its Web site. KHN also provides daily summaries of news coverage of health from across the nation, original programming from Kaiser’s broadcast studio, and a broad range of perspectives from contributing writers and experts.

Through our other specialized Web sites, statehealthfacts.org and kaiserEDU.org, — as well as our online tools and gateways, we are a synthesizer and broker of data and information, providing timely and easy access to health news and facts worldwide.

We also have a long-standing commitment to helping journalists keep policymakers and the public well informed. Since 1993, when we began our principal fellowship program for journalists interested in U.S. health policy, hundreds of journalists have conducted in-depth reporting projects and participated in seminars, briefings, and site visits to gain extensive, firsthand knowledge about major health issues in the U.S. and internationally. In addition to our fellowship program for established reporters and editors in the U.S., we also run a large internship program for young minority journalists interested in specializing in health reporting. For journalists outside the U.S. reporting on HIV/AIDS, we organize briefings and frontline site visits, provide reporting materials, and sponsor travel/project awards for local journalists to do in-depth projects.

States are increasingly interested in the individual budget model for older Medicaid beneficiaries as a mechanism to improve responsiveness of benefits to beneficiaries’ needs and preferences and to increase their ability to remain outside or leave nursing homes. Beginning in January 2007, a new provision in the Deficit Reduction Act of 2005 (DRA) allows states to offer an individual budget option for an expanded range of home- and community-based services in their Medicaid state plans without having to obtain a waiver from the Centers for Medicare and Medicaid Services.

This report describes 10 operating individual budget model programs that serve older persons and identifies four areas of program design that are of particular importance to the success of the individual budget model. It also discusses how states have addressed these areas and draws key findings and implications in several areas such as level of funding, participant choice, support systems, and quality of care monitoring.

Report (.pdf)

This report provides a detailed account of how employer-sponsored insurance (ESI) coverage changed between 2001 and 2005, particularly among employees (i.e., workers who are not self-employed). The report begins with a short description of the major forces driving employer-sponsored insurance: changes in the workforce and the rising costs of health insurance over the four year period. Next, the report examines the decline in ESI among employees and the reasons determining whether or not an employee has ESI, specifically:

• whether the employer sponsors health benefits,
• if the employee is eligible for the benefits,
• whether the employee chooses to participate in the health insurance offering, and
• whether the employee participates in other ESI available through another family member’s job.

This report also identifies which groups were hardest hit by the decline in job-based coverage and how the reasons for the decline in ESI varied across different groups of employees.

You may also read an issue brief related to this report and view a policy briefing about this topic by clicking the links on the right.

Report (.pdf)