-AND- 2002 Findings from the Kaiser/HRET and Kaiser/Hewitt Employer Surveys

-AND-

2002

Findings from the

Kaiser/HRET and

Kaiser/Hewitt Employer Surveys

California Employers Health Benefits Survey 2000

Employer Health Benefits, 2002

Overview

- Methods

- Health Insurance Costs

- Plan Choice and Enrollment

- Coverage and Benefits

- Retiree Coverage



Survey Methods

• Kaiser/HRET National Employer Health Benefits Survey – Telephone survey was conducted between January and May 2002 – 3,262 randomly selected public and private employers, ranging from

3 to 300,000 employees, representative of all regions and industries– 2,014 firms responded to the full survey– An additional 1,248 firms indicated whether or not they provide

health coverage

• Kaiser/Hewitt Retiree Health Survey– Online survey was conducted between July and September 2002 – 435 private employers with more than 1,000 employees responded

to the survey. Only firms offering retiree benefits were surveyed– The sample sample represents 36% of Fortune 100 companies and

28% of Fortune 500 companies, impacting 18.5 million employees and family members, and 5.4 million retirees and family members



14.0%

18.0%

12.7%

11.0%

8.3%

4.8%

0.8%

8.5%

12.0%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Health Insurance PremiumsWorkers EarningsOverall Inflation

1.6%3.4%

Increases in Health Insurance Premiums Compared to Other Indicators, 1988-2002

Source: KFF/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1989, 1990, 1993, 1996.

Note: Data on premium increases reflect the cost of health insurance premiums for a family of four.

Chart #1



13.2%12.4%12.4%

14.2% 13.7%12.3% 12.0% 12.0%

12.9%11.2%

0%

5%

10%

15%

20%

All Plans Conventional HMO PPO POS

Fully Insured Self-Insured

Premium/Cost Increases1, by Plan Type and Funding Arrangement, 2002*

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2002.

Chart #2

Note1: Fully insured plans measure premium increases, self-insured measures cost increases.

* Tests found no statistically different estimates between Fully Insured and Self-Insured within a plan type.



$8,173

$3,175

$8,037

$3,119

$7,541*

$2,764*

$8,479

$3,582*

$7,954

$3,060

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000

Single

Family

Single

Family

Single

Family

Single

Family

Single

Family

Conventional

HMO

PPO

POS

All Plans

Average Annual Premium Costs for Covered Workers, by Plan Type, 2002

* Estimate is statistically different from All Plans by coverage type.


Chart #3



Average Monthly Worker Contribution, 1988-2002

$8

$52$34

$124

$37

$122

$30

$150$138*

$28*

$174*

$38*

$0

$40

$80

$120

$160

$200

Single Coverage Family Coverage

1988

1993

1996

2000

2001

2002

* Estimate is statistically different from the previous year shown: 1996-2000, 2000-2001, 2001-2002.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996

11%

29%

20%

32%

21%

28% 27%

15%

27%

16%

27%

14% *

0%

5%

10%

15%

20%

25%

30%

35%

Single Coverage Family Coverage

1988

1993

1996

2000

2001

2002

Percentage of Premium Paid by Covered Workers, 1988-2002


Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996.

Chart #4



$663

$588

$529

$463$442

$367

$197

$89

$255$221$202

$173$170

$0

$100

$200

$300

$400

$500

$600

$700

1996 2000 2001 20021993

Average Monthly Premium Costs for Covered Workers, 1988-2002

* Estimate is statistically different from the previous year shown: 1988-1993, 1993-1996, 1996-2000, 2000-2001, 2001-2002.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2002. Data not available for 1993 Single Coverage. All data are nominal figures.

Chart #5

NA

1988

1998

// // // //

California Employers Health Benefits Survey 2000Employer Health Benefits 2002 Annual Survey

$174$138$122

$52

$489

$217

$391

$174

$320

$133$145

$81$8 $37 $28 $38

$0

$100

$200

$300

$400

$500

$600

$700

Family SingleFamilySingleFamilySingleFamilySingle

Employee Share Employer Share

Source: Health Insurance Association of America, 1988; KPMG, 1996; Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002. Family premiums are calculated for a family of four. All data are nominal figures.

Average Monthly Premium Costs for Covered Workers, 1988-2002

1988 1996 2000 2002

$89

$197$170

$442

$202

$529

$255

$663



Percentage of Covered Workers With a Choice of Conventional, HMO, PPO, or POS

Plans, 1988-2002

Chart #6

90%

68%

49%

71%76%

18%

46%

21%

59%

30%

45%

64%

52%

44% *

66% *

55% *

21% *

37% *

46% *

21%

53% *

16%

35%

0%

20%

40%

60%

80%

100%

Conventional HMO PPO POS

1988 1993 1996 2000 2001 2002

Source: KFF/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996.

10


^ Information was not obtained for POS plans in 1988.

^



73%

46%

27%

14%

9%

8%

7%

5%

11%

26%

28%

35%

38%

41%

48%

52%

7%

14%

24%

25%

22%

22%

18%26%

23%

29%

28%

27%

31%

21%

16%

0% 20% 40% 60% 80% 100%

1988

1993

1996

1998

1999

2000

2001

2002

Conventional HMO PPO POS

Health Plan Enrollments for Covered Workers,

by Plan Type, 1988-2002

* Distribution is statistically different from the previous year shown: 1996-1998, 1998-1999, 1999-2000, 2000-2001, 2001-2002.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996.

Chart #7

8

*

*

*

*

*


Employer Health Benefits, 2002Chart #8

12

Percentage of All Firms Offering Health Benefits, 1996-2002

59%65% 62%

67% *

55%

0%

20%

40%

60%

80%

1996 1998 2000 2001 2002

* Estimate is statistically different from the previous year shown: 1996-1998, 1998-2000, 2000-2001, 2001-2002.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998.



55%

74%

88%

96% 99%

0%

20%

40%

60%

80%

100%

3-9 Workers 10-24 Workers 25-49 Workers 50-199 Workers All Large Firms(200+Workers)

Note: Nationwide, there are about 6,290,665 firms with 3-199 workers and 85,448 with 200+ workers.

Percentage of Firms Offering Health Benefits,

by Firm Size, 2002


Chart #9

13



59%

99%

54%

100%

67%

99%

65%

99%

61%

99%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

All Small Firms (3-199 Workers) All Large Firms (200+Workers)

1996 1998 2000 2001 2002

Note: Nationwide, there are about 6,290,665 firms with 3-199 workers and 85,448 with 200+ workers.

Percentage of Firms Offering Health Benefits,

by Firm Size, 1996-2002

* Estimate is statistically different from the previous year shown: 1996-1998, 1998-2000, 2000-2001, 2001-2002.

^ Estimate is statistically different from the previous year shown: 2000-2002 at p<0.1.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998.

Chart #10

14

*^



Even When a Firm Offers Health Benefits, Not All Workers Are Covered, 2002

67%

79%

84%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Overall % of Workers Covered

% of Eligible Workers WhoAccept Coverage

In Firms That Offer Coverage, %of Employees Who are Eligible

41%

3%

49% 49% 48%

9%10% *6%

0%

10%

20%

30%

40%

50%

60%

Part-Time Workers Temporary Workers

1999 2000 2001 2002

Percentage of Workers Employed in Firms That Offer Part-Time and Temporary Workers Health Coverage, 1999-2002



Sources: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002.

Chart #11

15



Percentage of Covered Workers With Benefit Changes in 2002; Percent of

Covered Workers With Benefit Declines, 2000, 2001 and 2002

7%

17% *

11% *

0%

5%

10%

15%

20%

2000 2001 2002

Same as Last Year

73%

Less than Last Year

17%

More than Last Year

10%

Chart #12

17

* Estimate is statistically different from the previous year shown: 2000-2001, 2001-2002.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002.

Percentage of Covered Workers



Average Annual Deductibles for Single Coverage

in PPO and POS Plans, 1996 - 2002

Chart #13

$181

$313 $324

$79

$367

$84

$406

$488

$71

$361*

$187

$407*

$201

$276*

$59

$413

$0

$100

$200

$300

$400

$500

$600

PPO IN-PLAN PPO OUT-PLAN POS IN-PLAN POS OUT-PLAN

1996 2000 2001 2002


Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer Sponsored Health Benefits: 1996.

19



Percentage of Covered Workers Facing Different Cost Sharing Formulas for

Prescription Drugs, 2000, 2001, and 2002

* Distribution is statistically different from the previous year shown: 2000-2001, 2001-2002.


Three Tier = One payment for generic drugs, another for preferred drugs, and a third for non-preferred drugs

Two Tier = One payment for generic drugs and one for name brand

Payment the same regardless of type of drugs

Other/ Don’t know

Chart #14

57%

36%

29%

28%

37%

49%

13%

22%

19%

5%

2%

4%

0% 20% 40% 60% 80% 100%

2002

2001

2000

20

*

*



Average Copayments for Generic Drugs, Preferred Drugs, and Non-Preferred Drugs,

2000, 2001, and 2002

* Estimate is statistically different from the previous year shown by drug tier: 2000-2001, 2001-2002.


Chart #15

21

$8

$14$16

$9* $8*

$17* $15*

$26*

$20*

$0

$5

$10

$15

$20

$25

$30

2000 2001 2002

Generic Drugs Preferred Drugs Non-Preferred Drugs



Likelihood of Large (200 or more workers) Employers Making the Following Changes in the

Next Year, 2002

12%

35%

24%

33%

29%

11%

62%

22%

17%

7%

1% 3%

6%

1%

4% 92%

<1%

3%

4%

3%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Drop Coverage Entirely

Restrict Employee Eligibilityfor Coverage

Increase the AmountEmployees pay for

Deductibles

Increase the AmountEmployees pay forPrescription Drugs

Increase The AmountEmployees Pay

Very Likely Somewhat Likely Not Too Likely Not At All Likely Don't Know

3%


30

Chart #16

2%


Employer Health Benefits, 2002Chart #17

66%

46%

36%40% 40% 41%

37%34% 34%

5%

0%

10%

20%

30%

40%

50%

60%

70%

1988 1991 1993 1995 1998 1999 2000 2001 2002 2002

Percentage of Large Firms Offering Retiree Health Benefits, 1988-2002*

All Large Firms (200+Workers)All Small Firms

(3-199 Workers)

23

* Test found no significantly different estimates from the previous year shown: 1998-1999, 1999-2000, 2000-2001, 2001-2002.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1991, 1993, 1995, 1998.



Percentage of Large Employers Offering Retiree Health Benefits, by Type of Employee/Retiree

Note: Based on responses from private-sector firms with 1,000 or more employees that offer retiree health benefits.SOURCE: Kaiser/Hewitt 2002 Retiree Health Survey, December 2002.

Chart #18

Pre-65 Only9%

Both Pre-65

and 65+91%



Average Estimated Increase in Total Retiree Health Costs, by Firm Size, 2001 to 2002

16%17% 17%

15% 15%

0%

10%

20%

Total 1,000 - 4,999Employees

5,000 - 9,999Employees

10,000 - 19,999Employees

20,000 or moreEmployees

Note: Based on responses from private-sector firms with 1,000 or more employees that offer retiree health benefits. SOURCE: Kaiser/Hewitt 2002 Retiree Health Survey, December 2002.

Chart #19



Employer Caps on Contributions to Retiree Health Benefits for Age 65+ Retirees

No50%

Yes50%

15%

11%

57%

17%

0%

50%

100%

Have already hit the cap

Yes, anticipate hitting the cap within the next year

Yes, anticipate hitting the cap within the next 3 years

No, do not anticipate hitting the cap

Of large private employers with a cap, percentage that anticipate hitting the cap:


Chart #20



Average Monthly Premiums for New Retirees, 2002

$241

$401

$115

$212

$165

$328

$79

$153

$0 $200 $400 $600 $800

65+ Retirees

Pre-65 Retirees

65+ Retirees

Pre-65 Retirees

Employer Contribution to Premium Retiree Contribution to Premium

Note: Based on responses from private-sector firms with 1,000 or more employees that offer retiree health benefits. Weighted average premiums for full-time employees retiring on or after January 1, 2002, in plans with the largest number of enrolled retirees.SOURCE: Kaiser/Hewitt 2002 Retiree Health Survey, December 2002.

$194

$365

$406

$729

Retiree-Only

Retiree+Spouse

Chart #21



Changes in Retiree Health Coverage Within the Past Two Years


44%

29% 29%

20%18% 17% 16%

14% 13%

7%

0%

25%

50%

Increasedretiree

contributionsto premiums

Increasedphysiciancopays

Increaseddependent

contributionsto premiums

Increaseddeductibles

Increased out-of-pocket

limits

Added orimproved

benefits orcoverage

Increasedhospitalcopays

Providedaccess-onlyretiree pays

100%

Terminatecoverage for

future retirees

Shift todefined

contribution

Percentage of large private-sector employers that made the following changes:

Chart #22



Expected Changes in Retiree Health Coverage in the Next Three Years


64%

36% 34%43%

29% 26%

4%10% 6%

18%

39%37%

23%

35%32%

21%15%

16%

5%1%

7%

4%0%

50%

100%

Increaseretiree

contributions topremiums

Increasedeductibles

Increase physiciancopays

Increasedependent

contributions topremiums

Increase out-of-pocket limits

Increasehospitalcopays

Shift to definedcontribution

Provideaccess-only;retiree pays

100%


FUTUREretirees

Add or improvecoverage or

benefits


CURRENTretirees

Somewhat Likely

Very Likely

Percentage of large private-sector employers very/somewhat likely to make the following changes:

Chart #23

Documents

-AND- 2002 Findings from the Kaiser/HRET and Kaiser/Hewitt Employer Surveys