Table 4 HEALTH INSURANCE STATEMENT OF Tabl Table Table DALLAS e 9 5 10 SALISBURY • States financial plan futurechoices have effect disaster. attempted on (other employers Health than to HMOs) expand insurance will primarily health as an is the option, insurance come second compared from coverage most theimportant massive with and94 assure percent unfunded employee a minimum in liability 1987 benefit(Hewitt of in the public • • Small provi worker leav Defi percen care,e n,d ed up its n employers insuran ,gwas from cpar on hea ttribu ifor c c lt e, ularly 62 htinsurance ion benefi per and arecent less plans tretirement hose ts in for likely cos are in 1989. c ts, urren small also than 3.0 and tIn easier firms, percent large and savings 1992, fu to employers now ture 83 communicate, was make percent retirees. have forup a re tot 6.6 defined irement of offer One employers pparticularly ercent, pension survey contribution and 8.0 savings required shows plans perc to younger eand nt, plan, that costs, more and between very and 4.0 likely likely 9.3 to suggest there is a potential for savings. For example, AT&T was able to reduce its .',9. PercentageTrends of Surveyed in the Employers Structure with of EUtilization mployee B Review enefits Programs, Trends in the Structure of Employee Benefits Associates, 1987 and 1994). 13 PRESIDENT, EMPLOYEE BENEFIT RESEARCH INSTITUTE (EBRI) • eyes level Currently, pension of of workers. health anda majority retiree benefits medical oftoworkers theprograms insured receive population as they health areinsurance by paid mandating for in through thethe future. their benefits employers. that must2 Availa a coinsurance offer percent employees, annual percent 1988 401 bility and primary (k) growth was of plan, 1992, total of because in ofdefined when Ca the rates 20 compensation, the feform percent ter percentage they for in ia contribution the of medical are for Plan past legally able physician scompared of they expenses to large required plans see likely employers their visits, ifwith from they would benefits. benefits 6.3 up offer 12.9 have from providing percent, percent aaccumulate plan had 77 percent 6.2 no athealth inall employment-based percent, 1991 because inin insurance an to 1989. account and under they 2.6 In coverage 5 are while percent faced retirement to for with Percentage of Traditional Employers With Indemnity Cost-Sha Plans, ring Provisions, T- 100 HEARING BEFORE THE HOUSE COMMITTEE 1989-1994 ON GOVERNMENT REFORM AND Percen •tageThere of Full-Time has been Emplo a clear yees increase Eligible m forthe Cafe number teria Plans of employers and Flexibleoffering Spendingcafeteria Accountsbenefits (FSAs): (and Medium •• The working be Employers Over included revenue 60 percent rather also in required all than seek of health nonelderly being to to design pay insurance told by forAmericans Level programs they Social policies will of Cost Security receive that participate issued Sha allow ring and a monthly inindividuals and Medicare the in an Yea state. employment-based income r has State to had retire on mandates retirement. a major (work health do effect force notexit). on total Percentage •• As the plan. retirees economic There 1992, establishment service-producing 26 In has of declined addition, percent Employers been circumstances afrom small of size shorter employers with increases, industry. 62 but that percent service steady Cafete often limited the r to workers ia increase discourage 52 amount Plans out-of-pocket percent (the inspent Who the them majority (table percentage on Include from expenses 6). wages ofIn sponsoring the taddition, and h of ework to cafeteria Following salaries between force) plans, an increasing plans as $1,500 will Types aparticularly percentage offered gain of more Benefits byof percent in 1992 because they moved their workers into POS plan. In 1991, the and Large Private Establishments, 1988, 1989, 1991, and 1993: Small Private Establishments, 1990 and 1992; and for Traditional Indemnity Plans in Program, 1987 and 1994 OVERSIGHT SUBCOMMITTEE ON CIVIL SERVICE FSAs) compensation extend to to their employers packages workers. thatEmployees and self-fund on the their funds working health employers ininsurance medium and and plans. workers large The have private Employee available establishments for funding are • total and defined Some percentage plan. benefit During employers. $2,499, compensation The employers the from benefit employment-based earlier of In an aretirees defined 1993, increase plans. choose age decreases. 12 now of Perhaps contribution percent from paternalism toshare integrate 21 health In the of the March percent full-time most plan cost system pension andimportant than 1995, of in family-owned their employees 1989. has benefits they 74.1 been health would economic percent with evolving working insurance enterprise, from Social ofreason employee asince in defined Security with medium these that World their benefit fewer programs compensation in and former War order small plan. large II,were to p spend ri was vate Pacific Telesis Group Statmoved e and Loca their l Governmen fee-for-service ts, 1987, enrollees 1990, and into 1992 POS plans and Type of Program 1989 1990 1991 1992 1993 1994 TRENDS IN THE STRUCTURE OCTOBER OF EMPLO 31, YE1995 E BENEFITS Retirement more likely Income than workers Security in small Act of private 1974 (ERISA) establishments exempts to be self-insured eligible for plans cafeteria from benefits. employers. in their an with employers primarily establishments the equal employers own form amount, focused pension offer of wages were being plans as on and aeligible those and very percentage is retirement the salaries who active overall for were cafeteria savings in of forlower the pay, employers still development on benefits, programs. working compensation retirement with for compared and Should 1-99 an benefits levels employer implementation workers, payroll with common for 5all at percent taxes compared the employees. to of point continue small cost in 1988. with ofemployers. reaching Employers to 71.3 Four rise, • Employers reduced its have annualincreased growth rate theirfrom use of 12utilization percent toreview 5 percent. (UR)Surveys programs of their (table 5). ,=- Precertification Individualof Elective Deductible Admissions 73% 81°/0 81% 83% 79% 80% state benefit mandates. The increase in availability of cafeteria benefits and FSAs is likely to continue. Contributing M • • anemployers Lower management retirement are There percent agerable ialare paid and toaage. and C integrate number employees 68.8 onsid strategies. workers That er percent ati of benefits has on central typically scan changed forbe with employers trends expected face Social with in lower employee the with to Security effective cut marginal 100-499 back bene more end on tax fits workers effectively private of rates today: family than pension andthrough higher ownership 500savings orpaid defined more and employees asworkers, well. benefit and employees These percentprograms of full-time found are that employees designed they were toworking generally monitor in the satisfied state progress and with local andthe governments appropriateness system oncewere they ofeligible health for Concurrent Review 52 65 65 66 64 65 Amount 1989 1990 1991 1992 1993 1994 Types of Benefits 1987 -_ 1994_ Subcommittee on Civil Service Introduction RETunderstood IREMENT it. PLANS • to There the increase is limited are evidence the changing that government needs of a mandated work forcebenefits with large that increase numbers the of dual-earner cost of Catastrophic• • Case plans care there management Traditional Emp respec cafeteria I. tlore services oyers' Management tbecause ively. More benefits have defined use focus of on the less of large ain integration case-by-case cost on incentive benefit 1992, enterprise, incentive management compared anto d can 55 de defer basis. compensation combined fi be ned strategies done with income In con 1992, 65 by 1 twith ri ,percent but adjusting and in leading ion federal 83 health taxes. percent plans in671987. to benefit law care In the have of addition, that has Approximately growth surveyed formulas. their "vests" become 69 relative given of employers pro workers more fi competing tme 68 2 sharing; percent rits in and the current of at value 80 risk full- __ 0", _ 0", O0 _"q "_- 0,1 ",'- Medium and Large Small Private State and Local $100orless 40% 38% 34% 29% 29% 16% Outpatient SpendingUtilization Account-Hea Review lth Care 19 20 85% 19 22 87% 36 36 _ _ o =..=. CONCLUSION Private Establishments a Establishments b Governments c families. Mr. Chairman, In addition,I am flexible pleased benefit to appear plans before are viewed your as subcommittee a way to helptoday control to discuss the rising the •• • of drawbacks Employers consumption employing prevalent As In time pensions 1991, establishment employees cash Cincinnati aslabor in may as a compensation; needs, terms result benefits have working result size of Bell, of they a increases, their the accrue. in philosophy in General may some growth and small usebe Early form as equity the reluctant private Electric in management about amount employment-based of vesting, ownership cost establishments who Aircraft tospent shifting. defer which should tools. on by Engines, a substantial benefits carried employees. bear One Within were health investment study Proctor aas eligible legal high insurance, portion afound percentage cost, and and for return that of cost Gamble, caused cafeteria third their several constraints, and of party pay, total employers inflation benefits whether in to required prior authorization for certain procedures, nonemergency hospital $150 15 15 15 13 6 10 Second Surgical Opinion 89 88 82 71 91 87 1988 1989 1991 1993 1990 1992 1987 1990 1992 Committee on Government Reform and Oversight $200 29 27 28 28 29 34 costs reimbursement, state and of health federalcare, and mandates where technological that duplicate stipulated advances. coverage that childbirth Responding can be avoided. be to covered rising comprehensively health care costs, Spending Employers Pl structuring anemployee admissions, employers risks. as focus Account-Dependent T elective y 2. pclearly eMore In have ofa Tren compensation compensation design defined contributions and spent focus d on s the elective pension decades on benefit relatively Care employee to and increases. surgery, plans plan, building a benefit 401 small to employers choice (k) up match In number aplan programs from structure March and or their 73 generally responsibility, as of1995, percent automatic management in of full the employment-based career 78 for private absorb inemployers employer 1989. workers leading goals sector. the In investment for they with 1992, to contributions My employee the attracting had, name 1-99 66 growth 93 percent retu and workers, isa rn benefits Dallas the to of specific risk some high 5.3 by totype and 1992, theup Kroger from Company 1 percent in formed 1990.1° a health care coalition to increase bargaining power Mandatory a 59 55 49 45 40 44 United_ States House of Representatives _ .... Over $200 11 18 23 26 36 40 •_ c> _ eq _", cq _,c,_ ',,o c,,o t,", t"-- '4", _ c:a e---, Total 100c_ 100% 100% 100% 100% 100% 100% 100% 100% Voluntary b 30 33 33 26 51 43 in health insurance plans shifted the cost of those mandated benefits to workers in assist Salisbury. •• percent, Wh employers rates providing of Inworkers worker, recent ile ofthe participant-directed Iturnover 5.7 am years, number ain retaining have specific percent, pre planning sFSAs ident moved among of benefit workers and private (and of lifetime to most 2.3 the managed to defined regardless employment-based Employee percent for a workers. economic limited a desirable contribution care, ofof extent Benefit compensation The investment security. which time complex cafeteria Research retirement can savings period, The be income. web was plans) defined end plans; and Institute of plans in of encouraging legal the have In paternalism, flexible asand a form any (EBRI), and defined expanded plan type of accounting spending paid participants them contribution of ainnonprofit, in the leave, both to accounts wake leave standards the has of plan, orthe for for of other employers discounts type of plan. required with area Small health hospitals, employers care monitor to be may monitored in quality turn be improvements, asill-equipped it was provided toand add and search retirement /or for plan Health Plan Choices (Other Than HMOs) 94 71 None of These 9 7 8 7 10 5 TAXATION AND THE FEDERAL ROLE IN BENEFIT PROGRAMS the form of lower wages. 7 Another study has also suggested that the increased end nonpartisan intervention retire determined that insurance, been contributions the of family employee make increasing, at health a public specified control it and the nearly in bears on and retirement the policy length proportionately top of dependent impossible provision age the enterprises ofresearch of existing or investment a after and hospital of care; for savings, organization a health and payroll, fewer specified an multiple risk. stay the employer care are respectively, rise and given defined amount services option the of based to tight ascope global promise benefit of health in or or compared Washington, time. of reimbursement uncertain economy, the plans; retirement plans treatment with in and profit have some DC. defined income 6.2 of prior margins. begun 1cases, health percent, to benefit orto cafeteria retiree care shape 7.0 plan percent, health many or other public ways and private to control sector costs. (table Annual 9). Insavings 1993, 53 in the percent Cincinnati of full-time area have employees been working in Providing Cafeteria Benefits and/or FSAs 13 24 37 53 8 14 9 32 51 Hearing on Death Coinsurance Benefit Choices Rate 46 39 oo c.,'-_ "_ oo oo l-'-- "_- e"_, _ _I" c_l _ ,'-' .-- Source: A. Foster Higgins & Co., Inc., Health Care Benefits Survey (Princeton, NJ: A. Foster Higgins & Co., Inc., 1990- • costs Employers EBRI of workers has have been designed compensation committed, their employee were since largely its founding benefit shifted programs in to 1978, wages to around the withaccurate little government effect statistical on mandated analysis changes • • • and benefits providers Employers treatment, Employers participants. Other medium 2.9 ineconomic the total percent without and that private up that are flexible large from is able have of immediate factors intended employee private compensation 52 to benefit uncertain provide percent inhibit to establishments understanding plans; provide benefit employees in or retirement for 1989. volatile and system. health employers education Second were profits, with plan of care As what a eligible sponsorship, services with surgical moderate, your regarding such those 100-499 invitation to asbenefits in opinions participate small the but benefits particularly most workers. predictable, employers letter will were choice efficient innoted, cost FSAs the In sponsorship has tied or establishments retirement only the and new also to same /type or concepts led cafeteria of is benefit to of estimated at $75 million for all private and public payers of health care because of a 5 Cafeteria Benefits with FSA 4 8 9 11 1 2 1 3 4 Inpatient Care Major Medical 1993). 1989 1990 1991 1992 1993 1994 of UR whose use decreased between 1989 and 1992. of economic programs security for decades. issues.Pension Through plans--both our research defined we strive benefit to contribute and definedtocontribution--have the formulation of Disability beginning • with change. defined with The employment. settings. businesses, Benefit total a 500 to defined life-cycle benefit The occur number Choices These or may more 8 legally benefit in plans. interventions prefer stages of the workers, private required public-sector plan Small aand defined because 7.9 tax-qualified what employers, not move percent, contribution only the work retirement from indiviudal include 7.9 employment-based place. who pay-as-you-go percent, income plan pay the As must movement lower in the 34 and order do isCongress independent to for wages, 4.0advance to plans the percent of have individuals individual. often deals (both flexibility funding of of employ with compensation investment primary 24 into the of in less pensions, future contribution and skilled was of and in percent plans, compared decrease in with the 13 average percentcharge in 1988. per patient In 1992,and 14apercent 10 percent of full-time decrease employees in the Civil Service Reform _ o."_c, , ", o oo ooooo c'. c-q oo c.", _ o .- aFor specific procedures. Cafeteria Benefits with no FSA 1 1 l 1 d d 5 2 1 • effective been The health health integrated and maintenance responsible care with delivery organizations Social health, andSecurity financing welfare, (I-IMOs) toand system avoid retirement but excessive is also evolving include policies. employer-funded rapidly. increased Consistent There employee retirement have with been our mission, income. • Social the performance. the The supplemental) employees to working the Security, form accounting-motivated 3. use plan. More of of in ¢,-, HMOs who small paid Medicare, Profit-sharing focus In more may leave, a private has on defined Private-Sector than r--- be employment been insurance, public _easier establishments doubled move ,,", plans contribution one employee to for of allow replace. from and the as Compensation retiree aretirement most employers 311,000 plan, function were benefits, The health prevalent even eligible employees in recognition, of and and to and though 1975, the use savings, to methods issues Benefit state participate discretion when may employers of such have respectively. Issues utilized the also theas Employee business caused in in be tax can FSAs making _younger by reform, structure a employers and/or much versus Retirement plan or .="a we more greater a cafeteria can right to average hospital length of stay. 6 This coalition has now grown to over 120 bFor all procedures. 0% 23% 25% 27% 25% 6% 5% Time Off with Pay (buying/selling) 15 11 Freestanding FSA 8 15 27 41 6 12 3 28 46 10% 7 5 4 4 n/a we do focus changes contributions Disability noton lobby in cost; insurance the or for significant way advocate health health is integrated insurance specific redesign care is financed, with policy premiums of benefit Social solution the and programs; Security types s.increased ofdisability, treatments and cost a growing sharing and available, health recognition in traditional incurance the sites of the is being • expect loosely Income contributions In to contribution plans, March control significant compared tenure, attached Security 1995, rising schedules and secondary leading employers to health Act with are the (ERISA) only 8 labor to to care percent effects meet a required with growing costs. force. became target on in 5001990. workers In Small to use or levels contribute 1980, effective, more of Fifty-one employers programs of and there workers retirement the to on were percent 699,000 structure awould that contributed "substantial 236 income, were of have HMOs, in of full-time 1991 originally their little the aand significantly with (see actual compensation incentive recurring" employees table 9.1 established benefits million 7). to higher basis. The provide working atas the total in employers and a new agreement was just signed to provide for quality standards and Note: Data for years 1989-1992 represent the full sample from the survey. Data for years 1993-1994 represent 15% 2 2 2 2 n/a Profit Sharing or Savings Allocation (Other Than fee-for-service health insurance. Not Provided Cafeteria Benefits or FSA 87 76 63 47 92 86 91 68 49 packages. amount integrated Defined of care, These that and benefit with the individuals changes workers physician-patient plans do may must compensation not never allow savebe relationship. for for sufficient themselves as on much an increasing to These flexibility stop in order changes legislative basis in to determining achieve ashave employers actions resulted economic from theseek level being security toof manage taken, plan in point defined number enrollees. percentage a state more and ofretirement coordinated benefit of retirement, local 4private ofBy employee governments plans 1994, plans defined community orto there separation encourage as compensation benefit life were were transition move from eligible 547 plans a long-lasting to Testimony HMOs, in service, managed increased resources the to participate form with can employment of care. of that from 43.4 bepaid far may in 103,000 million FSAs leave below be relationship used (2.6 and/or enrollees. or in far 1975 at percent retirement above cafeteria to 5 with 175,000 more) These theunskilled plans but target, than in may in1983, employers with 500 or more employees. 20% 62 65 63 65 87 88 0 e-, Separate 401(k) or Tax-Sheltered Annuity Plans) 13 6 CHARACTERISTICS OF PRIVATE-SECTOR EMPLOYEE BENEFITS 25% retirement. a 2 1 1 n/a total health cost. As government increases the age of benefit elegibility under Social Security but • they primarily Firms contributions, should have also from been always beand used reactions increasingly their be during considered actuarial to health periods requiring determination care asof policy unemployment cost workers is inflation, being depends to contribute designed and or on reeducation. employers' many and to health factors as implementation experiences This insurance thattrend may has in be out alsoof • then employers depending plans workers. Coalitions 1992,decreased range compared Moreover, on have with from the toalso 1-99 with staff investment 102,000 been because workers. 9 models percent formed in experience 1991. of where in gradual in 1987.11 The Denver, the and total HMO benefit the CO; number owns accruals, level Memphis, its of of health private contributions. vesting TN; care defined Cedar delays, facility Rapids, contribution and andother IA;plan plans Other 7 8 Other (e.g., Financial Counseling) on a Post-Tax Basis 2 5 increased and Medicare, from and 208,000 as it changes to 598,000 actual between benefit 1975 levels, andprivate 1991. programs will be adjusted. •• schedules design Defined the premiums Employer managing sponsor's are features, entered benefit contemplated. health recognition anddirect subjecting the plans shorter-term care realm control, costs allow of economic of them have employers Social such employees to varied as direct Security, and Dallas investment to with business generally out-of-pocket influence Salisbury with the methods performance. instability defined tend retirement provisions. to chosen. benefit benefit (boom andretirement less job We and In from tenure can 1979, bustexpect retirement cycles) plans by including to being has Houston, employs health TX; Minneapolis, care providersMN; on Kingsport, a salaried basis, TN; to andindependent many other practice cities. The Employee Benefit Research Institute Source: Employee Benefit Research Institute, EBRI Databook, Third edition. (Washington, DC: Employee Benefit Research Institute, Coinsurance Rate 0o -_ o,,o_ t--- _ o--, ",-4" "_" o--, -- _ ="a • Criter Tax observe ia treatment Use a d continued Thas o Esta been increase blis ahdriving in Em cost-sharing p force loyee in the Com responsibilities growth pensation of employee an of d workers, Bene benefit fit the programs. Programs When • Bargaining •Cafete There employers programs specific Employers combined ria ischanged provisions Plan no than with Status fully may evidence Options do full paid use tolonger-term "cash-balance" such recognition profit-sharing of foraas single widespread normal employees. of coverage the and and or "shift" company cost other early health of retirement from "hybrid" noncash insurance stock defined plans employee approaches age, for benefit to benefits 73 improve benefits percent that to defined accruing more productivity. of and full-time readily contribution recognition after retirement conform Some of a arrangements activities of these (IPAs), coalitions where have groups varied of physicians greatly, including practicingtheindependently selection of preferred contract 1995). Physician Visits 1989 1990 1991 1992 a These tabulations provide representative data for full-time employees in private nonagricultural establishments with 100 or more • monitoring workers Congress Employersemployed has seek of acted care, to provide in the to medium allow movement a atotal benefit andcompensation of large workers to be private provided and establishments. package their to the dependents that worker, willBy be without into 1993 sufficient managed , only the to dollar 37 attract, value •I •• very The 401(k) highly As age, with plans. According much work wages and anmobile Although to plans HMO appreciate vesting force the and to realization are awork to age salaries 1994 schedules. provide some also demographics the force study used plan opportunity compensation that health toto by sponsors, move Defined few improve Hewitt care workers change, the toservices contribution Associates, component appear employer particularly productivity employers whoto today. earn the focus is plans the small HMO by a aIt may benefit smaller most from increasing has are employers, enrollees. need common been retirement worker will percentage to my still the alter exit pleasure have types The employer's be neutral; their atof with recent replaced retirement of total benefit to benefits the they work matching employer defined allow programs age with offered to at _ providers on the basis of efficiency, _ assistance in __the purchase _ of _ cardiovascular _ Source: Hewitt Associates, Salaried Employee Benefits Provided by Major U.S. Employers, 1988 and 1994 (Lincolnshire, Illinois: Hewitt employees in the District of Columbia and all states except Alaska and Hawaii. In 199l and following years, the survey includes •- oc _ o t--- eq r-- _ ,,o_-eq "_" e,-, _m, _ Z e_ Associates, 1988 and 1994). Washington, DC 0% 8% 6% 6% 5% establishmentsmovement in Alaska and ofHawaii. individuals into HMOs has not been into the more controlled staff or _._ this_ being percent facilitation care motivate, contribution committee _ arrangements, treated ofand workers of for _, when as worker retain over taxable _ profitability especially had 20 an ,,o exit years, appropriate their income _ whenever ,_-individual and those improves. toIthe pledge work that economic worker, coverage offer force the These greater availability circumstances employers forplans fully the choice particular paid provide have of for. of myself require. responded physician, employees functions In 1979, and This _ the by employers that such with employment-at- Employee putting need as direct • to the be benefit compensation employers care, to under continue the cafeteria plans retirement provision to towith influence attract for plans union age. defined ofthe were mental job employers quantity contribution FSAs-dependent tenure health and through than and quality plans, substance forvesting nonunion care of such workers (93 schedules, abuse replacements percent employers they programs of but desire. employers are (see their atnot table reduced According ability driving offering 2).to rates, Incontrol the to March cafeteria Census trends in 10% 6 5 4 4 ca. _ ._ b These tabulations provide representative data for full-time employees in private, nonagricultural establishments with fewer than 100 a Survey summarizes principal benefit plans of 822 major U.S. employers. Benefit retirement fully IPAs, incentives programs will accomplished Research doctrine paid PPOs, into for to age is and increase family Institute while place. is changing limited. POS allowing coverage The productivity plans, in the the size years face and the health and the of enterprise ahead and profitability both formation insurance identify as employement you to operate for more of of seek employer the 54to strongly business, percent without and deal employee with coalitions with of losses. as full-time these well thebenefits. employer. Employers major to as negotiate workers employees' economic Many make relative large use defined group projections, the plans 1995, enactment 4. wages offered model The benefit rising the and HMOs this of and proportion salaries healthy age benefit) defined but _"_ of "_ tthe into lifestyle averaged and _of contribution work the elderly FSAs-health IPAs, programs force 64.3 persons where is percent plans. influencing care for in patients adults Most the of (87 employer population percent) large employers. have and children, employer a costs (see greater will table It for and increase choice is with union leading 10). themore provision Other of in employee to the than an common future 5,000as employees. 15% 2 2 2 2 31 October 1995 b Survey summarizes principal benefit plans of 1,035 major U.S. employers c The Bureau of Labor Statistics' survey scope was expanded significantly in 1990 to include part-time workers, all governments for volume discounts for health care services. 20% issues. 77 84 82 83 earnings levels, lead to variation in sponsorship, but the responses are clear. Employers with • the of In employed private this ababy wide era employers boom range in of medium continued generation of are surveys and only corporate large ages. to now assess private atdownsizing, thewhat stage establishments. this of appropriate employers thinking through By often package 1993, find what only is, it this and highly 21 percent change they desirable ultimately means, of to be as compensation, employees of physician. benefits small increasing offered business now Between compared have under insurance focus 1993 both cafeteria on with types and employee options. 73.2 1994, plans of plans. percent there These include education was coalitions for health aregarding nonunion 42.6 plans percent are financial choices employers. successful increase other planning in Paid in reducing than enrollment leave, and HMOs retirement insurance, (71 regardless of size, and Alaska and Hawaii. The former survey coverage, which included only full-time workers in government units 25% a 2 1 1 e-- "_ eO •-- . _ _ t< _ od ._ o< _., _. ._ _- employing 50 or more workers in the 48 contiguous states and the District of Columbia, is referred to as old scope. The expanded survey primarily minimum wage employees are the least likely to respond to tax preferences and •Roleand workers able market Almost baby ofretirement to boomers W reduce test three-quarters or had kthe their F move their and package: orce family savings work into De (73 m does senior coverage force ographi percent) made iton allow management cup saof fully voluntary 6.9 the them paid percent, nettodecrease for. positions basis attract, 310.0 bymotivate, in percent, offering tothe replace number and and incentives those 5.1 retain. of percent defined who through grew of benefit total up a defined inplans the expenditures in percent), mixedplanning death models, onbenefit health and followed education care choices because by aabout (39 7.6percent), they percent taking create full increase andaadvantage disability competitive in enrollment benefit of market the programs choices inwith IPAs.sound (24 that Group- percent). are being12 coverage is referred to as new scope. In this table, 1987 is old scope and 1990 and 1992 are new scope. Retiree Health Insurance d Less than CAFETERIA 0.5 percent. PLANS • • There Cash establish compensation hasprograms. also been is a simultaneous the base in allincrease cases, with in the a movement cost-sharing in recent provisions yearsoftoward a Employee • A benefit paternalistic change pension made in work work available plan. place. force Early by patterns These the retirement employer. employers affects incentives pension It are is leading beginning coverage are a tomore recognition to tostructure positive the extent of way their the thatto benefit implications different reducepackages the types of labor ofto • compensation economic based involved The greatest plans, very principles changes i.e., small for staff, union plans, such ingroup, benefits employers, as consisting volume and offered network compared purchasing of under fewer models, than cafeteria with and 10 6.3 experienced competitive active plans percent, participants has6.0 bidding. a occurred decline percent, (see with inand table health 2.68). percent plan Out-of Pocket enrollment between 1993 and 1994. • traditional The growing dramatic component fee-for-service growth of of "at 401 health risk" (k) plans, or insurance "incentive" the dramatic (table compensation. 4). growth In 1992, of health 26 For percent most insurance, of ofthis and century, flexible conform Between employers force tbr nonunion than future with 1986 involuntary areemployers. work demographics more and 1990, force likely work there mobility. toforce and offer was future reductions. different aThe netgrowth "golden decrease plan Employers oftypes, handcuff" the in the retiree and number desiring pension different population of this primary plan types type and is of seldom of defined isemployees resulting retirement seen benefit in as • States choiceshave (other responded than HMOs) to growing and spending health care accounts costs not (dependent only as government care). In 1994, entities 93 percent of Maximums 1989 1990 1991 1992 1993 1994 _ N • spending profit-sharing The availability accounts, plans of health are have all been insurance recenta common examples for retired form of the individuals ofeffect at riskofcompensation, is new a growing tax incentives. concern particularly Were of workers for tax small •• desirable incentive prefer A surveyed In cafeteria March different efforts flexibility as employers 1995, plan wetoprogress plans. union is redesign a through flexib required employers into le programs a benefit this a qualified deductible contributed new plan to age produce retirement that of of offers a over rewarding significantly manageable vehicle $200, an employee talent up arehigher from future virtually versus certain 11 costs percentage percent tenure. forced choices for retiree in toof 1989. in adopt employee accordance income a • plans but employers Preferred also of 67,995, asprovider employers. who provided andorganizations the The net cafeteria decrease California (PPOs) plans inPublic plans offered and point-of-service Employees' with dependent fewer than Retirement care (POS) 10spending active plans System participants accounts have also aswas an _ _,II _ _-- <$1,000 35% 37% 30% 28% 27% 21% D"- ¢,"-, C_ t/_, incentives eliminated so that all income (cash and in-kind) was taxable to the individual, 49,700. businesses. Statistics Cash is from the the most Internal important Revenue employee Service benefit, indicate according that these to trends worker have surveys. • compensation In with and While defined 1992, employers. Internal aand benefit smaller 65 health percent Revenue inplan Ever-increasing percentage the programs. of as form Code employers opposed ofof insurance sec. Future employees to health 125. required a defined retirees Cafeteria (4 care in percent coinsurance the costs contribution who service plans want more) and (which the postretirement sector of than plan. Financial 20 nonunion percent offer are covered aAccounting wide for COLAs employers. inpatient by range defined will Standards of benefit have benefit to (CalPERS) option, emerged compared as strong has hadwith alternatives success 78 percent with to its fee-for-service inown 1987. purchasing In 1994, plans 71 cooperative and percent HMOs. offor employers The health number care offered of health $1,000-$1,499 38 37 39 38 38 40 -u E =o $1,500-$2,499 dramatic Board's Statement changes 21 inNo. employer 1069 have provision 20caused of many employee employers 24 benefits to reexamine could 26 be 22 expected. their role 30 in Employer • • continued plans In options Employers addition than /choices) have Costs through are to also saved encouraging covered Per seek must enough 1995. Hour to offer by have defined retirement, in Worked a a a combination healthy defined contribution pension for work contribution of Employee force, qualified plans plans, with plan may the nontaxable Compe low to number also make rates n be satio used of these of benefits n participants absenteeism. topayments attract in (health the and in Private to insurance, This both retain has types services. individuals CalPERS enrolled experienced in these arrangements premium decreases increased significantly in both 1994 between and 1995the bymid- The views expressed in this statement are solely those of the author and should not be attributed to the $2,500-$4,999 4 5 6 6 8 4 g _ _f"_ _D D"- tt', c'_, -- e,", < ("q _ _ >. = e'-, Sector • Employee The revenue Benefit required Research through Institute, taxes its officers, to support trustees, public sponsors, employee or other benefit staff. Theprograms Employee has Benefit not had Major • employees. Between of been sickness plans Industry thethemselves. increased and primary 1985 Employers accident and Group motivator between 1991, Retirees insurance, attempting thein 1985 net who theincrease long-term and continued want to attract 1989. retiree in disability, the sponsorship younger, medical numbermore etc.) protection ofofprimary and health mobile taxable will insurance defined workers have benefits contribution to would and have (or disability be cash). saved more plans negotiating 1980s and today. more aggressively Recently, the with growth health rate care of enrollees providers in and these asking plans HMOs has exceeded to forgo $5,000+ 2 2 2 2 5 5 Research Institute,o is a nonprofit, nonpartisan, _ public policy research _ organization. "= _ _ -_'- 2 In 1993, 54.2 percent of workers aged 18-64 received health insurance coverage from their employer. See Sarah 7 Jonathan any direct Gruber, impact "The Incidence on employers of Mandated in terms Maternity of the Benefits," compensation America packages n Economic they Review offer. (June The 1994). actual • While income likely to defined benefits. choosebenefit a Family defined plans coverage contribution have remained increases plan, the while theprimary likelihood employers form that of attempting employees pension coverage towill retain remain for workers a at for • with Service-producing the Flexible rate growth increases; fewer money spending than ratethe so of 10 they accounts enrollees state industries participants can introduced afford (FSAs) in provide HMOs was the aare 66,594 standard premium wages because another plans; and benefits they copayments type salaries this allow of package accounted flexible as greater a and higher in benefit deductibles, choice for 1993, percentage 42plan requiring percent of that as more of may of total the exist net as Snider and Paul Fronstin, "Sources of Health Insurance and Characteristics of the Uninsured: .=_ Analysis of the Source: A. Foster Higgins & Co., Inc., Health Care Benefits Survey, Report 1: Indemnity Plans: Cost, Establishment Size employee benefits provided to public-sector employees have created pressure for private March growing longer work 1994when time Current number a periods family Population of would participants member Survey," be has more EBRI in health large likely Special problems firms, to Report offer a decrease aand SR-28 defined that /Issuein health benefit the Briefproportion problems no. plan. 158 (Employee Since will of workers benefits not Benefit causein compensation increase physician. copayments stand-alone employers of 160,052 Evidence plans ofthan its or employees. facilitate goods-producing in within on thethe number the cafeteria savings purchase offrom plans. industries primary of _these ._0;In retiree "_- defined an (table plans FSA, health is 3). contribution employees largely insurance In _ March _ ._lacking set plans. but 1995, _ aside _ do but 73.5 not Statistics does money provide percent for from the of the Design 8Jonathan and Fu Gruber, nding and (Princeton, Alan B. Krueger NJ: A..Foster "The Incidence Higgins of &Mandated Co., Inc.,Employer-Provided 1990-1993). Insurance: Lessons from 10Employee Benefit Research Institute, EBRI Databook on Employee Benefits, Third edition (Washington, DC: Research Institute. February 1995). • Workers' employers defined In employed March Compensation benefit 1995, in to manufacturing maintain plans wages Insurance accrue programs and ." salaries in and atDavid a unionized slow in Bradford. averaged order rateto for industries ed. compete 71.6 the . Tax initial percent Polic in and the y years a an of nd market increase the employer of Eco service place nom iny costs the and (Cambridge, forproportion accrue workers. for employee at MA: faster The ofMIT qualified total Internal compensation money Revenue unreimbursed forService the for premiums service-producing medical indicateor during that dependent these the industries postretirement trends care expenses have was continued inperiod. the through formthrough pretax of wages salary 1995. and reduction salaries, Employee Benefit Research Institute, 1995). - _ _ 4 Nancy Kraus, Michelle Porter, and Patricia Ball. Managed Care: A Decade e--, ine--, Rerieu' 1980 _ .,.-- -1990 k.____ (Excelsior, _ ,-_ Press. 1991). aData not available. _s 3 U.S. Department of Labor, Bureau of Labor Statistics, Employee Benefits in Medium and Large Firms, 1979- •r"! compensation, rates workers for employed older employees whileinbenefit service with costs industries more averaged service, should 28.4 they increase percent rewardthe (see long-tenure role table of defined 1).employees. Included contribution in Defined the 28.4 plans • compared The in separate rapid growth with accounts. 67.3 in defined percent Employees contribution for goods-producing choose how plans much cannot industries. money simply they be want explained to contribute by a replacement to an FSA MN: The lnterStudy Edge, 1991). 11Ibid. IMr. 1989 Salisbury (Washington, joined DC: EBRI U.S. as Government its first executive Printingdirector Office, in selected 1978. His years); previous Employee assignments Benefits were in Medium with the and 6Danae A. Mmms, Robert J. Strub, and Thomas R. Werner. "The Cincinnati Initiative," Managed Care Quarterly contribution percent in at the providing beginning in benefit plans retirement ofcosts: do thenot plan income. 6.4 cause percent year,large within ofbenefit compensation limits. losses To the for was extent mobile in the that employees, form theseoffunds paid assuming leave, are not6.7 that usedeach for • of Goods-producing defined benefit plans industries with provide defined their contribution employees plans, with because benefitsthe asnet a greater increaseportion in defined of L 9 Pension ar In geDecember Priv Benefit ate Establishments 1990, Guaranty the Financial Corporation: , 1991Accounting andthe 1993 Pension (Washington, Standards and Welfare Board DC:approved Benefits U.S. Government Administration StatementPrinting No. 106 of the Office, (FAS U.S.106), Department 1993requiring and Note: Data for years 1989-1992 represent the full sample from the survey. Data for years 1993-1994 (Winter 1994): 20 26. 5 1995). The InterStudy Competitive Edge, 5.1 (Minneapolis. MN: Interstudy, 1995). of 13Hewitt Labor; the Associates Office ,of Salaried the Deputy Employee Attorney Benefits General Provided at the U.S. by Major Department U.S. Employers of Justice; , 1988 and and the Committee 1994 on many 12Hewitt employers Associates, to record Salaried a liability Employee for retiree Benefits health Provided benefits byon Major theirU balance .S. Employers sheet in . order 1988(Lincolnshire. to comply with IL: represent employers with 500 or more employees. Suite 600 o o _ a , ,¢ .,.a ,= -_"a T_.._ ....... ...>:. expenses of their employers incurred during has an equally the plan generous year, theyplan. are forfeited. compensation contribution plans than isservice-producing far greater than the industries. net decrease In the in defined goods-producing benefit plans. industry, Manypaid (Lincolnshire, IL: Hewitt Associates. 1988 and 1994). Elections generally Hewitt Associates, accepted and Reapportionment. accounting 1988). standards, Washington beginning State wi House th fiscal of Representatives. years after December 15, 1992. 2121 K Street, NW _ _ _'u _ _ _ _ _ _ _ _ _ _ggg_ _o -_ _ _2__= So _ _ _-_ _-_6 Washington, I)C © >2- ..o - _ ",.a _ _ ,._ > 14 8 1 15 11 1 10 4 2 13 20037-1896 202-659-0670 Fax 202-775-6312