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EBRI Health Care Research: 2004 Findings
Sources of Health Insurance
From the March 2004 Notes article, "Health Insurance Coverage of Individuals Ages 55-64, 1994-2002."
- In 2002, 12.9 percent of individuals ages 55-64 were without health insurance-a slight change from 1994, 12.8 percent were uninsured.
- Adults ages 55-64 are the least likely group of adults to be without health insurance. In 2002, 24.4 percent of 18-20 year olds were without health insurance, 33.9 percent of 21-24 year olds, 25.1 percent of 25-34 years olds, 17.8 percent of 35-44 year olds, and 13.9 percent of 45-54 year olds.
- Among workers ages 55-64, 78.5 percent had employment-based coverage, compared with 55.1 percent of retirees ages 55-64.
Trends in Health InsuranceFrom the June 2004 Notes article, "The Impact on Employment-Based Health Benefits of the Shift From a Manufacturing Economy to a Service Economy."
- Percentage of workers employed in manufacturing decreased from 24.0 percent in 1987 to 18.8 percent in 2002. Correspondingly, the percentage of workers employed in the service industries increased from 17.7 percent in 1987 to 26.4 percent in 2002.
- Workers in the service sector are much less likely to have employment-based health benefits than workers in manufacturing. Studies have found that the movement of workers from the manufacturing sector to the service sector accounts for approximately 10 to 15 percent of the decline in employment-based health insurance coverage.
- Workers with employment-based health benefits typically have coverage not only for themselves but also for their dependents. Twenty percent of the nonelderly population was in families with a family head employed in the manufacturing sector. Among individuals with employment-based health benefits, 24.4 percent were in families whose family head was employed in the manufacturing sector.
Health Care SpendingFrom the March 2004 Notes article, "National Health Spending Rose 9.3 Percent in 2002: Sixth Consecutive Year of Faster Growth."
- In 2002, according to the Centers for Medicare & Medicaid Services (CMS), national health expenditures rose 9.3 percent, reaching nearly $1.6 trillion.
- Between 1970 and 1980, the average annual growth rate in health care spending was 12.9 percent; between 1980 and 1990, it was 11.0 percent, and between 1990 and 2000, it was 6.5 percent. In 2000, the annual growth rate in health care spending started rising again; in 2001, it was 8.5 percent and in 2002 it was 9.3 percent.
- Health care spending, measured as a percentage of GDP, remained fairly constant throughout the 1990s at roughly 13.5 percent. Health care spending today is not nearly as high as it was expected to be. In 1992, health care expenditures were projected to reach 15.6 percent of GDP in 1995 and 18.1 percent in 2000.
Prescription DrugsFrom the January 2004 Issue Brief, "Prescription Drugs: Recent Trends in Utilization, Expenditures, and Coverage."
- Prescription drug costs, which rose by 15.7 percent in 2001, are the fastest rising component of medical expenditures and accounted for 16.7 percent of the total increase in health care spending that year. Americans Spent more than $140 billion on prescription drugs in 200-or about 10 percent of the nation's health bill, approximately the same level noted in 1960.
- Nearly half of the nation's prescription bill (47.4 percent) was paid by private insurance. Individuals paid slightly more than 30 percent out-of-pocket. This is a reversal of the pattern of the early 1990s, when out-of-pocket payments were substantially greater than insurance reimbursement. The segment of the bill paid by government programs has remained stable over time.
- More than three in five Americans fill at least one prescription annually. While the segment of the population not filling any prescriptions has remained largely constant, those who do take pills are filling more prescriptions. More than half of those older than 75 filled more than 15 prescriptions (including refills) annually. Adult prescription drug use is inversely correlated with income.
- Most of the drug bill increase reflects increased consumption. The cost per pill in increasing at a much more modest rate. However, the impact of price increases on the increasing expenditures for prescription drugs has grown since 1996, when it accounted for 15.8 percent of the increase. In 2002, price increases were responsible for 29 percent of the total increase in prescription drug expenditures.
- Drug costs interact with other medical cost components. Greater drug utilization may decrease hospital and other medical bills. Conversely, restrictions on drug utilization could lead to greater costs elsewhere. There is some evidence that newer drugs may be better than older drugs at preventing other health care costs.
- Roughly half the prescriptions filled annually are for generic drugs. Such substitutes tend to enter the market priced 70-80 percent of the relevant brand-name drug, with such prices falling to 40 percent or less as the market becomes more competitive. Many health plans actively encourage (or even require) the use of generic drugs.
- Ninety-nine percent of employees covered by employment-based health insurance have prescription drug coverage, and more than 6 in 10 are in three-tier drug benefit plans. Employers and health plans are using tiered benefit structures and other means to encourage price sensitivity among their members and influence drug utilization.
- On December 8, 2003, the President signed into law the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173), which creates a voluntary prescription drug benefit for Medicare beneficiaries to begin in 2006. Retirees and policymakers are concerned that a drug benefit under Medicare may cause employers to drop retiree drug coverage, and the legislation includes an employer subsidy to encourage them to continue to provide it.
Evidence Based MedicineFrom the February 2004 Notes article, "Evidence Based Medicine: Putting Research Into Practice."
- There is a growing belief that there is an optimal way to deliver care for a specific diagnosis and that finding and publicizing that path to a point where it becomes the norm could lead to better medical outcomes at less cost.
- A push for evidence-based medicine would involve the cooperation of integrated medical systems, practitioners, and patients.
- A family practice physician noted that the average family physician sees more than 125 patients weekly and that many patients have multiple complaints. He concluded that there was seldom time for physicians to update themselves on the favored way of dealing with a problem before actually confronting it. He noted that in many instances and for many conditions, no quality evidence exists on optimal care. He also noted, newer physicians are most likely to use practice guidelines and to believe that they have a positive impact.
- Another physician in a HMO noted that her group has made substantial investments in creating patterns of practice and installing technology that allows physicians, and their patients, immediate access to current research on numerous medical problems.
The Need for Health BenefitsFrom the March 2004 Issue Brief, "The 'Business Case' For Investing in Employee Health: A Review of the Literature and Employer Self-Assessment."
- This Issue Brief reports on the findings from interviews with six large employers to learn more about what these employers actually do to promote employee health beyond offering health plans. They were asked why they do what they do, how they justify what they do to their peers and superiors, and what the prospects are for their more expansive and longer-term approach to health benefits costs in the current general economic climate and in the face of sustained health care inflation. Some of these employers attribute reductions in the cost of providing health benefits to strong management of employee health status, the use of health care, and occupational injuries. However, they also believe that the cost of providing health benefits is strongly influenced by health care system and environmental factors outside the work place that affect health.
- Employers that offer health insurance to their workers generally believe that offering this benefit helps to create a more satisfied and productive work force. The fairly large, sophisticated employers discussed in this report have found that by aligning preventive health services and work-place education programs with their health benefit programs, they can improve work-force health and productivity and manage their employees' use of health care.
- Such employers are increasingly concerned about distracted workers who are on the job but failing to pay full attention to their duties because of health problems. They've found that employee assistance and related health interventions can deal successfully with this problem.
- Innovative employers are making significant investments in education programs that discourage unhealthy habits and stress the need for timely and cost-effective responses when a medical problem is identified.
- Some economists have posited a link between the health of workers and the economic health of the broader society. When individual firms take action to create more productive workers, they argue, the nation's GDP grows in a fashion that provides a more positive environment for all Americans.
- This economic argument also holds that the nation would be wealthier if the 35 million uninsured American workers and dependents had health coverage; even after the cost of their care were subtracted, there would be a net gain to society.
- Employers are becoming increasingly frustrated with annual premium increases that are a multiple of the general inflation rate. Unless and until they come up with a way of managing and finding greater value in such expenditures, the future of employment-based health benefits may be at stake.
Retiree HealthMedicare Part B Changes
From the May 2004 Notes article, "Medicare Program Takes on More Income-Related Features."
- Low-income workers have always paid less for Medicare Part A than high-income workers. A worker earning $25,000 a year will pay $363 in 2004 in taxes for Medicare Part A, while in contrast, a worker earning $200,000 a year will pay $2,900 in 2004 in taxes for the same Medicare Part A benefits.
- Premiums for Part B will be related to income starting in 2007. By 2011, the changes to Part B premiums as they relate to income will be fully phased in. Medicare beneficiaries with income under $80,000 ($160,000 for a married couple) will continue to be required to pay 25 percent of the cost of Part B. However, beneficiaries with income between $80,000 and $100,000 will be required to pay 35 percent of the premium and beneficiaries with income of at least $200,000 will be responsible for 80 percent of the premium to enroll in Part B.
- This latest change has received little attention since it only affects the highly paid, but it may be indicative of changes that will become necessary in the future to keep Medicare solvent.
Medicare Part D
From the June 2004 Issue Brief, "Medicare Prescription Drugs: Making the New Program Work."
- This Issue Brief reports on the progress that has been made and questions that have been raised about the new Medicare prescription drug benefit that became law in late 2003. The focus is on issues raised during the National Medicare Prescription Drug Congress held in Washington, DC, in February 2004.
- The first phase of the program, the discount drug card, became effective on schedule in May and June 2004, but this initial step did not end the ongoing partisan debate about whether the new legislation is a significant positive development for seniors or whether it will work as intended.
- Most questions about the logistics and operation of the prescription drug program will remain unanswered until the second, more expensive, phase of the program (government-subsidized prescription drug insurance) begins in 2006.
- There's disagreement about the impact the program will have on state budgets. Supporters of the new law say it relieves the states of current responsibilities of providing needed medicines to medically indigent Medicare beneficiaries. But states fear that residual responsibilities (not all drugs will be covered under the new programs), coupled with reductions in federal aid, will ultimately increase their costs.
- The use of drug formularies may pose potential problems, particularly for beneficiaries who are unaccustomed to such restrictions on drug purchases. Whether such beneficiaries will be willing to switch drugs in order to take advantage of discounted prices remains to be seen. This reaction will partly depend on how restrictive the formularies are.
- Critics believe that the new law lacks mechanisms that could drive drug prices down by an appreciable amount and continue to pursue other strategies, including permitting imports from other nations (especially Canada) where drugs cost less.
- While the law contains language mandating drug counseling, there's little agreement on whether such advice will have much impact on consumption patterns or beneficiary satisfaction.
- It is still unclear how many firms will offer to provide prescription drug insurance under the Medicare program in 2006 because it is a new and untested product.
- 401(k) Valuations Published: September 1, 2016 401(k) Balances and Changes Due to Market Volatility
- Data Book Last Updated: February 2013 A comprehensive collection of the most up-to-date benefit information available