Health Insurance Coverage in the United States Paul Fronstin, Ph.D. Director, Health Research and Education Program Employee Benefit Research Institute Copyright© - Employee Benefit Research Institute Education and Research Fund, All rights reserved. The information contained herein is not to be construed as an attempt to provide legal, accounting, actuarial, or other such professional advice. Permission to copy or print a personal use copy of this material is hereby granted and brief quotations for the purposes of news reporting and education are permitted. Otherwise, no part of this material may be used or reproduced without permission in writing from EBRI-ERF.

2 Health Insurance Sources, 2007 Source: EBRI estimates of the March 2008 Current Population Survey.

3 Health Insurance Sources, 1999 & 2007 Source: EBRI estimates of the March 2000 & 2008 Current Population Survey.

4 Spending Sources, ( $2.1 Trillion Spent on Health Care in 2006, 54% Private/46% Public) Source: Employee Benefit Research Institute estimates from CMS.

5 But Employer Coverage Dominates Coverage (Why Coverage is Offered) Voluntarily provided (except MA and HI) Business case Competitive labor market – recruitment & retention Wellness, prevention, DM have positive effect on worker health & productivity Despite view on bottom line – role of employer is access

6 Percentage of Employers Offering Health Benefits, by Firm Size, Source: Kaiser Family Foundation.

7 Percentage of Children, Under Age 18 With Employment-Based Health Benefits, Medicaid, & Uninsured,

8 Health Plan Enrollment, 1988 & 2007 Source: KFF/HRET.

9 Health Reimbursement Arrangement (HRA) Employers started to offer in 2001 Exist under then current law Employer provided notional account that allows for pre-tax reimbursement of medical expenses. “Typically” combined with a high-deductible health plan. Employer funded & owned –Employee contributions not permitted. Unused balanced can roll over. Preventive care can be carved out.

10 Health Savings Account (HSA) 2003 Medicare Modernization Act Allows for tax-free accumulation of savings –Tax free contribution. –Tax free accumulation. –Tax free withdrawals for health care services, COBRA and LTCI premiums, retiree health premiums for Medicare-eligible retirees. Qualified health plan –Self-only: Minimum $1,100 deductible, $5,500 OOP max. –Family coverage: Minimum $2,200 deductible, $11,000 OOP max. Contributions –Self-only: limited to $2,900 max. –Family coverage: limited to $5,800 max. Catch-up contributions allowed once age 55 of $1,000 –Phased-in by 2009.

11 Non-Group (Individual) Insurance 7% of <65 population or 18 million individuals. Typically for those who do not have access to employer coverage and don’t qualify for public programs. On average, more costly than employer market because of higher admin costs. Individuals usually subject to medical underwriting.

12 Who Are The Uninsured? Workers or their dependents Minorities Lower income Younger Male Employed in trade and service sectors Employed less than full time full year Employed at small firms Resides in South and Southwestern U.S. Recent immigrants

13 Reasons Uninsured Workers Are Not Covered by Own Employer's Health Plan, Wage and Salary Workers Ages 18-64, 2005

14 Reasons Uninsured Workers Choose Not to Participate in Own Employer's Health Plan, Wage and Salary Workers Ages 18-64, 2005

15 Reasons Uninsured Workers are Ineligible for Own Employer's Health Plan Wage and Salary Workers Ages 18-64, 2005

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