Accounting for the Slowdown in Employer Health Care Costs, Issue 5891
National Bureau of Economic Research, 1997 - Employer-sponsored health insurance - 28 pages
Abstract: The most widely used measure of employer health care costs, the health insurance component of the Employment Cost Index, indicates that cost growth has decelerated since 1989. In recent years employer expenditures per hour worked have even declined in nominal dollars. This paper analyzes the components of changes in employers' health care costs over the 1992-94 and 1987-93 periods. We find that employer costs have decreased primarily as a result of a steady decrease in the fraction of workers with coverage and a large decrease in the rate of growth of insurance premiums. We conclude that the shift to managed care does not appear to be directly responsible for significant cost savings because managed care premiums are almost as high as those for fee-for-service plans, on average. Finally, we note that there is a significant need for improved data collection in this area.
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200 employees Bulletin Change in cost change in fraction cost decomposition Cost per worker costs per hour CPS estimate Current Population Survey decline Department of Labor dollar ﬁgures EBRI EBS data Employee Beneﬁts Surveys employee contribution employer costs employer share Employment Cost Index Establishment size dummies family coverage Family FFS family premiums fee-for-service coverage fee-for-service plans Fee-for-service premium FFS plans FFS premiums ﬁnding ﬁrst fraction in managed fraction of workers full sample full-time workers Health Beneﬁts health care costs health insurance costs health insurance CPS Health Insurance Premiums HMO and FFS HMO premium KPMG sample large employers large ﬁrms managed care plans medium and large nominal dollars number of workers offered insurance percent per annum premium cost premium data premiums for HMO Princeton University RWJ data share of premium shift to managed single and family single coverage Single FFS sources Table A2 U.S. Department workers covered workers in private