PRELIMINARYPRELIMINARY-PLEASE DO NOT
QUOTE
Why do Firms SelfSelf-Insure (and Why
Should We Care)?
„ Firms selfself-insure to lower costs for economic and
legal reasons
Trends & Determinants of SelfSelfinsuring Health Benefits
19971997-2004
– Over 50% of all insured employees in 1990s received self
insured benefits (Jensen, Gabel, Hawkins 2001)
„ States ability to regulate insurance limited when firms
self insure
Philip F. Cooper
Kosali I. Simon
– Mandates on benefits or workers, premium tax, coverage
continuation, community rating etc.
Influence of State Regulations on Self
Insurance
Prior ResearchResearchPrevalence and trends in self insurance
–
Over 50% of employees with ESI are in selfselfinsured plans in 1984, varies by firm size
„
Acs,
Acs, Long and Marquis (1996)
„
Marquis and Long (1999)
–
42% of employees with ESI are in selfself-insured
plans in 1987, 32% in 1991, 41% in 1993
„
–
33% of employees with ESI are in self insured
plans in 1997, down from 40% in 1993
„
1993 and 1997 RWJF
Park (2000)
–
% of employees in firms that self insure at least
one plan in 1993, large variation by states
„
„
NMES 1987, HIAA 1991, RWJF 1993
–
–
–
Pre val e n ce S u m m ary: % of In su re d Em pl oye e s i n Se lf-in sure d
Pl an s, by Ye ar
HCFA survey of employers, 1984
„
„
„ Cross sectional studies
McDonnell et al (1986)
60%
% of insured employees in
self-insured plans
„
„ Studies covering more than one year
50%
40%
–
30%
10%
1985
1990
1995
2000
2005
Ye ar
1993 NEHIS
–
–
% of workers in self insured plans 55% in
1993, 57% in 1996, 52% in 1999, 50% in 2001
„
HIAA/KPMG/HRET surveys of employers
93,96,99,01
•Caution: survey designs vary across studies so numbers not directly comparable
•Many of these studies show prevalence and trends by firm size, industry,
plan type (HMO vs PPO etc), premiums
Jensen, Cotter and Morrisey (1995)
Studies on effect of state mandates and other regulations on decision
decision to insure
„ Jensen and Gabel (1992)
„ Gruber (1994)
„ Kaestner and Simon (2002)
Gabel, Jensen and Hawkins (2003)
–
Gabel and Jensen (1989)
– Jensen and Morrisey (1990) finds that mandates are expensive; so is
self insurance
20%
0%
1980
Morrisey and Jensen (1993)
Garfinkel (1995)
Park (2000)
–
Buchmueller et al (2007)
„ Overall picturepicture-firm size matters, but state regulations do not appear
important, at least not in more recent years.
Our contributions
Data
„ Uses rich data new to this literature
„ Multiple years of the same survey, recent
„ Medical Expenditure Panel Survey – Insurance
Component (MEPS(MEPS-IC) 19971997-2004
years
„ We examine
– A) Recent trends in self insurance (descriptive)
– B) Regression models to consider impact of state
regulations, establishment, and local market
characteristics on decision to self insure
– Large nationally representative annual employer survey ~
25,000 establishments
– Health insurance plan info – type, selfself-insured/ purchased
– Establishment characteristics
– State level estimates
– Response rate ~ 78 percent
„ ARF
„ State mandates
1
Number of Workers Enrolled in SelfSelfinsured Plans
State Mandates
„ State regulation mandated benefits
„ Small group reform
40,000,000
„ Premium taxes
„ Stop loss regulation
20,000,000
30,000,000
10,000,000
0
1997
1998
1999
2000
2001
2002
2003
2004
Source MEPSMEPS-IC 19971997-2004
Percent of Active Enrollees in SelfSelfinsured Plans
Percent of Establishments that offer a
SelfSelf-insured Plan
40
60
50
40
30
20
10
0
30
20
10
0
1997
1998
1999
2000
2001
2002
2003
2004
Source MEPSMEPS-IC 19971997-2004
1997
1998
1999
2000
2001
2002
2003
2004
Source MEPSMEPS-IC 19971997-2004
Percent of Establishments that Offer a
SelfSelf-Insured Plan by Firm Size
Percent of Establishments that Offer a
SelfSelf-Insured Plan by Whether Multiple
Location Firm
80
100
80
60
Less than 50
More than 50
500 or more
60
40
20
0
One
More than one
40
20
0
1997 1998 1999 2000 2001 2002 2003 2004
1997 1998 1999 2000 2001 2002 2003 2004
Source MEPSMEPS-IC 19971997-2004
Source MEPSMEPS-IC 19971997-2004
2
Average Single Premium
Average Family Premium
$4,000
$3,000
Purchased
Self-Insured
$2,000
$1,000
$0
1999
2000
2001
2002
2003
2004
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
Purchased
Self-Insured
1999
Source MEPSMEPS-IC 19971997-2004
2000
2001
2002
2003
2004
Source MEPSMEPS-IC 19971997-2004
Percent of Establishments that SelfSelf-Insure
and Offer a Purchased Plan
Logit Results Probability of Offering A
SelfSelf-Insured Plan(significant)
Plan(significant)
„ Increase likelihood
25
20
– Firms size
– Multiple locations
15
10
„ Decrease likelihood
– Low wage
– Retail trade, services
relative to manufacturing
5
0
1997
1998
1999
2000
2001
2002
2003
2004
Source MEPSMEPS-IC 19971997-2004
Conclusion
„ No statistically significant effects from mandated
– Suggests they don’
don’t drive the decision to selfself-insure
„ Multiple location and size matter
„ Future work will add more state regulation (re(reinsurance limits)
3