Comparing employee health benefits in the public and private sectors, 1997

Health Affairs

Volumn 18, Issue 6, 1999, Pages 183-193

  Long, Stephen H ^a   Susan Marquis, M ^a  

^a RAND CORPORATION   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; CLASSIFICATION; COMPARATIVE STUDY; ECONOMICS; HEALTH INSURANCE; HUMAN; INSURANCE; ORGANIZATION AND MANAGEMENT; STATISTICS; UNITED STATES;

EFFICIENCY, ORGANIZATIONAL; HEALTH BENEFIT PLANS, EMPLOYEE; HUMANS; INSURANCE COVERAGE; MANAGED CARE PROGRAMS; PRIVATE SECTOR; PUBLIC SECTOR; UNITED STATES;

EID: 0006740513     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.18.6.183     Document Type: Article

References (49)

1. A.C. Enthoven, "Consumer-Choice Health Plan (Second of Two Parts)," New England Journal of Medicine (30 March 1978): 709-720; A.C. Enthoven, "The History and Principles of Managed Competition," Health Affairs (Supplement 1993): 24-48; W. Francis, "A Health Care Program Run by the Federal Government That Works," American Enterprise (July/August 1993): 50-61; E.W. Hoy, E.K. Wicks, and R.A. Forland, "A Guide to Facilitating Consumer Choice," Health Affairs (Winter 1996): 9-30; and M.L. Maciejewski, B.E. Dowd, and R. Feldman, "How Do States Buy Health Insurance for Their Own Employees?" Managed Care Quarterly (Summer 1997): 11-19.
2. A.C. Enthoven, "Consumer-Choice Health Plan (Second of Two Parts)," New England Journal of Medicine (30 March 1978): 709-720; A.C. Enthoven, "The History and Principles of Managed Competition," Health Affairs (Supplement 1993): 24-48; W. Francis, "A Health Care Program Run by the Federal Government That Works," American Enterprise (July/August 1993): 50-61; E.W. Hoy, E.K. Wicks, and R.A. Forland, "A Guide to Facilitating Consumer Choice," Health Affairs (Winter 1996): 9-30; and M.L. Maciejewski, B.E. Dowd, and R. Feldman, "How Do States Buy Health Insurance for Their Own Employees?" Managed Care Quarterly (Summer 1997): 11-19.
3. A.C. Enthoven, "Consumer-Choice Health Plan (Second of Two Parts)," New England Journal of Medicine (30 March 1978): 709-720; A.C. Enthoven, "The History and Principles of Managed Competition," Health Affairs (Supplement 1993): 24-48; W. Francis, "A Health Care Program Run by the Federal Government That Works," American Enterprise (July/August 1993): 50-61; E.W. Hoy, E.K. Wicks, and R.A. Forland, "A Guide to Facilitating Consumer Choice," Health Affairs (Winter 1996): 9-30; and M.L. Maciejewski, B.E. Dowd, and R. Feldman, "How Do States Buy Health Insurance for Their Own Employees?" Managed Care Quarterly (Summer 1997): 11-19.
4. A.C. Enthoven, "Consumer-Choice Health Plan (Second of Two Parts)," New England Journal of Medicine (30 March 1978): 709-720; A.C. Enthoven, "The History and Principles of Managed Competition," Health Affairs (Supplement 1993): 24-48; W. Francis, "A Health Care Program Run by the Federal Government That Works," American Enterprise (July/August 1993): 50-61; E.W. Hoy, E.K. Wicks, and R.A. Forland, "A Guide to Facilitating Consumer Choice," Health Affairs (Winter 1996): 9-30; and M.L. Maciejewski, B.E. Dowd, and R. Feldman, "How Do States Buy Health Insurance for Their Own Employees?" Managed Care Quarterly (Summer 1997): 11-19.
5. A.C. Enthoven, "Consumer-Choice Health Plan (Second of Two Parts)," New England Journal of Medicine (30 March 1978): 709-720; A.C. Enthoven, "The History and Principles of Managed Competition," Health Affairs (Supplement 1993): 24-48; W. Francis, "A Health Care Program Run by the Federal Government That Works," American Enterprise (July/August 1993): 50-61; E.W. Hoy, E.K. Wicks, and R.A. Forland, "A Guide to Facilitating Consumer Choice," Health Affairs (Winter 1996): 9-30; and M.L. Maciejewski, B.E. Dowd, and R. Feldman, "How Do States Buy Health Insurance for Their Own Employees?" Managed Care Quarterly (Summer 1997): 11-19.
6. T. Bodenheimer and K. Sullivan, "How Large Employers Are Shaping the Health Care Marketplace (First of Two Parts)," New England Journal of Medicine (2 April 1998): 1003-1007; T.C. Buchmueller, "Does a Fixed-Dollar Premium Contribution Lower Spending?" Health Affairs (November/December 1998): 228-235; D.M. Cutler and S. Reber, "Paying for Health Insurance: The Trade-off between Competition and Adverse Selection," Quarterly Journal of Economics (May 1998): 433-466; H. Darling, "Employers and Managed Care: What Are the Early Returns?" Health Affairs (Winter 1991): 147-160; H. Darling, "Market Reform: Large Corporations Lead the Way," Health Affairs (Spring 1995): 122-124; Enthoven, "The History and Principles;" Hoy et al., "A Guide to Facilitating Consumer Choice;" and J. Maxwell et al., "Managed Competition in Practice: 'Value Purchasing' by Fourteen Employers," Health Affairs (May/June 1998): 216-226. 3. See, for example, P. Peterson, Facing Up: How to Rescue the Economy from Crushing Debt and Restore the American Dream (New York: Simon and Schuster, 1993), 103-104, under the subheading referring to federal employees' "Benefits Bonanza."
7. T. Bodenheimer and K. Sullivan, "How Large Employers Are Shaping the Health Care Marketplace (First of Two Parts)," New England Journal of Medicine (2 April 1998): 1003-1007; T.C. Buchmueller, "Does a Fixed-Dollar Premium Contribution Lower Spending?" Health Affairs (November/December 1998): 228-235; D.M. Cutler and S. Reber, "Paying for Health Insurance: The Trade-off between Competition and Adverse Selection," Quarterly Journal of Economics (May 1998): 433-466; H. Darling, "Employers and Managed Care: What Are the Early Returns?" Health Affairs (Winter 1991): 147-160; H. Darling, "Market Reform: Large Corporations Lead the Way," Health Affairs (Spring 1995): 122-124; Enthoven, "The History and Principles;" Hoy et al., "A Guide to Facilitating Consumer Choice;" and J. Maxwell et al., "Managed Competition in Practice: 'Value Purchasing' by Fourteen Employers," Health Affairs (May/June 1998): 216-226. 3. See, for example, P. Peterson, Facing Up: How to Rescue the Economy from Crushing Debt and Restore the American Dream (New York: Simon and Schuster, 1993), 103-104, under the subheading referring to federal employees' "Benefits Bonanza."
8. T. Bodenheimer and K. Sullivan, "How Large Employers Are Shaping the Health Care Marketplace (First of Two Parts)," New England Journal of Medicine (2 April 1998): 1003-1007; T.C. Buchmueller, "Does a Fixed-Dollar Premium Contribution Lower Spending?" Health Affairs (November/December 1998): 228-235; D.M. Cutler and S. Reber, "Paying for Health Insurance: The Trade-off between Competition and Adverse Selection," Quarterly Journal of Economics (May 1998): 433-466; H. Darling, "Employers and Managed Care: What Are the Early Returns?" Health Affairs (Winter 1991): 147-160; H. Darling, "Market Reform: Large Corporations Lead the Way," Health Affairs (Spring 1995): 122-124; Enthoven, "The History and Principles;" Hoy et al., "A Guide to Facilitating Consumer Choice;" and J. Maxwell et al., "Managed Competition in Practice: 'Value Purchasing' by Fourteen Employers," Health Affairs (May/June 1998): 216-226. 3. See, for example, P. Peterson, Facing Up: How to Rescue the Economy from Crushing Debt and Restore the American Dream (New York: Simon and Schuster, 1993), 103-104, under the subheading referring to federal employees' "Benefits Bonanza."
9. T. Bodenheimer and K. Sullivan, "How Large Employers Are Shaping the Health Care Marketplace (First of Two Parts)," New England Journal of Medicine (2 April 1998): 1003-1007; T.C. Buchmueller, "Does a Fixed-Dollar Premium Contribution Lower Spending?" Health Affairs (November/December 1998): 228-235; D.M. Cutler and S. Reber, "Paying for Health Insurance: The Trade-off between Competition and Adverse Selection," Quarterly Journal of Economics (May 1998): 433-466; H. Darling, "Employers and Managed Care: What Are the Early Returns?" Health Affairs (Winter 1991): 147-160; H. Darling, "Market Reform: Large Corporations Lead the Way," Health Affairs (Spring 1995): 122-124; Enthoven, "The History and Principles;" Hoy et al., "A Guide to Facilitating Consumer Choice;" and J. Maxwell et al., "Managed Competition in Practice: 'Value Purchasing' by Fourteen Employers," Health Affairs (May/June 1998): 216-226. 3. See, for example, P. Peterson, Facing Up: How to Rescue the Economy from Crushing Debt and Restore the American Dream (New York: Simon and Schuster, 1993), 103-104, under the subheading referring to federal employees' "Benefits Bonanza."
10. T. Bodenheimer and K. Sullivan, "How Large Employers Are Shaping the Health Care Marketplace (First of Two Parts)," New England Journal of Medicine (2 April 1998): 1003-1007; T.C. Buchmueller, "Does a Fixed-Dollar Premium Contribution Lower Spending?" Health Affairs (November/December 1998): 228-235; D.M. Cutler and S. Reber, "Paying for Health Insurance: The Trade-off between Competition and Adverse Selection," Quarterly Journal of Economics (May 1998): 433-466; H. Darling, "Employers and Managed Care: What Are the Early Returns?" Health Affairs (Winter 1991): 147-160; H. Darling, "Market Reform: Large Corporations Lead the Way," Health Affairs (Spring 1995): 122-124; Enthoven, "The History and Principles;" Hoy et al., "A Guide to Facilitating Consumer Choice;" and J. Maxwell et al., "Managed Competition in Practice: 'Value Purchasing' by Fourteen Employers," Health Affairs (May/June 1998): 216-226. 3. See, for example, P. Peterson, Facing Up: How to Rescue the Economy from Crushing Debt and Restore the American Dream (New York: Simon and Schuster, 1993), 103-104, under the subheading referring to federal employees' "Benefits Bonanza."
11. T. Bodenheimer and K. Sullivan, "How Large Employers Are Shaping the Health Care Marketplace (First of Two Parts)," New England Journal of Medicine (2 April 1998): 1003-1007; T.C. Buchmueller, "Does a Fixed-Dollar Premium Contribution Lower Spending?" Health Affairs (November/December 1998): 228-235; D.M. Cutler and S. Reber, "Paying for Health Insurance: The Trade-off between Competition and Adverse Selection," Quarterly Journal of Economics (May 1998): 433-466; H. Darling, "Employers and Managed Care: What Are the Early Returns?" Health Affairs (Winter 1991): 147-160; H. Darling, "Market Reform: Large Corporations Lead the Way," Health Affairs (Spring 1995): 122-124; Enthoven, "The History and Principles;" Hoy et al., "A Guide to Facilitating Consumer Choice;" and J. Maxwell et al., "Managed Competition in Practice: 'Value Purchasing' by Fourteen Employers," Health Affairs (May/June 1998): 216-226. 3. See, for example, P. Peterson, Facing Up: How to Rescue the Economy from Crushing Debt and Restore the American Dream (New York: Simon and Schuster, 1993), 103-104, under the subheading referring to federal employees' "Benefits Bonanza."
12. T. Bodenheimer and K. Sullivan, "How Large Employers Are Shaping the Health Care Marketplace (First of Two Parts)," New England Journal of Medicine (2 April 1998): 1003-1007; T.C. Buchmueller, "Does a Fixed-Dollar Premium Contribution Lower Spending?" Health Affairs (November/December 1998): 228-235; D.M. Cutler and S. Reber, "Paying for Health Insurance: The Trade-off between Competition and Adverse Selection," Quarterly Journal of Economics (May 1998): 433-466; H. Darling, "Employers and Managed Care: What Are the Early Returns?" Health Affairs (Winter 1991): 147-160; H. Darling, "Market Reform: Large Corporations Lead the Way," Health Affairs (Spring 1995): 122-124; Enthoven, "The History and Principles;" Hoy et al., "A Guide to Facilitating Consumer Choice;" and J. Maxwell et al., "Managed Competition in Practice: 'Value Purchasing' by Fourteen Employers," Health Affairs (May/June 1998): 216-226. 3. See, for example, P. Peterson, Facing Up: How to Rescue the Economy from Crushing Debt and Restore the American Dream (New York: Simon and Schuster, 1993), 103-104, under the subheading referring to federal employees' "Benefits Bonanza."
13. T. Bodenheimer and K. Sullivan, "How Large Employers Are Shaping the Health Care Marketplace (First of Two Parts)," New England Journal of Medicine (2 April 1998): 1003-1007; T.C. Buchmueller, "Does a Fixed-Dollar Premium Contribution Lower Spending?" Health Affairs (November/December 1998): 228-235; D.M. Cutler and S. Reber, "Paying for Health Insurance: The Trade-off between Competition and Adverse Selection," Quarterly Journal of Economics (May 1998): 433-466; H. Darling, "Employers and Managed Care: What Are the Early Returns?" Health Affairs (Winter 1991): 147-160; H. Darling, "Market Reform: Large Corporations Lead the Way," Health Affairs (Spring 1995): 122-124; Enthoven, "The History and Principles;" Hoy et al., "A Guide to Facilitating Consumer Choice;" and J. Maxwell et al., "Managed Competition in Practice: 'Value Purchasing' by Fourteen Employers," Health Affairs (May/June 1998): 216-226. 3. See, for example, P. Peterson, Facing Up: How to Rescue the Economy from Crushing Debt and Restore the American Dream (New York: Simon and Schuster, 1993), 103-104, under the subheading referring to federal employees' "Benefits Bonanza."
14. T. Bodenheimer and K. Sullivan, "How Large Employers Are Shaping the Health Care Marketplace (First of Two Parts)," New England Journal of Medicine (2 April 1998): 1003-1007; T.C. Buchmueller, "Does a Fixed-Dollar Premium Contribution Lower Spending?" Health Affairs (November/December 1998): 228-235; D.M. Cutler and S. Reber, "Paying for Health Insurance: The Trade-off between Competition and Adverse Selection," Quarterly Journal of Economics (May 1998): 433-466; H. Darling, "Employers and Managed Care: What Are the Early Returns?" Health Affairs (Winter 1991): 147-160; H. Darling, "Market Reform: Large Corporations Lead the Way," Health Affairs (Spring 1995): 122-124; Enthoven, "The History and Principles;" Hoy et al., "A Guide to Facilitating Consumer Choice;" and J. Maxwell et al., "Managed Competition in Practice: 'Value Purchasing' by Fourteen Employers," Health Affairs (May/June 1998): 216-226. 3. See, for example, P. Peterson, Facing Up: How to Rescue the Economy from Crushing Debt and Restore the American Dream (New York: Simon and Schuster, 1993), 103-104, under the subheading referring to federal employees' "Benefits Bonanza."
15. B. Braden and S. Hyland, "Cost of Employee Compensation in Public and Private Sectors," Monthly Labor Review (May 1993): 14-21; and M. Miller, "The Public-Private Pay Debate: What Do the Data Show?" Monthly Labor Review (May 1996): 18-29.
16. B. Braden and S. Hyland, "Cost of Employee Compensation in Public and Private Sectors," Monthly Labor Review (May 1993): 14-21; and M. Miller, "The Public-Private Pay Debate: What Do the Data Show?" Monthly Labor Review (May 1996): 18-29.
17. Braden and Hyland, "Cost of Employee Compensation;" A.C. Foster, "Public and Private Sector Defined Benefit Pensions: A Comparison," Compensation and Working Conditions (Summer 1997): 37-43; Miller, "The Public-Private Pay Debate;" and W. Wiatrowski, "On the Disparity between Private and Public Pensions," Monthly Labor Review (April 1994): 3-9.
18. Braden and Hyland, "Cost of Employee Compensation;" A.C. Foster, "Public and Private Sector Defined Benefit Pensions: A Comparison," Compensation and Working Conditions (Summer 1997): 37-43; Miller, "The Public-Private Pay Debate;" and W. Wiatrowski, "On the Disparity between Private and Public Pensions," Monthly Labor Review (April 1994): 3-9.
19. Braden and Hyland, "Cost of Employee Compensation;" A.C. Foster, "Public and Private Sector Defined Benefit Pensions: A Comparison," Compensation and Working Conditions (Summer 1997): 37-43; Miller, "The Public-Private Pay Debate;" and W. Wiatrowski, "On the Disparity between Private and Public Pensions," Monthly Labor Review (April 1994): 3-9.
20. Braden and Hyland, "Cost of Employee Compensation;" A.C. Foster, "Public and Private Sector Defined Benefit Pensions: A Comparison," Compensation and Working Conditions (Summer 1997): 37-43; Miller, "The Public-Private Pay Debate;" and W. Wiatrowski, "On the Disparity between Private and Public Pensions," Monthly Labor Review (April 1994): 3-9.
21. Congressional Budget Office, Comparing Federal Employee Benefits with Those in the Private Sector (Washington: CBO, August 1998); and Congressional Research Service, Federal Civil Service Retirement: Comparing the Generosity of Federal and Private-Sector Retirement Systems, CRS Report for Congress no. 95-687 EPW (Washington: CRS, 5 June 1995).
22. Congressional Budget Office, Comparing Federal Employee Benefits with Those in the Private Sector (Washington: CBO, August 1998); and Congressional Research Service, Federal Civil Service Retirement: Comparing the Generosity of Federal and Private-Sector Retirement Systems, CRS Report for Congress no. 95-687 EPW (Washington: CRS, 5 June 1995).
23. CBO, Comparing Federal Employee Benefits. Absent nationally representative data on private benefits, the values for private-sector employees were based on data characterizing large companies from an employee benefit consulting firm convenience sample.
24. Overall, cost per labor hour for health insurance is higher in these governments, but this is largely owing to a larger share of all employees' being offered and participating in health plans, as well as a somewhat higher percentage of covered state and local employees' having fully paid benefits. See Braden and Hyland, "Cost of Employee Compensation;" and A.C. Foster, "Brief: Employee Benefits in the United States, 1993-94," Compensation and Working Conditions (Spring 1997): 46-50. We did not find relative values of premiums for state and local enrollees in the literature.
25. Overall, cost per labor hour for health insurance is higher in these governments, but this is largely owing to a larger share of all employees' being offered and participating in health plans, as well as a somewhat higher percentage of covered state and local employees' having fully paid benefits. See Braden and Hyland, "Cost of Employee Compensation;" and A.C. Foster, "Brief: Employee Benefits in the United States, 1993-94," Compensation and Working Conditions (Spring 1997): 46-50. We did not find relative values of premiums for state and local enrollees in the literature.
26. California Health Policy Roundtable, Health Plan Liability (Berkeley, Calif.: Center for Health and Public Policy Studies, University of California, June 1999); U.S. General Accounting Office, Employer-Based Health Plans: Issues, Trend's, and Challenges Posed by ERISA, GAO/HEHS-95-167 (Washington: GAO, July 1995); and S. Hunt,J. Saari, and K. Traw, Impact of Potential Changes to ERISA: Litigation and Appeal Experience of CalPERS, Other Large Public Employers, and a Large California Health Plan (Menlo Park, Calif.: Henry J. Kaiser Family Foundation, June 1998).
27. California Health Policy Roundtable, Health Plan Liability (Berkeley, Calif.: Center for Health and Public Policy Studies, University of California, June 1999); U.S. General Accounting Office, Employer-Based Health Plans: Issues, Trend's, and Challenges Posed by ERISA, GAO/HEHS-95-167 (Washington: GAO, July 1995); and S. Hunt,J. Saari, and K. Traw, Impact of Potential Changes to ERISA: Litigation and Appeal Experience of CalPERS, Other Large Public Employers, and a Large California Health Plan (Menlo Park, Calif.: Henry J. Kaiser Family Foundation, June 1998).
28. California Health Policy Roundtable, Health Plan Liability (Berkeley, Calif.: Center for Health and Public Policy Studies, University of California, June 1999); U.S. General Accounting Office, Employer-Based Health Plans: Issues, Trend's, and Challenges Posed by ERISA, GAO/HEHS-95-167 (Washington: GAO, July 1995); and S. Hunt,J. Saari, and K. Traw, Impact of Potential Changes to ERISA: Litigation and Appeal Experience of CalPERS, Other Large Public Employers, and a Large California Health Plan (Menlo Park, Calif.: Henry J. Kaiser Family Foundation, June 1998).
29. California Health Policy Roundtable, Health Plan Liability; and Hunt et al., Impact of Potential Changes to ERISA.
30. California Health Policy Roundtable, Health Plan Liability; and Hunt et al., Impact of Potential Changes to ERISA.
31. S.H. Long and M.S. Marquis, "Stability and Variation in Employment-Based Health Insurance Coverage, 1993-1997," Health Affairs (November/December 1999): 133-139; and M.S. Marquis and S.H. Long, "Trends in Managed Care and Managed Competition, 1993-1997," Health Affairs (November/December 1999): 75-88.
32. S.H. Long and M.S. Marquis, "Stability and Variation in Employment-Based Health Insurance Coverage, 1993-1997," Health Affairs (November/December 1999): 133-139; and M.S. Marquis and S.H. Long, "Trends in Managed Care and Managed Competition, 1993-1997," Health Affairs (November/December 1999): 75-88.
33. For more details of these methods, see 1997 Employer Health Insurance Survey: Final Methodology Report (Research Triangle Park, N.C.: Research Triangle Institute, 1998).
34. The weighted samples represent employees in all private employment establishments that have at least one employee and in all substate government units. Self-employed persons with no employees are excluded.
35. Long and Marquis, "Stability and Variation;" and Marquis and Long, "Trends in Managed Care."
36. Long and Marquis, "Stability and Variation;" and Marquis and Long, "Trends in Managed Care."
37. Specifically, we regressed reported premiums on the actuarial value of the plan and employee characteristics. We then measured the adjusted premium as the observed premium for a plan minus the product of the regression coefficients and the vector of differences between the quantity measures for the plan and the average value of the quantity measures for all plans. Equivalently, the adjusted premium is the predicted premium for a plan with average characteristics plus the residual from the regression equation for the specific plan in question.
38. Long and Marquis, "Stability and Variation."
39. Marquis and Long, "Trends in Managed Care."
40. Ibid.
41. In practice, the federal government pays a fixed-dollar amount not to exceed 75 percent of the plan cost; hence, there is some partial government subsidy of the difference between the lowest-price and mid-price plans. For all other employers, our measure of incentives is based on a self-reported contribution policy.
42. Federal workers are provided results of satisfaction surveys. Among both private and state and local workers provided information, about 40 percent receive satisfaction survey results, 10 percent receive outcome measures such as Health Plan Employer Data and Information Set (HEDIS) measures, and 50 percent receive both types of information.
43. The employer shares for family coverage in state and local governments are 75 percent and 79 percent, respectively (not shown).
44. However, having a choice of plans, the scope and breadth of benefits available, and the exercise of employer's purchasing power all may have value to the employee that we are unable to measure directly.
45. This is not to say that the FEHBP does not have its critics. See A.C. Enthoven, "Effective Management of Competition in the FEHBP," Health Affairs (Fall 1989): 33-50.
46. Much of the difference in the estimates can be explained by the fact that the CBO used information for an unrepresentative sample of very large employers. If we had restricted our comparison to all large employers, the estimated gap would be about $450.
47. The likelihood is similar if the contrast is limited to workers in large private firms only.
48. California Health Policy Roundtable, Health Plan Liability; and Hunt et al., Impact of Potential Changes to ERISA.
49. California Health Policy Roundtable, Health Plan Liability; and Hunt et al., Impact of Potential Changes to ERISA.