Medical and retirement plan coverage: Exploring the decline in recent years

Monthly Labor Review

Volumn 127, Issue 8, 2004, Pages 29-35

  Wiatrowski, William J ^a  

^a BUREAU OF LABOR STATISTICS   (United States)

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EID: 20444445506     PISSN: 00981818     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (21)

1. The term "medical care" is used throughout this article to refer to coverage for medical conditions, such as hospitalization, physician visits, and substance abuse treatment. Separate coverage for dental or vision care expenses was excluded from this analysis.
2. Due to changes in survey methodology, the percent of workers participating in medical care in 2003 excludes 8 percent of workers who had some type of coverage (medical, dental, vision, or some combination) that could not be identified in the survey data collection process. This may serve to exaggerate the decline in medical care coverage. In his article, "New statistics for health insurance from the National Compensation Survey," in this issue of the Review, Michael Lettau imputes a coverage type for the 8 percent of workers with missing data. After imputation, Lettau shows that 51 percent of workers have medical care coverage in 2003, identical to the participation rate found in the prior survey, conducted in 2000.
3. A defined benefit plan provides a periodic benefit at retirement, which is derived from a fixed formula and is guaranteed by the employer. A defined contribution plan specifies a formula for depositing funds into an account for each employee, but does not guarantee a future benefit. The trend over the last quarter century has been away from defined benefit plans toward defined contribution plans. For more information on this trend, see Employee Benefit Research Institute, EBRI Research Highlights: Retirement Benefits, Issue Brief number 258, June 2003.
4. Section 401 (k) of the Internal Revenue Code, enacted as part of the Revenue Act of 1978, allows employers to establish defined contribution plans that permit employee contributions to be made on a tax-deferred basis. These plans, commonly referred to as 401 (k) plans, became popular beginning in the early 1980s, once regulations addressing plan design issues were finalized.
5. Diane Herz, Joseph Meisenheimer, and Harriet Weinstein, "Health and retirement benefits: data from two BLS surveys," Monthly Labor Review, March 2000, pp. 3-20.
6. John Turner, Leslie Muller, and Satyendra Verma, "Defining participation in defined contribution pension plans," Monthly Labor Review, August 2003, pp. 36-43.
7. Beth Levin Crimmel, "Employee Choice in Employer-Sponsored Health Insurance Plans: 2001," Statistical Brief #29, Center for Financing, Access and Cost Trends, Agency for Healthcare Research and Quality, U.S. Department of Health and Human Services.
8. See, for example, Craig Copeland, "Employment-Based Retirement and Pension Plan Participation: Declining Levels and Geographic Differences," EBRI Issue Brief, October 2003.
9. In 1993, 24 percent of private sector employment was in goods-producing industries, such as construction and manufacturing. In 2003, 20 percent of private sector employment was in goods-producing industries.
10. In the BLS National Compensation Survey, approximately 20 percent of the employer locations (called establishments) in the sample are replaced each year with new establishments. For the years covered by this article, a similar, though less regular, sample replacement pattern was used.
11. While there have been a number of new laws and court rulings throughout the past 10 years that could affect medical care and retirement benefit coverage, the timing of the BLS data do not correspond with the timing of these changes. Thus, it is difficult to determine what effect, if any, new laws and court rulings had on benefit coverage using these data.
12. For more details on employment data from the Bureau of Labor Statistics, go to www.bls.gov/ces.
13. The figures in the text may differ slightly from those in the appendix due to the use of rounded numbers in the text and more precise numbers in the appendix.
14. While the BLS benefits survey was not designed to estimate employment, the share of employment in various groups is similar to that found in the Bureau's Current Employment Statistics program. For example, the Current Employment Statistics program shows that employment in goods-producing industries declined from 24 to 20 percent of private industry employment from 1993 to 2003. Data from the benefits survey show a similar decline - from 26 percent to 23 percent of private industry employment over the same period.
15. The exact effect of all of the employment shifts taken together cannot be determined from the data, because some of the shifts are over-lapping. For example, some of the shift from union to nonunion employment may have included a shift from full-time to part-time workers.
16. William J. Wiatrowski, "Counting the Incidence of Employee Benefits," Compensation and Working Conditions, June 1996, pp. 10-18.
17. The Bureau's benefit surveys are designed to capture data on the number and percent of workers with benefit coverage. Different methods were used to determine the percent of establishments offering benefits in 1992/93 and in 2003. In 1992/93, an establishment was counted as offering the benefit if at least one worker was found with the benefit. Because the survey only covers a sample of workers in each establishment, this method may serve to undercount the percentage of establishments offering coverage. In 2003, all establishments were asked if they offered coverage to any worker, regardless of whether any workers were counted as covered. In addition, data on the percent of establishments offering benefits in 1992/93 refer to medical care benefits, while 2003 data refer to the broader concept of health insurance (which may include separate dental or vision benefits).
18. Because the 1992-93 survey did not specifically ask questions about the percent of employees offered benefits, several proxy estimates were derived. These estimates vary based on assumptions. For complete details, see William J. Wiatrowski, "Counting the Incidence of Employee Benefits," Compensation and Working Conditions, June 1996, pp. 10-18.
19. A deferred profit sharing plan provides participants with a share of company profits, typically allocated to each participant equally or proportionally to salary. A money purchase plan provides a fixed employer contribution, typically a percent of salary, to each employee's account. These plans may allow optional employee contributions, but generally do not require employee contributions as a condition of joining the plan.
20. These data indicate the percent of full-time employees who are covered by various types of defined contribution plans, not the percent of plans offered. If anything, these data underestimate the prevalence of savings and thrift plans offered among all defined contribution plans because participation in savings and thrift plans (which require an employee contribution) is generally a lower percentage of employees than is participation in other defined contribution plans (which typically do not require an employee contribution). Data on plan type are not yet available for 2003.
21. David M. Cutler, "Employee Costs and the Decline in Health Insurance Coverage," National Bureau of Economic Research Working Paper 9036, July 2002.