By Suzanne M. Paranjpe, Ph.D., Senior Vice President, Greater Detroit Area Health Council
New Directions for Research and Action is a conference designed to be a collaborative forum for discussing the challenges and opportunities of improving communication of information about health care quality to consumers. Discussions will be based on the Research and Action Agenda, developed by the Work Group on Consumer Health Information.
Because that agenda does not address the problems of specific segments of the population, the Work Group commissioned a set of papers that focus on how issues relate to the information and health care needs of certain groups. This discussion paper is being distributed with the agenda in preparation for the conference in December 2000.
Introduction
Employment-Based Coverage—Who is Covered, Who is Not?
Task I. Educate and Motivate Consumers to Use Quality Information
Task II. Improve the Supply and Delivery of Consumer-Oriented Quality
Information
Task III. Develop Consumer-Oriented Measures
Task IV. Identify the Market Characteristics and the Purchasing Strategies that Support Consumer Use of Quality Information
Task V. Evaluate the Impact and Utility of Consumer Information Efforts
References
Today’s consumers are increasingly interested in a wide variety of health care topics, and health care tops the list of most frequently searched subject matters on the Internet. These topics can run the gamut from how to choose a health plan to choice of medical treatment. Regardless of the specific health-related topic, there is frequently a common thread—an interest in assessing health care quality.
Since 1995, around 65 percent of consumers with private health care insurance obtained coverage as part of their employment relationship.1 For the employed consumer, the plan sponsor often plays a key role in providing information on health care quality.
This paper will examine the history of providing information to consumers with employment-based health care coverage. It will also explore the challenges and future opportunities to provide this population expanded information on health care quality.
For purposes of this paper, consumers are defined as those individuals who participate in a health care plan offered through the workplace. Purchasers will be defined as those employers, union trust funds, or Federal, State, and local governments that provide health care coverage to these individuals as part of the employment relationship.
Return to ContentsSince the late 1930s and 1940s, health care insurance through the workplace has been the major source of private health care insurance. Workplace coverage includes both employer-sponsored coverage as well as that provided by unions. In 1997, approximately 166 million persons, or 71.4 percent of the United States population age 65 and under, had private health care insurance.1 Of those with health insurance coverage, 65.1 percent obtained private health care insurance through the workplace. However, the percentage of workers with employment-based coverage has been declining. In 1984, 69 percent of consumers had employment-based coverage, but only 65 percent had such coverage in 1997.
Private insurance coverage through the workplace does not vary significantly by sex. Approximately 65.4 percent of men and 64.9 percent of women had employment-based coverage in 1997. However, the prevalence of private insurance does differ by race. As demonstrated in Table 1, the percent of non-whites with workplace private insurance has historically been less than that of whites.
| Characteristic | 1984 | 1989 | 1994 | 1995 | 1996 | 1997 |
| White | 72.0 | 71.2 | 67.4 | 68.8 | 67.9 | 68.0 |
| Black | 53.3 | 53.6 | 50.2 | 51.8 | 53.0 | 53.7 |
|
Asian and Pacific Islander |
64.4 | 60.2 | 57.8 | 60.2 | 59.4 | 60.5 |
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The prevalence of employment-based coverage for individuals of Hispanic origin also differs greatly from that of non-Hispanics. As shown in Table 2, in 1997, only 44.5 percent of all Hispanics had employment-based coverage, as compared with 71.4 percent of white non-Hispanics.
| Characteristic | 1984 | 1989 | 1994 | 1995 | 1996 | 1997 |
| All Hispanic | 52.9 | 48.6 | 45.1 | 44.9 | 44.6 | 44.5 |
|
White, non-Hispanic |
74.0 | 74.0 | 70.7 | 72.3 | 71.5 | 71.4 |
|
Black, non-Hispanic |
53.4 | 53.7 | 50.6 | 52.3 | 53.3 | 53.9 |
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The prevalence of private insurance obtained through the workplace is positively related to household income. In 1997, 82 percent of the population whose household income exceeded 200 percent of the poverty level obtained private insurance through the workplace. In contrast, only 19.6 and 36.8 percent of the population below 100 percent and 100-149 percent of the poverty level respectively obtained private insurance through the workplace. As shown in Table 3, there has been a steady decline since 1984 in the percent of the population, regardless of poverty level. However, the most striking declines have been for those below 200 percent of the poverty level. Since income and education are highly correlated, individuals with lower level of education are more likely not to have employment-based health care coverage.
| All Ages | 1984 | 1989 | 1994 | 1995 | 1996 | 1997 |
|
Below 100 percent |
23.8 | 19.7 | 16.8 | 17.7 | 15.8 | 19.6 |
|
110-149 percent |
51.1 | 45.0 | 40.6 | 41.7 | 40.4 | 36.8 |
|
150-199 percent |
68.6 | 61.9 | 58.3 | 60.0 | 60.0 | 58.1 |
|
200 percent or more |
85.0 | 83.9 | 82.7 | 83.4 | 83.0 | 82.0 |
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Finally, there are also regional variations in the employment-based health insurance coverage. The percent of the population with employment-based private insurance is the highest in the Midwest, which may be reflective of the strength of organized labor in the region. The Northeast follows the Midwest, with the lower levels of employment-based coverage in the South and the West. In all geographic regions, the percent of the population with employment has also declined markedly since 1984.
| Region | 1984 | 1989 | 1994 | 1995 | 1996 | 1997 |
| Northeast | 74.1 | 75.1 | 70.0 | 70.1 | 69.2 | 69.7 |
| Midwest | 72.1 | 73.4 | 71.4 | 71.6 | 72.6 | 71.4 |
| South | 66.2 | 63.8 | 60.0 | 62.4 | 61.0 | 61.6 |
| West | 64.9 | 64.2 | 58.8 | 61.2 | 60.1 | 59.4 |
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Return to ContentsPrior to examining how to motivate employed consumers to use health care information in decisionmaking, it is important to first explore the purchasers’ decisionmaking process. In the model of employment-based health care coverage, the first level decisionmaker is the purchaser, with the consumer as a second-level decisionmaker. The purchaser must first make first determine whether or not to offer its workforce health care coverage. After making the decision to provide coverage, the purchaser will select the health plan(s) to offer to its workers. The purchaser’s selection of health plans will be based on one or more of the following key criteria:
The relative importance of each of the above elements will vary by purchaser. Purchasers committed to value-based health care purchasing principles, a balancing of quality and cost, will strive to balance both elements. In other environments, cost considerations may dominate the purchaser’s decisionmaking process.
Purchasers will also determine the number of plan choices that will be made available. As detailed in Table 5, purchasers with more than 500 employees are more likely to offer a choice of plans. Consumers in firms of less than 500 employees are more likely to have a single choice of a plan, which is typically a managed care offering.
| Fewer than 500 Employees | 500 or More | All | |
| Employees offered a choice of plans | 25% | 59% | 43% |
| Employees by Type of Plan Offered | |||
| One type of managed care plan only | 68% | 39% | 53% |
| Indemnity only | 14% | 12% | 12% |
| Multiple managed care plans, no indemnity | 11% | 27% | 20% |
| Managed care and indemnity plans | 7% | 22% | 15% |
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The consumer with employment-based health care coverage can thus make choices within the constraints established by the purchaser. For some consumers, typically those in firms with more that 500 workers, their first decision will be the selection of the health plan. Given that decision, or the absence of needing to make the decision because they are offered only one plan, the consumer must then select a provider. Both the choice of plan and provider will reflect the consumer’s individual preferences and definition of quality.