Wednesday, February 06, 2019

How many might be loathe to trade employer-sponsored insurance for expanded Medicare?

In my last post, I stressed that a significant and politically powerful subset of the 156-odd million Americans who get health insurance through employers have coverage way better than the norm. Those with the most generous employer-sponsored coverage (ESI) might be averse to transitioning to a public plan with significant cost sharing -- say, to a plan with coverage comparable to a typical Medicare Advantage plan.

Out-of-pocket costs for enrollees in ESI have risen rapidly in recent years; premiums have risen more slowly, but steadily. Nonetheless, a lot of people have coverage a good deal more generous than the norms reported in the Kaiser Family Foundation's 2018 Employer Health Benefits Survey -- e.g., deductibles well below the $1,573 average for single coverage, and premiums well below the $99 per month average for single and $462/month average for family coverage.

The figures below**, taken from the Kaiser survey, highlight benefits enjoyed by insured employees with the most generous coverage.
  • For 12% of covered workers, the employer pays 100% of the premium for single coverage. Another 8% of workers in single coverage pay less than $500 per year. Just 3% of covered workers pay nothing for family coverage; another 4%, pay under $1500 annually.

  • 15% of all covered workers in single coverage (and 19% in organizations with unionized workers) are in plans with no general deductible. For 11% of those in single coverage who do have a deductible, it's under $500. 42% of covered workers in single coverage have a deductible below $1000, suggesting coverage above the gold level in the ACA marketplace.*

  • For 15% of employees with single coverage in plans with a deductible whose employer contributes to an HRA or HSA, the employer account contribution zeroes out the deductible. For another 15%, the employer contribution reduces the effective deductible to under $500. Overall, 29% of covered workers are in plans paired with an HRA or HSA. Taken together, these workers comprise another 9% of workers in single coverage with effective deductibles in the $0-$500 range -- suggesting that more than a third of workers in single coverage still have a deductible in that range.

  • 16% of insured workers have no cost sharing other than the deductible for hospital admissions. The same percentage have no additional cost sharing for outpatient surgery.

  • 14% of employees in single coverage have an annual out-of-pocket maximum below $2,000.
These figures seem to point to perhaps 15% of the ESI population -- about 40 million people -- enjoying especially generous coverage -- and a higher percentage than that in plans with coverage more comprehensive than, say, a typical Medicare Advantage plan. At least that many might be averse to transitioning to all but the most generous public program.  That may explain why state-based single payer bills and plans in Vermont, Colorado, California and New York featured plans with minimal out-of-pocket costs -- and foundered (or remain in limbo) because of taxes required.  

Bernie Sanders' Medicare for All plan, of course, covers almost everything and requires almost no out-of-pocket costs. It would also require enormous payroll or other taxes, broadly based. Different choices in the tradeoff between required revenue and benefit levels would create different sets of winners and losers.

And of course, loss aversion and hostility to a public plan would involve more than a cold-eyed comparison of benefits.  ACA coverage was demonized in Republican circles and red states to the point where millions or perhaps even tens of millions wouldn't look at it. While "Medicare" is currently a sterling brand for Americans, right-wing claims that expansion will ruin it would likely resonate with much of the country. That attack has already launched, with a Trump broadside from last October: "the Democratic Party’s so-called Medicare for All would really be Medicare for None."

"I’m not sure that only those with great ESI will fear losing their current coverage and being enrolled in something Medicare-like," says Stan Dorn of Families USA."Polls show that most people like their ESI... fear is powerful."  

None of this is to suggest that Democrats should balk at a major expansion of coverage should they gain control of Congress and the presidency. If they do so, however, the product had better be good enough to trump the fear -- as ACA marketplace coverage was not, for too many (in contrast to ACA Medicaid expansion). And once again, those who like their plans -- or who like offering their plans to employees -- should be able to keep them, as in the Medicare buy-in bill, Medicare for America.


* A bit shy of 50% of enrollees in the ACA marketplace also have coverage above gold level, thanks to Cost Sharing Reduction (CSR).

**These figures don't include variations (reported by Kaiser) according to plan type (HMO, PPO, POS, HDHP), firm size, or prevalence of high-wage or low-wage workers. Those variations are significant but don't always cut in the same direction. For example, while small employers generally offer less generous benefits, a higher percentage of small employers (27%) pay the full premium for single coverage. POS plans have the lowest OOP in several categories. 

1 comment:

  1. Thanks for posting.

    Some of the workers who have 100% coverage are not quite so well off.
    If they have a non-working spouse and kids, they may indeed get their own insurance for free. But if the employer pays nothing for spouse and kids, this family may have big problems.

    The classic Bernie Sanders pitch has been this" "New taxes of $2000 won't hurt you, because you are paying $5,000 for premiums right now."

    This message is exciting for some, but as you point out it does not work for everyone.

    Also, there is another group of persons who get free or nearly-free insurance today, and who would gripe loudly about new taxes.

    This group is Veterans who use the VA, and subscribers to Tricare.

    Some readers may remember the 1989 debacle about the Catastrophic Medicare Act. About 10% of seniors would have had to pay a tax surcharge, but you would have thought it was the French Revolution for all the protests.

    I am working on an article called "20 Key Questions for Single Payer Advocates" that discusses these challenges in more detail.