Chartbook #15

State differences in employer-sponsored health insurance, 2003.

By James M. Branscome, M.S., and Beth Levin Crimmel, M.S.

The estimates in this report are based on the most recent data available from MEPS at the time the report was written. However, selected elements of MEPS data may be revised on the basis of additional analyses, which could result in slightly different estimates from those shown here. Please check the MEPS Web site for the most current data - www.meps.ahrq.gov.

The mission of AHRQ is to improve the quality, safety, efficiency, and effectiveness of health care for all Americans by:

• Using evidence to improve health care.
• Improving health care outcomes through research.
• Transforming research into practice.
   

Suggested citation:

Branscome JM, Crimmel BL. State differences in employer-sponsored health insurance, 2003. Rockville (MD):Agency for Healthcare Research and Quality; 2006. MEPS Chartbook No. 15. AHRQ Pub. No. 06-0030.

Definition of Terms

Establishment— A particular workplace or location.

Firm— A business entity consisting of one or more business establishments under common ownership or control. A firm represents the entire organization, including the company headquarters and all divisions, subsidiaries, and branches. A firm may consist of a single-location establishment, in which case the establishment and firm are identical.

Small firm— A firm with fewer than 50 employees.

Large firm— A firm with 50 or more employees.

Employee— A person on the actual payroll. Excludes temporary and contract workers but includes the owner or manager if that person works at the firm.

Health insurance plan— An insurance plan that provides hospital and/or physician coverage to an employee in return for a premium payment.

Offer health insurance—To make available or contribute to the cost of any health insurance plan for active employees. Premium greed upon fee paid for coverage of medical benefits for a defined benefit period, usually a calendar year. Premiums can be paid by employers or employees, or shared by both.

Single coverage—Health insurance that covers the employee only.

Family coverage—Health insurance that covers the employee and the employee's family. If a plan offers more than one arrangement for family coverage, premium information for a family of four was reported.

Employee-plus-one coverage—Health insurance that covers the employee plus one family member at a lower premium level than family coverage. The family member could be a spouse or a child. If premiums differ for employee-plus-child and employee-plus-spouse coverage, information for employee-plus-child was reported.

Level of significance—The maps show States as being at or above the national average or below it. States where the estimates are statistically significantly different from the national average at the 0.05 level are noted with a star. For this chartbook, a multiple comparison procedure using the Benjamini-Hochberg Adjustment was done when simultaneously testing whether each of the States differs from the national average. Even though a State's estimate may be significantly different than the national average, it may not be different than that of other States.

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This report presents variations by State in employees' access to and enrollment in job-related health insurance and in the cost of that insurance for 2003. Key findings include:

Access and Enrollment

• In 34 States, the portion of employees working for firms that offered health insurance in 2003 did not differ from the national average of 86.8%. Hawaii and the District of Columbia had the highest offer rates at over 96%; Montana (73.6%) and Wyoming (72.1%) had the lowest rates.
   

• In every State, more than 90% of employees in large firms worked where health insurance was offered. There was much more variation by State in small-firm offer rates.
   

• Small-firm eligibility rates were lower than the U.S. rate in Nevada, South Dakota, and Idaho. Only Nebraska had a large-firm eligibility rate below the national average.
   

• In most States, about 80% or more of eligible employees were enrolled in employer-sponsored health insurance.

Premiums and Employee Contributions

• The annual average single premium did not differ from the national average of $3,481 in 41 States.
   

• Thirty-six States had average employee single-coverage contributions that did not differ from the Nation's ($606) in 2003. Employees in Nebraska paid the most for coverage ($875) and those in Hawaii the least ($251).
   

• Eight States had premiums for family coverage that were greater than the U.S. average ($9,249), with the District of Columbia the highest ($10,748). Twelve States had below-average family premiums, with North Dakota the lowest ($7,866).
   

• Of all employees of small firms, those working in Louisiana contributed the most to family coverage ($3,713), while those working in West Virginia contributed the least ($1,153). For large firms, employees in Maine contributed the most ($2,853), while employees in West Virginia contributed the least ($1,630).

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This chartbook presents State estimates from the 2003 Medical Expenditure Panel Survey (MEPS) Insurance Component, which is sponsored by the Agency for Healthcare Research and Quality (AHRQ). The chartbook is split into two sections based on key aspects of State differences in employer-sponsored health insurance. The first section looks at workers' access to job-related health insurance and their enrollment rates. The second section examines State differences in the cost of that insurance, both to the employer offering coverage and to the worker taking the coverage.

This chartbook and other MEPS publications are available electronically on the MEPS Web site at www.meps.ahrq.gov.

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Data in This Report

The data in this report come from the private-sector sample of the Medical Expenditure Panel Survey Insurance Component (MEPS IC), conducted for the Agency for Healthcare Research and Quality by the U.S. Census Bureau. The MEPS IC is an annual survey with approximately 38,000 responding private-sector establishments and State and local governmental units in 2003. It provides statistics on employer-sponsored insurance both at the national level and individually for all 50 States and the District of Columbia (a total of 51 State-level estimates).

The data shown in this chartbook refer exclusively to the more than 31,000 responding private-sector establishments that reported data for 2003. They are drawn from the summary data tables that appear on the MEPS Web site at www.meps.ahrq.gov.

In earlier years of the MEPS IC survey, State-level estimates could not be produced for every State every year due to sample size considerations resulting from budget constraints. In 2003, for the first time, State-level estimates were available for all States in the same year.

State estimates cover employers with workplace locations in that State and the employees working at those locations.

Some employees may work in one State and reside in another.

For each map in this report, States are classified based on whether they are at or above the national average or below the national average. They are shaded accordingly. States where the estimates are statistically significantly different from the national average at the 0.05 level are noted with a star. For statistical purposes, these significance tests are performed on all 51 State-level estimates—50 States and the District of Columbia— At the same time. (See the definitions section for more detail.)

Unless otherwise noted, only differences that are statistically significant at the 0.05 level are discussed in the text. When a State is described as having one of the highest or lowest rates, this means that it is significantly above or below the national average, but not necessarily that it is significantly different from other States. For example, the District of Columbia had the highest average family premium ($10,748) in 2003. While this is statistically different from the national average ($9,249), it is not statistically larger than the average family premiums for a number of other States, such as Alaska ($10,564), Delaware ($10,499), Maine ($10,308), and New Jersey ($10,168). All comparisons made in this chartbook are comparing the State estimates to the national estimate. Unless specifically stated, we did not make comparisons between States.

Differences in the size of the standard errors for estimates from one State to the next can result in what may appear to be inconsistent results. For example, Alaska had the highest average single premium ($4,011), but this premium is not significantly above the national average of $3,481 because of the large standard error for the Alaska estimate ($264). However, Maine, with a smaller average single premium of $3,852, is significantly above the national average because it has a smaller standard error ($98) than Alaska.

The premium data in MEPS do not assume a standardized package of benefits for all health insurance plans. Because plans offer various benefits, higher premiums in a State may indicate that the plans in that State offer more generous benefits. The variations in premiums by State also may reflect differences in medical costs, enrollment patterns, State regulations, cost-sharing provisions such as deductibles and copayments, and insurance plan types.

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Section 1: Access and Enrollment

Job-related health insurance plays a critical role in covering American workers and their families. Most employees work for firms that offer health insurance.

However, some employees do not. And some employees are not eligible for health insurance even though their firms offer it, for reasons such as working a part-time schedule, lack of job tenure, or a preexisting health condition.

Workers eligible for coverage may choose not to enroll because they have health insurance through a spouse, their employee contribution is more that they are willing to pay, or they do not believe they need coverage.

Access to employer-sponsored health insurance differs by the size of the firm. In the United States, 71.7% of private-sector employees work in firms with 50 or more employees. The remaining 28.3% of employees are in small firms of fewer than 50 workers. In 10 States, the number of employees working for small firms is higher than the U.S. average: Alaska, Idaho, Maine, Montana, New Hampshire, North Dakota, South Dakota, Vermont, Washington, and Wyoming. With the exception of Washington, these States all have rural populations that make up a higher percentage of their total population than the U.S. average.

Did offer rates vary by State?

• In 34 States, the portion of employees working for firms that offered health insurance in 2003 was not significantly different from the national average of 86.8%.
   

• Nine States had offer rates that were higher than the U.S. total, with the rate exceeding 96% in both Hawaii and the District of Columbia.
   

• Of the eight States where employees were less likely to work for firms offering insurance than in the Nation as a whole, Montana (73.6%) and Wyoming (72.1%) had the lowest rates.

Percent of private-sector employees working for firms that offer health insurance, 2003

How did firm size affect offer rates?

• Overall, nearly all employees of large firms (96.8%) worked where coverage was offered, compared to only 61.6% of employees of small firms.
   

• The portion of employees in large firms who worked where insurance was offered did not vary much from State to State: more than 90% in every State. Ten States had rates above the U.S. average that were over 98%. No State had a large-firm offer rate that was significantly lower than the national rate in 2003.
   

• There was much more variation by State in small firms' offer rates. In eight States, about 70% or more of employees in small firms were offered coverage. The seven States that were below average for small employers had rates at or below 51%.

Percent of private-sector employees working for firms that offer health insurance, 2003

Did employee eligibility differ for States?

• During 2003, the percentage of eligible employees was the same in both small and large firms that offered coverage—78.5%.
   

• Small-firm eligibility rates were lower than the U.S. rate in Nevada (70.3%), South Dakota (68.7%), and Idaho (66.9%). No State had a small-firm rate that was above average.
   

• Compared to the national large-firm average, only Nebraska had a lower eligibility rate (68.6%). As was the case for small firms, no State's large-firm rate was greater than the U.S. average.

Percent of private-sector employees eligible for health insurance at establishments that offer health insurance, 2003

Were employees in some States more likely to enroll?

• About 80% of eligible employees enrolled in an employer-sponsored health insurance plan in 2003 in the United States as a whole. Enrollment was at about 80% or more in most States.
   

• Four States—Hawaii (86.0%), Alaska (86.0%), Oregon (85.9%), and South Carolina (83.8%)—had enrollment rates above the national average.
   

• Wisconsin was the sole State with enrollment below the U.S. average, at 74.5%.

Percent of private-sector employees eligible for health insurance at establishments that offer health insurance who are enrolled, 2003

How did enrollment vary by firm size?

• Eligible employees of large firms were more likely to enroll (81.0%) than eligible employees of small firms (77.3%) during 2003.
   

• Only Oregon (87.8%) and Hawaii (86.7%) had enrollment rates for large firms that were above the U.S. rate. No State's enrollment fell below the national average for large firms.
   

• Washington (84.8%), Hawaii (84.1%), and Idaho (83.5%) had above-average enrollments for small firms. Only Wisconsin had a below-average enrollment rate (69.7%) for eligible employees of small firms.

Percent of private-sector employees eligible for health insurance at establishments that offer health insurance who are enrolled, 2003

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Section 2: Premiums and Employee Contributions

Cost is a key determinant of whether an employer chooses to offer health insurance to its employees and also of whether employees choose to enroll in a plan.

The premium and employee contribution for a given health insurance plan vary by the number of people covered by the policy. In 2003, 47.3 percent of employees who enrolled in health insurance through their employer took single coverage, 16.5 percent took employee-plus-one coverage (a plan that covers an employee plus either a spouse or a child), and 36.2 percent took family coverage (data not shown).

The employee share of the premium, or contribution, can range from $0 to the full premium amount.
Variations in premium costs between States may reflect differences in many factors, including:

• Medical costs.
   

• Overall cost of living.
   

• Age and health status of the population.
   

• Type and generosity of health plan benefits.
   

• State regulations.

Were there differences among States in premium amounts for single coverage?

• In 41 States, the annual average single-coverage premium did not differ from the national mean of $3,481 in 2003.
   

• Four States had single premiums that were above the national average—Maine ($3,852), West Virginia ($3,809), the District of Columbia ($3,740), and Rhode Island ($3,725).
   

• Single premiums were below the national average in California, Arizona, Alabama, Arkansas, Hawaii, and North Dakota.
   

• The difference between the largest (Alaska) and smallest (North Dakota) average single premium by State was more than $1,000 per year.

Average total annual premium for employer-sponsored health insurance, 2003

How did firm size affect the premium for single coverage plans?

• For the United States as a whole, small firms paid a higher annual single-coverage premium ($3,623) than large firms ($3,438). Single premiums were above the national average for small firms in four States—New York ($4,103), Maine ($4,093), Florida ($3,967), and Michigan ($3,944).
   

• Single premiums were lower than the national average in small firms in eight States, with North Dakota the lowest at $2,945.
   

• Single premiums for large firms, like those for small firms, did not vary from the national average in most cases. Among the exceptions, with large-firm premiums higher than the national average, were West Virginia, Maine, District of Columbia, Wisconsin, and Georgia. The States with premiums for large firms below the average included Oregon, Arizona, Oklahoma, Alabama, Arkansas, North Dakota, and Hawaii.

Average total annual premium for employer-sponsored health insurance, 2003

Did employee contributions for single coverage vary by State?

• Thirty-six States had an average annual employee contribution for single coverage that did not vary from the national mean for 2003 ($606). This contribution was slightly over 17 percent of the total average U.S. single-coverage premium.
   

• Eight States had contributions greater than the national average, ranging from $875 for Nebraska to $750 for Florida. Only Rhode Island had both above-average premiums and above-average contributions.
   

• Seven States had below-average contributions, with employees in Hawaii paying the smallest amount, $251. Both California and Hawaii had premiums and contributions that fell below the U.S. average.
   

• Employees contributed over $600 more toward the average single premium in the most expensive State than in the least expensive State.

Average annual employee contribution for employer-sponsored health insurance, 2003

Did firm size affect the employee contribution for single coverage?

• On average, employees of small firms enrolled in single coverage made a lower dollar contribution toward the premium cost ($538) than their counterparts in large firms ($627). Employees who made no contribution to their plan cost are included in these averages.
   

• Only five States had contributions for single coverage that differed from the national average for small firms. In New Hampshire ($967) and Connecticut ($855), employee contributions were above average. California ($327), Washington ($324), and Hawaii ($177) showed employee contributions that were below the U.S. average.
   

• In 2003, more States differed from the U.S. rate in their contributions by employees in large firms. Nebraska ($905), Rhode Island ($858), Wisconsin ($822), Kansas ($779), and Florida ($764) were above the national average for large firms. Nine States reported contributions for single coverage at large firms that were below the U.S. total. Hawaii had the lowest amount, $288.

Average annual employee contribution for employer-sponsored health insurance, 2003

How did premiums for family plans differ by State?

• Family premiums did not differ from the national average ($9,249) in 31 States in 2003.
   

• Annual premiums were above the U.S. mean in eight States. Amounts ranged from $10,748 in the District of Columbia to $9,867 in Massachusetts.
   

• Twelve States had premiums that were lower than average. North Dakota had the smallest annual premium ($7,866).
   

• Family premiums were almost $2,900 higher in the State with the highest average cost than in the State with the lowest average cost.

Average total annual premium for employer-sponsored health insurance, 2003

Were family premiums different for small vs. large firms?

• Unlike single premiums, average family premium amounts were close to the national average ($9,249) for both large and small firms.
   

• In the majority of States, family premiums for small firms did not vary from the U.S. average for small firms ($9,321) in 2003. Five exceptions had higher than average premiums, ranging from the District of Columbia ($11,380) to Maine ($10,066). Seven States had lower than average premiums for small firms, ranging from Idah o ($8,246) to Iowa ($7,216).
   

• In 17 States, family premiums for large firms differed from the national average ($9,235) for 2003. Alaska ($10,583) had a higher than average large-firm family premium, along with seven other States. Hawaii ($7,759) and eight other States had lower than average family premiums for large firms.

Average total annual premium for employer-sponsored health insurance, 2003

Did family plan contributions vary much from the U.S. average?

• In 45 States, the average annual contribution to family plans was close to the national average of $2,283 in 2003. This contribution made up about one-fourth of the total family premium.
   

• Maine ($2,872), Florida ($2,810), and Texas ($2,568) were the only States with higher than average employee contributions. Maine also had an above-average family premium.
   

• Family contributions were below the national mean in three States—New York ($1,812), Michigan ($1,661), and West Virginia ($1,554).
   

• On average, employees in the most expensive State contributed over $1,300 more to their family premiums than those in the least expensive State.

Average annual employee contribution for employer-sponsored health insurance, 2003

How did family contributions differ by firm size across States?

• Across the country during 2003, employees of small firms who had a family health insurance plan contributed more to their premium ($2,494) than employees of large firms ($2,242).
   

• For small firms, just three States—Louisiana ($3,713), Arizona ($3,700), and North Carolina ($3,333)—had contribution amounts above the national average. Three States—Missouri ($1,710), Montana ($1,487), and West Virginia ($1,153)—had contribution amounts below the national average.
   

• Maine ($2,853), Florida ($2,813), and Texas ($2,530) were the only States where employee contributions for family coverage in large firms were above the national average. States with family coverage contributions below the U.S. average were New Jersey ($1,903), New York ($1,798), Michigan ($1,657), and West Virginia ($1,630).

Average annual employee contribution for employer-sponsored health insurance, 2003

Did employee-plus-one premiums vary by State?

• Forty States had average employee-plus-one premiums that were not different from the U.S. mean of $6,647 in 2003.
   

• Premiums were above the national average in four States—New Hampshire ($7,517), Connecticut ($7,507), District of Columbia ($7,442), and New Jersey ($7,380).
   

• Employee-plus-one premiums were below the national mean in seven States, with North Dakota having the smallest premium at $5,657.
   

• Employees in the State with the largest average premium had an annual cost nearly $1,900 more than those in the State with the smallest average premium.

Average total annual premium for employer-sponsored health insurance, 2003

Did employee-plus-one premiums differ for large and small firms?

• In 2003, small and large firms did not significantly vary from the U.S. average ($6,647) in the premiums they paid for employee-plus-one coverage.
   

• Several States had small-firm employee-plus-one premiums that were higher than the national small-firm average. They ranged from Rhode Island ($8,166) to the District of Columbia ($7,469). Five States—the lowest being Utah ($5,050)—had employee-plus-one premiums for small firms that were lower than average.
   

• Large firms in Connecticut ($7,511), District of Columbia ($7,437), New Jersey ($7,343), and New Hampshire ($7,326) had higher premiums than large firms in the Nation overall. Large firms in Oregon, Nevada, North Carolina, North Dakota, Arkansas, and Hawaii had lower premiums than the national average.

Average total annual premium for employer-sponsored health insurance, 2003

Were there State variations in employee-plus-one contributions?

• Forty-one States had employee-plus-one contributions at about the national average ($1,577) in 2003. Employee contributions made up around 24 percent of the U.S. premium for employee-plus-one coverage.
   

• In four States, employee contributions were greater than in the Nation as a whole: New Hampshire ($2,113), Kansas ($1,971), Florida ($1,970), and Texas ($1,745). New Hampshire was the sole State with above-average costs for both premiums and contributions.
   

• Six States had smaller than average contributions, with Pennsylvania the lowest at $1,230 annually.
   

• Almost $900 separated the average employee cost share for employee-plus-one plans in the most and least expensive States.

Average annual employee contribution for employer-sponsored health insurance, 2003

What effect did firm size have on employee-plus-one contributions?

• Employee contributions for employee-plus-one plans were greater for workers in small firms ($1,787) than for those in large firms ($1,541) across the Nation during 2003.
   

• Kansas ($2,746) was the only State where employee contributions were higher than the U.S. average for small firms. North Dakota ($1,100) and Washington ($1,006) both had contribution rates lower than the small-firm average.
   

• With an employee-plus-one contribution in large firms of $1,933, Florida was the only State above the national average. Ohio ($1,295), New Jersey ($1,254), Pennsylvania ($1,246), and Nevada ($1,203) were below average.

Average annual employee contribution for employer-sponsored health insurance, 2003

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References

All the data shown in this chartbook (and much more) are available on the MEPS Web site at www.meps.ahrq.gov. In addition to the tables, the Web site provides an interactive tool called MEPSnet that allows users to make queries about trends in health insurance offered by private establishments and State and local governments across all available years.

The confidential microdata are accessible for research purposes through the Census Bureau's Center for Economic Studies. For additional information, see their Web site at http://www.ces.census.gov.

The following references were used for the descriptions and discussion in this report.

Branscome JM, Brown, E. State differences in job-related health insurance, 1998. Rockville (MD): Agency for Healthcare Research and Quality; 2001. MEPS Chartbook No. 7. AHRQ Pub. No. 01-0036.

Branscome JM, Cooper PF, Sommers JP, et al. Private employer-sponsored health insurance: new estimates by state. Health Affairs 2000 Jan-Feb;19(1):139-47.

Cohen JW, Monheit AC, Beauregard KM, et al. The Medical Expenditure Panel Survey: a national health information resource. Inquiry 1996;33:373-89.

Peterson CL, Vistnes JP. State differences in job-related health insurance, 1996. Rockville (MD):Agency for Healthcare Research and Quality; 2000. MEPS Chartbook No. 4. AHRQ Pub. No. 00-0017.

Sommers JP. List sample design of the 1996 Medical Expenditure Panel Survey Insurance Component. Rockville (MD):Agency for Health Care Policy and Research; 1999. MEPS Methodology Report No. 6. AHCPR Pub. No. 99-0037.

Sommers JP. Construction of weights for the 1996 Medical Expenditure Panel Survey Insurance Component list sample. Rockville (MD): Agency for Health Care Policy and Research; 1999. MEPS Methodology Report No. 8. AHCPR Pub. No. 00-0005.

Sommers JP. Imputation of employer information for the 1996 Medical Expenditure Panel Survey Insurance Component. Rockville (MD): Agency for Healthcare Research and Quality; 2000. MEPS Methodology Report No. 10. AHRQ Pub. No. 00-0039.

Sommers JP. Updates to the Medical Expenditure Panel Survey Insurance Component List Sample Design, 2004. Rockville (MD):Agency for Healthcare Research and Quality; 2005. MEPS Working Paper #04008. Web-only publication. Available at: http://www.meps.ahrq.gov/PrintProducts/PrintProdLookup.asp?ProductType=WPOnline.

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