Chartbook #25: MEPS Insurance Component 2020 Chartbook

Agency for Healthcare Research and Quality
5600 Fishers Lane
Rockville, MD 20857
www.ahrq.gov

Acknowledgments

This chartbook was prepared by G. Edward Miller, Patricia Keenan, Thomas A. Hegland and Asako S. Moriya of the Division of Research and Modeling, Center for Financing, Access, and Cost Trends (CFACT) in the Agency for Healthcare Research and Quality (AHRQ).

The authors appreciate the efforts of Alon Evron, Jillian Botkin, Lauren Kestner, Sara Bernate Angulo, and Andy Elkins of IMPAQ, Karen Turner of the University of Minnesota, Abigail Smith and Damon Harris of Insignia, and Embrey Young of Visual Connections in creating the exhibits in the chartbook, compiling the chartbook, and preparing the chartbook for production; the data production work of Brandon Flanders of the U.S. Census Bureau; and the production assistance of Doreen Bonnett and Nicole Shulman, AHRQ.

Reviewers of this publication were Joel W. Cohen, Director of CFACT, and Steven C. Hill (Senior Economist), Julie Hudson (Senior Economist), Salam Abdus (Senior Economist), Paul D. Jacobs (Senior Service Fellow), and Samuel H. Zuvekas (Senior Research Adviser) of the Division of Research and Modeling in CFACT.

Table of Contents

The data used in this report are from the Insurance Component of the Medical Expenditure Panel Survey. Information about this survey, including sample design, data collection, sample sizes, and response rates, can be found at https://meps.ahrq.gov/survey_comp/Insurance.jsp.

This product is in the public domain and may be used and reprinted without permission in the United States for noncommercial purposes, unless materials are clearly noted as copyrighted in the document. No one may reproduce copyrighted materials without the permission of the copyright holders. Users outside the United States must get permission from AHRQ to reprint or translate this product. Anyone wanting to reproduce this product for sale must contact AHRQ for permission.

Suggested Citation

Medical Expenditure Panel Survey Insurance Component 2020 Chartbook. Rockville, MD: Agency for Healthcare Research and Quality; December 2021. AHRQ Publication No. 22-0002. https://meps.ahrq.gov/mepsweb/data_files/publications/cb25/cb25.shtml.

Introduction

The Medical Expenditure Panel Survey Insurance Component (MEPS-IC) is an annual survey of private employers and State and local governments. The MEPS-IC produces national and Statelevel estimates of employer-sponsored insurance, including offered plans, costs, employee eligibility, and number of enrollees. The MEPS-IC is sponsored by the Agency for Healthcare Research and Quality and is fielded by the U.S. Census Bureau.

This chartbook provides both single-year and multiyear trend analyses using private-sector MEPS-IC data from 2008 to 2020. To best convey key information from the MEPS-IC, the report is presented in five sections: Health Insurance Offer Rates; Employee Eligibility and Enrollment; Health Insurance Premiums; Employee and Employer Premium Contributions; and Employee Cost Sharing. Each section provides charts and discussion with links to MEPS-IC data tables that contain the estimates and standard errors for each exhibit.

Many of the estimates in this publication are categorized by firm sizes that are relevant to national healthcare policy. The firm-size categories used in the charts and tables are based on actual employment counts rather than full-time equivalent (FTE) counts, because the MEPS-IC does not collect FTE employment figures.

Each section discusses the estimates to highlight trends and differences by employer and workforce characteristics. If a comparison of estimates is presented in the discussion, any differences are statistically significant at the 0.05 level. In some cases, differences noted in the text, in estimates as well as statistical significance of comparisons, may vary slightly from calculations performed using data in the exhibits, MEPS-IC data available on the MEPS website, or MEPS-IC Statistical Briefs due to rounding. All dollar estimates are nominal (not adjusted for inflation).

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Background

The IC is one of three annual component surveys that make up MEPS. The other two components are the Household Component (HC) and the Medical Provider Component (MPC). The HC is a nationally representative survey of the U.S. civilian noninstitutionalized population that collects data at both the person and household levels. The MPC collects information from a sample of physicians, hospitals, home health agencies, and pharmacies that provided services to HC respondents.

The MEPS-IC uses two independent samples: the private sector and the public sector. The private-sector sample is composed of approximately 42,000 business establishments from more than 7 million establishments found on the Business Register at the U.S. Census Bureau, with 4.2 percent of the sample determined during the data collection process to be out of scope. In 2020, the response rate for the private sector was 56.1 percent of the remaining in-scope sample units.

An establishment is a single business entity or location. Firms (also often referred to as companies) can include one or more establishments. An example of a multi-establishment firm is a chain of grocery stores, where the establishments of the firm are the sites of the individual grocery stores. The charts and tables in this publication report characteristics within firm-based size categories.

The public-sector sample of the MEPS-IC selects almost 3,000 State and local government agencies. However, this report focuses only on the private sector. Additional information on MEPS-IC sampling can be found in Sample Design of the 2020 Medical Expenditure Panel Survey Insurance Component (Davis, 2021; PDF).

The unprecedented pandemic and economic disruption in 2020 have caused uncertainty in some of the private-sector employment estimates, particularly with respect to the distribution of employment across firm sizes.

The issue is a concern because offers of health insurance are strongly correlated with firm size. Consequently, changes in employment may have affected differences in the estimated percentages of employees offered, and covered by, employer-sponsored health insurance between 2019 and 2020. They also affect estimates of totals by firm size (e.g., totals of establishments and employees). However, our initial investigations suggest that the vast majority of means and proportions estimated in the MEPS-IC data are not affected by this issue.

AHRQ is currently investigating several factors that may have influenced the 2020 MEPS-IC data. These factors include: (1) when firms of different sizes respond to the survey; (2) openings and closures of establishments during the survey period; and (3) the role of openings and closures in multi-establishment firms.

Data Presentation

For purposes of the analyses presented in this chartbook, the District of Columbia is treated as a State. In addition, exhibits are organized by category (e.g., premium type, firm size), so references to exhibits in the text may not be in numeric order (e.g., Exhibits 3.1, 3.3, and 3.5 instead of 3.1, 3.2, and 3.3).

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References

Davis K. Sample Design of the 2020 Medical Expenditure Panel Survey Insurance Component. Methodology Report #34. Rockville, MD: Agency for Healthcare Research and Quality; August 2021. https://meps.ahrq.gov/data_files/publications/mr34/mr34.shtml. Accessed September 29, 2021.

Kearney A, Sommers J. Switching from retrospective to current-year data collection in the Medical Expenditure Panel Survey - Insurance Component. ICES-III: Third International Conference on Establishment Surveys, Conference Proceedings, Montréal, Québec, Canada; June 2007.

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Executive Summary

Overview

Employer-sponsored insurance (ESI) is the primary source of health insurance coverage for individuals under age 65. This chartbook uses data for private-sector establishments in the Medical Expenditure Panel Survey-Insurance Component (MEPS-IC) to describe trends in employer coverage, premiums, and benefits from 2008 to 2020.

The MEPS-IC is an annual survey of private employers and State and local governments and is designed to be representative of all 50 States and the District of Columbia. The large sample size (about 42,000 private-sector establishments), combined with a response rate of 56.1 percent in 2020, permits analyses of variations in ESI by firm size and across States that are not readily available from other sources.

Examining trends by firm size and across States is important due to variation in insurance markets along these dimensions. Historically, insurance markets have differed by firm size due to smaller firms' more limited ability to pool risk and their higher administrative costs compared with larger firms. State variation in ESI markets may reflect differences in employment patterns, healthcare prices, and utilization, as well as differences in State approaches to regulating private insurance and administering Medicaid.

This chartbook describes trends and patterns in ESI overall, by firm size, and by State from 2008 to 2020. All differences noted are at the 0.05 significance level. All dollar estimates are nominal (not adjusted for inflation).

Summary of Findings

Employee Enrollment in Health Insurance

Between 2019 and 2020, there was a significant increase, from 47.6 percent to 49.5 percent, in the overall percentage of private-sector employees covered by a health insurance plan offered by their employers (the "enrollment rate"). There were no significant changes, however, in the enrollment rate within any of the three firm size groups examined in this study.

Compared with 2019, the increase in the overall 2020 enrollment rate reflects a large reduction in employment among small employers (fewer than 50 employees) and a subsequent increase in the proportion of employees in medium (50 to 99 employees) and large firms (100 or more employees). Since these firms have higher enrollment rates than small firms, the overall 2020 enrollment rate increased even though enrollment rates within firm sizes did not change.*

The enrollment rate reflects the combination of employers' decisions about offering health insurance and employee eligibility for such coverage, as well as employees' decisions to take up coverage if eligible. Offer rates, eligibility rates, and take-up rates, as well as coverage rates among employees offered insurance, are described further below.

Availability of Coverage: Offer Rates

Overall, the percentage of private-sector employees working at establishments that offered insurance ("the offer rate") increased from 85.3 percent in 2019 to 86.9 percent in 2020 (Exhibit ES.1). Offer rates at small (50.5 percent), medium (88.5 percent), and large firms (98.8 percent) were unchanged from their 2019 values.

The change in the overall offer rate was driven by the large decline in employment among small employers. Compared with 2019, the increase in the overall 2020 offer rate reflects an increase in the proportion of employees in medium and large firms. Since these firms have higher offer rates than small firms, the overall 2020 offer rate increased even though offer rates within firm sizes did not change.*

* These findings may be affected by measurement issues related to the 2020 MEPS-IC employment and related estimates. For a discussion of these issues, see the MEPS IC 2020 user note.

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Employee Coverage, Eligibility, and Take-Up Rates

Among establishments that offered insurance, 57.0 percent of employees were enrolled in coverage through their employer (the "coverage rate") and 80.5 percent were eligible for health insurance (the "eligibility rate"). Among eligible employees, 70.8 percent were enrolled in their employers health insurance (the "take-up rate") (Exhibits ES.3, ES.4, and ES.5).

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Choice of Plans

The overall share of employees at health insurance-offering firms who were offered a choice of two or more health plans fell from 75.8 percent in 2019 to 73.8 percent in 2020. This decline was driven by firms with 100 or more employees, where the share of employees offered a choice of plans fell from 84.5 percent in 2019 to 81.0 percent in 2020 (Exhibit ES.6).

In all years from 2008 to 2020, the likelihood that a worker at an offering establishment had a choice of plans increased with firm size. In 2020, the percentage of workers with a choice of plans was 39.9 percent in firms with fewer than 50 employees, 58.6 percent in firms with 50 to 99 employees, and 81.0 percent in firms with 100 or more workers.

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Self-Insured Plans

Between 2019 and 2020, the overall percentage of offering establishments that self-insured at least one plan increased from 39.4 percent to 41.9 percent. This increase occurred despite a decrease (from 83.1 percent to 77.8 percent) among establishments in firms with 1,000 or more employees (Exhibit ES.7).

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Premiums

In 2020, average health insurance premiums were $7,149 for single coverage, $14,191 for employee-plus-one coverage, and $20,758 for family coverage (Exhibit ES.8).

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For the 3 years from 2018-2020, the overall average annual single premium was $6,944. Fifteen States, with average annual premiums ranging from $6,152 in Arkansas to $6,731 in Hawaii, were significantly below the national average. Twelve States, with average annual premiums ranging from $7,208 in Rhode Island to $8,672 in Alaska, were significantly above the national average (Exhibit ES.13).

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Employee Premium Contributions

In 2020, enrolled employees paid on average 21.4 percent of total premiums for single coverage, 28.4 percent for employee-plus-one coverage, and 28.8 percent for family coverage. In line with longer term trends, these shares were not significantly different from their 2019 levels (Exhibit ES.14).

From 2008 to 2020, the percentage of premiums contributed by employees increased by 1.3 percentage points, 1.4 percentage points, and 1.2 percentage points for single, employee-plus-one, and family coverage, respectively (Exhibit ES.14). There were few significant year-to-year increases, or decreases, in the employee share for any of the three types of coverage, indicating that employee and employer premium contributions typically increased at similar rates during this period.

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Plan Benefits: Deductibles

From 2019 to 2020, the percentage of enrollees in a health insurance plan with a deductible increased overall (86.6 percent to 89.2 percent), among small employers (84.1 percent to 86.5 percent), and among large employers (87.1 percent to 89.7 percent) (Exhibit ES.16). In the last 12 years, the overall percentage of enrollees with a deductible increased by 18.5 percentage points (from 70.7 percent in 2008 to 89.2 percent in 2020), but there was no significant change in this percentage from 2017 to 2019.

From 2019 to 2020, there were no significant changes in average deductible levels for single coverage overall, or within any of the three firm sizes (Exhibit ES.17). Similarly, there was no significant change in overall average deductibles for family coverage, and there was a 7.9 percent decrease in deductibles ($5,067 to $4,666) among small employers (Section 5, Exhibit 5.3). In the 2008 to 2020 period, single and family coverage deductibles showed overall increases in every year except 2018 and 2020.

Average individual deductibles were higher in small ($2,376) and medium firms ($2,464) than in large firms ($1,814) in 2020 (Exhibit ES.17). Family deductibles were also higher in small ($4,666) and medium firms ($4,761) than in large firms ($3,540) in 2020 (Section 5, Exhibit 5.3).

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Conclusion

AHRQ produces this chartbook to make MEPS-IC data more readily usable by providing trends nationally and by firm size, by presenting national and State-level estimates in one document, and by providing additional firm-size cross-tabulations relevant to recent policy changes. More information is available at www.meps.ahrq.gov. AHRQ welcomes feedback on additional ways to make the data more usable.

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Section 1: Health Insurance Offer Rates

Health Insurance Offer Rates

This section presents estimates of the percentage of employees who worked where coverage was offered (the "offer rate"), by firm size, State, establishment characteristics (i.e., industry, ownership type, firm age, number of locations, percentage of workers who are full time, and percentage of workers with low wages). It also shows interactions of the percentage of workers with low wages and firm size and State. In addition, this section provides information on the prevalence of self-insured plans, availability of dependent coverage, and availability of retiree coverage by firm size. Finally, it shows the percentage of establishments that offer two or more plans, by firm size and establishment characteristics.

In the MEPS IC survey, respondents are asked whether their organization offers, or makes available, any health insurance plans to its active employees. Health insurance plans are defined as policies that provide hospital or physician coverage. The plan may provide this coverage for the employee only, or it may also provide coverage for the employee's dependents through employee-plus-one or family coverage.

Many organizations offer more than one plan. For example, an organization may offer both a high and standard option of a given plan, or it may offer coverage under a health maintenance organization (HMO) and a preferred provider organization (PPO) from the same or a different insurance company. A health plan is self-insured when the financial risk for the enrollee's medical claims is assumed partially or entirely by the organization offering the plan.

Employers' decisions about offering coverage depend on a range of characteristics associated with productivity, workforce demand for coverage, State policy, and other factors. Historically, firm size has been a key determinant of the offer rate, with smaller employers being less likely to offer health insurance coverage than larger employers for a number of reasons, including:

• Smaller risk pools, which result in higher premium costs (holding benefits constant),
• Higher administrative costs, and
• Lack of dedicated staff to select and administer health benefits.

Highlights

• The percentage of employees working at insurance-offering establishments increased from 85.3 percent in 2019 to 86.9 percent in 2020, even as the offer rate within small, medium, and large firms remained stable over the same period (Exhibit 1.1). These findings reflect a marked reduction in small-firm employment relative to medium- and large-firm employment, causing a compositional shift in employment from small firms with low offer rates to medium and large firms with high offer rates.*
• The overall share of employees at health insurance-offering firms who were offered a choice of two or more health plans fell from 75.8 percent in 2019 to 73.8 percent in 2020. This decline was driven by 100+ employee firms, where the share of employees offered a choice of plans fell from 84.5 percent in 2019 to 81.0 percent in 2020 (Exhibit 1.10).
• Overall, the average annual offer rate for 2018-2020 was 85.6 percent for all firms and 49.5 percent for small firms (fewer than 50 employees). Offer rates showed substantial variation across the United States for both groups of employers (Exhibits 1.2 and 1.3):
  • Among all firms, the average annual offer rate ranged from 69.7 percent in Montana to 96.4 percent in Hawaii.
  • Among small firms, 15 States, with average annual offer rates ranging from 35.5 to 44.4 percent, were significantly below the national average. Another 15 States, with average annual offer rates ranging from 53.7 to 90.2 percent, were significantly above the national average for small firms.

Key Trends

Beyond the key highlights presented above, many longstanding trends related to insurance coverage offers continued in 2020. Establishments in small firms continued to have a significantly lower offer rate relative to other firms. In addition, small-firm establishments that did offer insurance were less likely to self-insure their plans, less likely to offer dependent coverage, less likely to offer a choice of two or more plans, and less likely to offer retiree coverage.

Dependent coverage, as in prior years, was available at very high rates wherever health insurance was offered. Availability of retiree coverage of all kinds remained low and very rare outside of large firms.

* These findings may be affected by measurement issues related to the 2020 MEPS-IC employment and related estimates. For a discussion of these issues, see the MEPS IC 2020 user note.

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Section 2: Employee Eligibility and Enrollment

Employee Eligibility and Enrollment

The share of employees enrolled in a health plan through their employer is determined by the establishment offer rate (described in Section 1), the share of employees eligible for coverage at establishments that offer ("eligibility rate"), and the share of eligible employees who enroll in coverage (the "take-up rate"). Factors such as the share of workers who are part time or who are low wage, can affect eligibility and take-up rates.

This section presents estimates for 2008 to 2020 for private-sector employees for the:

• Enrollment rate (percentage of all employees enrolled in their employer’s health insurance plan regardless of whether the establishment offered health insurance). Note that in this calculation the number of enrollees is equal to zero at employers that do not offer coverage;
• Coverage rate (percentage of all employees enrolled in their employer’s health insurance plan at establishments that offered health insurance). The coverage rate is equal to the eligibility rate multiplied by the take-up rate;
• Eligibility rate (percentage of employees eligible for health insurance through their employer at establishments offering health insurance); and
• Take-up rate (percentage of eligible employees who enrolled in their employer’s health insurance).

This section also presents estimates for 2008 to 2020 for the percentage of enrollees in single, employee-plus-one, and family coverage and examines variation in coverage, eligibility, and take-up rates by firm size, industry, and other employer characteristics. It also presents coverage rates by the State in which the establishment was located.

Highlights

• From 2019 to 2020, there were no statistically significant changes in enrollment rates for small (fewer than 50 employees), medium (50 to 99 employees), or large firms (100 or more employees). The overall enrollment rate increased from 47.6 percent in 2019 to 49.5 percent in 2020, while among small firms the total number enrolled decreased (Exhibits 2.1 and 2.2). These changes are due to a large reduction in total employment among small employers and a corresponding increase in the proportion of employees working in medium and large firms.*
• The overall eligibility rate for employees at private-sector establishments that offered insurance increased from 77.7 percent in 2019 to 80.5 percent in 2020. The eligibility rate for small employers increased from 78.1 to 80.2 percent, and the eligibility rate for large firms increased from 77.5 to 80.8 percent (Exhibit 2.4).
• Among large employers, take-up rates fell from 72.7 to 71.4 percent (Exhibit 2.5). Despite the decline, the take-up rate among large firms (71.4 percent) remained higher than in medium (68.8 percent) and small firms (68.7 percent), as has been true in almost every year from 2008 through 2020.
• Across the nation, nine States (District of Columbia, Hawaii, Idaho, Kentucky, Missouri, North Carolina, Oregon, Texas, and Washington) had coverage rates above the national average of 56.4 percent, ranging from 59.2 percent in Texas to 64.3 percent in Washington. Nine States had coverage rates below the national average (Florida, Maryland, Massachusetts, New Hampshire, New Mexico, New York, Rhode Island, Vermont, and West Virginia), ranging from 51.0 percent in New York to 53.8 percent in Vermont and Rhode Island. All of these States except New Mexico are in the South Atlantic, Mid-Atlantic, and New England census divisions (Exhibit 2.9).

Key Trends

Enrollment rates are lower at small and medium firms, compared with large firms, reflecting lower offer rates (presented in Section 1). Coverage, eligibility, and take-up rates are lower among younger firms, firms with one location (versus multiple locations), with fewer full-time workers, and with a majority of workers who are low wage.

For firms with fewer than 50 workers and firms with 50 or more workers, coverage, eligibility, and take-up rates are substantially lower at firms with a majority (50 percent or more) of low-wage workers, compared with firms with less than 50 percent of workers who are low wage. Continuing a longstanding pattern, in 2020, a lower percentage of enrollees in large firms than in small and medium firms chose single coverage, while a higher percentage of large-firm enrollees chose employee-plus-one coverage and family coverage.

* These findings may be affected by measurement issues related to the 2020 MEPS-IC employment and related estimates. For a discussion of these issues, see the MEPS IC 2020 user note.

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