The development and growth of employer-provided health insurance

Monthly Labor Review, March, 1994 by Laura A. Scofea

This decrease coincides with the increase in the percent of full-time workers required to contribute toward their health care premium. Between 1979 and 1991, the percent of participants sharing the cost of health care for individual coverage has nearly doubled. In 1979, 27 percent contributed toward their own health care; by 1991 that proportion had risen to 51 percent. The percentage of workers contributing for family coverage also has risen: in 1980, 46 percent of the workers paid at Feast a portion of the cost for family coverage, compared with 69 percent in 1991. The average monthly premium paid by an employee for self-coverage was 2.5 times higher in 1991 than in 1983--$10.13 versus $26.60. The average premium paid by an employee for family coverage tripled, from $32.51 in 1983 to $96.97 in 1991.

The growth in managed care plans is another trend the Employee Benefits Survey has documented. Managed care plans direct patients to specific providers in an effort to monitor care and reduce costs. When data on such plans were first tabulated in 1980, only 3 percent of health care participants in medium and large establishments were in managed care plans--all in HMO's. (See chart 1.) By 1986, 14 percent of participants were in managed care plans, including 13 percent in HMO's. Participation in HMO'S continued to climb and by 1991 represented 17 percent of participants. PPO's, first surveyed in 1986, covered only 1 percent of health care participants that year. Enrollment in PPO's quickly expanded, with participation rising to 16 percent in 1991. In 1991, 33 percent of participants were in managed care plans.

The Employee Benefits Survey also has monitored the growth of managed care features within traditional health insurance plans. Fee-for-service plans have developed these features as a way to hold down costs. The goal of these programs is to make sure that the services rendered are medically necessary and provided in the most appropriate medical setting. The Employee Benefits Survey has provided this information since 1986. (See table 2.) Three of the most widespread cost containment features are: requiring hospital preadmission certification, "utilization review", which monitors the quality and appropriateness of care, as it is delivered, and imposing penalties when second opinions are not obtained for nonemergency surgical procedures.

HEALTH INSURANCE in the United States began nearly 200 years ago with hospital care for seamen paid for by compulsory wage deductions. It was not until 1929, with the development of Blue Cross, that health insurance began to resemble its current form. In the 1970's and 1980's, enrollment surged in "managed care plans"--HMO's and PPO's. These plans were a direct response to the sharp rise in health care costs. Health care is now comprehensive, providing hospital, surgical, and medical benefits and also may include such benefits as dental, vision, mental health, and home health care. Current reform efforts may add a new chapter to the history of health insurance in the United States. Policy makers can gauge the extent of current benefits, and may design future health care programs, using data provided by the BLS Employee Benefits Survey.