Health Care Costs and Financing

Significant State-to-State differences found in health insurance offer rates, choice of plans, and premiums

In a recent analysis of the 1996 Medical Expenditure Panel Survey-Insurance Component (MEPS-IC), economists and statisticians at the Agency for Healthcare Research and Quality found State-to-State variability in employer-sponsored health insurance offer rates, plan choice, and employer premiums. The MEPS-IC covered establishments with at least one employee that were in business during the last quarter of 1996. [Editor's Note: For purposes of MEPS, an establishment is a particular workplace or location. A firm is a company or business. A firm can have many establishments or only one.]

Although workers in small firms in general are less likely to be offered health insurance than workers in large firms, offer rates varied from State to State. Almost all establishments that were part of firms with 1,000 or more workers offered health insurance to their employees. For the smallest firms (fewer than 10 workers), Hawaii's rate of insured workers was more than double that of the national average for this firm size. This is not surprising because Hawaii mandates that businesses offer health insurance. Among the smallest firms, establishments in Mississippi were the least likely to offer health insurance (21.1 percent). Significant State variation in health insurance offer rates was also observed in establishments from firms with 10 to 24 and 25 to 99 employees.

Overall, 22 percent of U.S. establishments that offered health insurance in 1996 offered a choice of plans. However, this varied by firm size. More than half of establishments from firms with 1,000 or more workers offered a plan choice, compared with only 9 percent of establishments from firms with less than 10 workers. Establishments in Massachusetts, New York, Hawaii, Tennessee, and California were most likely to offer choice. Those in Wisconsin, Mississippi, Alabama, and Minnesota were least likely to do so. Although managed care plans are offered by a majority of establishments, their prevalence across the country ranged from about half to nearly all employers in a State offering a managed care plan. Other types of plans also varied greatly from State to State.

The cost of employer-sponsored single and family health insurance coverage averaged $1,997 and $4,953, respectively, in 1996. Massachusetts, Connecticut, and New Jersey had the highest annual single and family premiums relative to the national average. South Carolina, Arkansas, and New Mexico were among the States with the lowest single and family premiums.

See "Private employer-sponsored health insurance: New estimates by state," by James Branscome, M.S., Philip F. Cooper, Ph.D., John Sommers, Ph.D., and Jessica P. Vistnes, Ph.D., in the January 2000 Health Affairs 19(1), pp. 139-147. Reprints (AHRQ Publication No. 00-R016) are available from the AHRQ Publications Clearinghouse.

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