As health care costs continue to rise, some are concerned that this will have a negative impact on employment-based private insurance (EBPI). A new study suggests these concerns may be warranted. This study is the first work that uses nationally representative data to show that rising health care costs reduce the availability of and enrollment in EBPI, and the financial protection provided by it, especially for middle-class families.
The study used data on annual growth of health expenditures to generate a cost index. This represented the average annual cost growth for each State as well as the District of Columbia. The cost data were merged with AHRQ’s Medical Expenditure Panel Survey (MEPS) on 72,609 families with different incomes.
The unit of analysis was the family. Both bivariate and multivariate logistic analyses were conducted. A significant negative association was found between the cost index and the likelihood a family would receive an offer for EBPI. This negative relationship was particularly significant for middle class families. There was also a negative association between the cost index and the proportion of families who had EBPI for each family member for an entire year. In those families where every member was covered by EBPI for an entire year, a positive relationship existed between the cost index and their likelihood of having out-of-pocket expenses that exceeded 10 percent of income.
According to the researchers, the findings suggest that health care costs may need to be controlled in order to maintain the EBPI system. They note that EBPI continues to be the cornerstone of insurance coverage following implementation of the Patient Protection and Affordable Care Act, which provides new coverage options for both small and large employers.
The study was supported in part by AHRQ (HS16742). See "Impacts of rising health care costs on families with employment-based private insurance: A national analysis with State fixed effects," by Hao Yu, Ph.D. and Andrew W. Dick, Ph.D., in the October 2012 HSR: Health Services Research 47(5), pp. 2012-2030.