Study: State Workers Well Covered by Health Insurance

According to a new survey by the Kaiser Family Foundation and the Health Research and Educational Trust (HRET), each of the 47 states surveyed offered health insurance to employees and their dependents during 2002 while only 62% of national firms did so. Some 91% of the eligible state workers opted for the health coverage while 84% of eligible workers nationally chose those policies. Greater numbers of part-time and temporary state workers were offered health coverage than the national average, the study found.

But that coverage did not come cheaply, according to the Kaiser/HRET study: nearly four in 10 of the state plans slapped employees with double-digit premium hikes in 2002. State plans experienced an average 12.8% premium increase in 2002, just north of the 12.7% national average. Wyoming state workers got hit with a whopping 38% premium hike – the highest in the nation – while those in Georgia actually dropped by 1.3%.

State workers forked over an average $276 monthly premiums for single coverage (average $255 nationally) and $643 monthly for family coverage (average $663 nationally). At the top end of the scale among the states for single premium was $635 monthly in Alaska while Maine state workers who covered their families paid the most at $1,110 monthly.

Sixteen states, covering 24% of all state employees, did not require workers to contribute to the cost of single premiums. Nationally, some 23% of covered workers were employed by firms that do not require workers to contribute to single coverage. State employee contributions for single coverage ranged from $0 in fourteen states, to $125 in Alaska, and $0 in four states to $486 in Kentucky for family coverage

State employee co-pays for HMO office visits were generally between $5 and $15; 58% of covered workers paid $10 per visit. Some 17% of covered workers paid a $5 co-pay and 9% pay $15. Only 1% of state workers with coverage paid $20 per visit.

State employee plans generally offer workers a choice of health plans. The vast majority of state employee plans allowed workers to pick from among three or more plans. Thirty-nine state employee plans, representing 88% of covered workers, had the choice of three or more plans. Seven state employee plans (covering 12% of workers) featured a single option.

In terms of plan types, here's how the choices broke down:

• 47% of covered state workers had a choice of conventional coverage (16% for national firms)
• 89% had a choice of HMO coverage (53% for national firms)
• 56% had a choice of PPO plans (76% for national firms)
• 34% had a choice of POS Plans (35% for national firms).

According to the survey, state employee plans enrolled more workers in HMO plans (37%) and fewer in PPO plans (42%), compared to the national average. In state employee plans, 5% of workers were in conventional coverage, 37% in HMOs, 42% in PPOs and 16% in POS plans.

State plan benefits are generally comprehensive, and tend to offer a similar level of benefits as the average national firm. The percentage of covered state workers with various health benefits covered in 2002 was as follows:

• outpatient mental health (100%)
• prenatal care (100%)
• well-baby care (100%)
• prescription drugs (99%)
• inpatient mental health (99%)
• chiropractic (99%)
• oral contraceptives (90%)
• annual OB/GYN visit (89%)
• adult physicals (84%)
• acupuncture (40%) .

Maximum annual out-of-pocket benefits for single PPO coverage in state employee plans ranged widely, and tended to be higher than the average national firm. While 36% of covered workers in state PPO plans had an out-of pocket maximum of $1,499 or less, a third had a maximum out-of-pocket expense of $3,000 or more. In national firms, 41% of covered workers in PPO plans had an out-of-pocket maximum of $1,499 or less, compared to 16% of covered workers with out-of-pocket maximums of at least $3,000.

Catastrophic coverage in state employee plans is on par with national averages: more than seven in 10 (73%) covered workers in state employee plans with single PPO coverage had a maximum lifetime benefit of $1 million or more, and the remainder had unlimited coverage. Nationally, 62% of covered workers enrolled in a PPO had coverage up to $1 million or more, and 24% had unlimited coverage.

Buying Prescription Drugs

Some 70% of covered workers in state employee plans had three-tiered cost sharing for prescription drugs, an even higher percentage than those that faced three-tiered cost sharing nationally (57%). Twenty-four percent of covered workers enrolled in state employee plans had two-tiered cost sharing for prescription drugs. Only 7% of covered workers had the same price for drugs regardless of type.

State employee plan co-payments for prescription drugs were on par with national estimates with the exception of generic drugs, which were less expensive than the national average. Co-pays for generic drugs were $6, while preferred drugs were $16, and non-preferred drugs were $25. The average national co-payment for generics was $9, preferred drugs were $17, and non-preferred drugs were $26 per prescription.

Of the 47 states surveyed, 31 of the state employee plans increased the amount workers pay for health insurance. Seventeen state employee plans increased the worker's deductibles, 24 plans increased co-pays or co-insurance for physician visits, and 29 plans increased the amount employees pay for drugs. Only one plan restricted employee eligibility for coverage.

When asked about changes they planned to make for the 2003 plan year, 34 state employee plans said it was very or somewhat likely they would increase the amount workers pay for coverage. Eight plans said they are very likely to increase the amount employees pay for prescription drugs, and 19 plans said they are somewhat likely to do so. Six plans said they are very likely to increase office visit copes and coinsurance, while 19 plans said they were somewhat likely to increase the cost of copes. Only one state responded that it was somewhat

likely to drop coverage in the next year.

The Kaiser/HRET Survey of State Employee Health Benefits was designed and analyzed by researchers at the Kaiser Family Foundation and HRET, and administered by National Research LLC (NR). The findings are based on 48 interviews with administrators of state employee health plans throughout the US.

The state employee plans surveyed represent more than 3.7 million workers and 3.4 million covered workers. NR conducted interviews as part of the Kaiser/HRET national employer survey between January and May 2002. Interviews with state employee plans not contacted as part of the national employer health benefits survey were conducted between August and October 2002.

A copy of the study report is available at http://www.kff.org/content/200three/6100/6100.pdf .