Health Care Spending Under Employer-Sponsored Insurance: A 10-Year Retrospective

Source: Amanda Frost, Eric Barrette, Kevin Kennedy, and Niall Brennan, Health Affairs, Vol. 37 No. 10, 2018
(subscription required)

From the abstract:
Using a national sample of health care claims data from the Health Care Cost Institute, we found that total spending per capita (not including premiums) on health services for enrollees in employer-sponsored insurance plans increased by 44 percent from 2007 through 2016 (average annual growth of 4.1 percent). Spending increased across all major categories of health services, although the increases were not uniform across years or categories. Growth rates for total per capita spending generally slowed after 2009 but increased between 2014 and 2016. Spending on outpatient services grew more quickly (average annual growth of 5.7 percent) compared to spending on the other types of services. However, the overall distribution of spending across categories remained largely unchanged. In the context of the dramatic economic and policy events that have taken place since 2007—including the Great Recession, the Affordable Care Act, and numerous medical innovations—this assessment of ten-year spending trends provides insights into how the largest insured population in the US contributes to health care spending growth.

State Public Pension Funds’ Investment Practices and Performance: 2016 Data Update

Source: Pew Charitable Trusts, Issue Brief, September 26, 2018

Substantial investment in complex and risky assets exposes funds to market volatility and high fees.

From the overview:
State and local public retirement systems held $3.8 trillion in assets in 2016, the most recent year for which comprehensive data are available. With the retirement security of 19 million current and former state and local employees at stake, sound and transparent investment strategies are essential.

In a bid to boost investment returns and diversify portfolios, plans in recent decades have shifted away from low-risk, fixed-income vehicles in favor of stocks and alternatives such as private equity, hedge funds, real estate, and commodities. In 2016, half of plan assets were invested in equities, a quarter in alternative investments, and another quarter in bonds and cash.

Investment performance over the last five to six years has, for the most part, tracked plan target rates, with average returns of about 7 percent. However, during the same time frame the fiscal position of public funds has not improved, and in most cases has declined. And while equities and alternatives can provide higher financial returns, they also leave funds vulnerable to market volatility and the risk of shortfalls. Furthermore, as our population ages and the number of retirees grows, cash outflows increase, adding more pressure to pension fund balance sheets.

Because earnings on these investments are expected to pay for about 50 to 60 percent of promised retirement benefits for public workers and retirees, careful attention to reporting and transparency has become increasingly important. In particular, understanding the impact of market volatility on public plans and their sponsoring governments’ budgets is critical for policymakers and stakeholders. Mandatory stress test reporting and full disclosure of asset allocation, performance, and fee details are therefore essential to determining whether public pension plans have the ability to pay promised retirement benefits…..

Genes, Education, and Labor Market Outcomes: Evidence from the Health and Retirement Study

Source: Nicholas W. Papageorge, Kevin Thom, NBER Working Paper No. 25114, September 2018
(subscription required)

From the abstract:
Recent advances have led to the discovery of specific genetic variants that predict educational attainment. We study how these variants, summarized as a linear index — known as a polygenic score — are associated with human capital accumulation and labor market outcomes in the Health and Retirement Study (HRS). We present two main sets of results. First, we find evidence that the genetic factors measured by this score interact strongly with childhood socioeconomic status in determining educational outcomes. In particular, while the polygenic score predicts higher rates of college graduation on average, this relationship is substantially stronger for individuals who grew up in households with higher socioeconomic status relative to those who grew up in poorer households. Second, the polygenic score predicts labor earnings even after adjusting for completed education, with larger returns in more recent decades. These patterns suggest that the genetic traits that promote education might allow workers to better accommodate ongoing skill biased technological change. Consistent with this interpretation, we find a positive association between the polygenic score and non-routine analytic tasks that have benefited from the introduction of new technologies. Nonetheless, the college premium remains the dominant determinant of earnings differences at all levels of the polygenic score. Given the role of childhood SES in predicting college attainment, this raises concerns about wasted potential arising from limited household resources.

Related:
It’s better to be born rich than gifted
Source: Andrew Van Dam, Washington Post, Wonkblog, October 9, 2018

The least-gifted children of high-income parents graduate from college at higher rates than the most-gifted children of low-income parents.

When Have States Saved Enough for a Rainy Day? Increasing number using data to set targets and better plan for economic swings

Source: Mary Murphy & Steve Bailey, Pew Charitable Trusts, October 4, 2018

States often depend on their rainy day funds, more formally known as budget stabilization funds, to help them weather economic downturns and uncertainty. These funds act as savings accounts that allow states to set aside above-normal revenue growth when the economy is strong so it can be used in times of recession when revenues drop sharply. With significant reserves, states can rely less on program reductions or tax increases to close a budget gap when their residents can least afford it.

For many states, the Great Recession, which ran from late 2008 through the middle of 2010, served as a wake-up call to re-evaluate their savings policies. In total dollars, state budget shortfalls outstripped savings nearly 2 to 1 in the first year of the downturn alone. A decade later, many states have improved their reserve policies, but more remains to be done as governments prepare for the next recession. For example, a September 2018 analysis by Moody’s Analytics found that 32 states fell short of having enough reserves to offset even a moderate recession.

As states work to balance saving for future needs against funding other important priorities, an increasing number are using evidence-based approaches to determine how much they want to have on hand to navigate the next recession. ….

2018 Employer Health Benefits Survey

Source: Kaiser Family Foundation, 2018

From the abstract:
This annual survey of employers provides a detailed look at trends in employer-sponsored health coverage including premiums, employee contributions, cost-sharing provisions, offer rates, wellness programs, and employer practices. The 2018 survey included 2,160 interviews with non-federal public and private firms.

Annual premiums for employer-sponsored family health coverage reached $19,616 this year, up 5% from last year, with workers on average paying $5,547 toward the cost of their coverage. The average deductible among covered workers in a plan with a general annual deductible is $1,573 for single coverage. Fifty-six percent of small firms and 98% of large firms offer health benefits to at least some of their workers, with an overall offer rate of 57%.

Survey results are released in several formats, including a full report with downloadable tables on a variety of topics, a summary of findings, and an article published in the journal Health Affairs.

Related:
Health Benefits In 2018: Modest Growth in Premiums, Higher Worker Contributions at Firms with More Low-Wage Workers, More Workers Face a Deductible.
Source: Gary Claxton, Matthew Rae, Michelle Long, Anthony Damico, and Heidi Whitmore, Health Affairs, Ahead of Print, October 3, 2018
(subscription required)

From the abstract:
The annual Henry J. Kaiser Family Foundation Employer Health Benefits Survey found that in 2018 the average annual premium for single coverage rose 3 percent to $6,896 and the average annual premium for family coverage rose 5 percent to $19,616. Covered workers contributed 18 percent of the cost for single coverage and 29 percent of the cost for family coverage, on average, with considerable variation across firms. Eighty-five percent of covered workers face a general annual deductible before they use most services, including the 29 percent of covered workers who are enrolled in a high-deductible health plan with a savings option. The share of firms covering services provided via telemedicine has increased steadily over the past several years. Nearly a quarter of large employers expect the elimination of the individual mandate to result in lower take-up in plan offerings.

Mercer National Survey of Employer-Sponsored Health Plans – 2018

Source: Mercer, 2018

From the press release:
Highlighting the many ways that health technology is transforming employer-sponsored health benefit programs, Mercer unveiled early results from its industry-leading survey at this year’s HR Technology Conference & Expo in Las Vegas. Based on the first 1,566 responses to the Mercer National Survey of Employer-Sponsored Health Plans, Mercer projects that health benefit cost per employee will rise by 4.1% on average in 2019 (see Figure 1).

This increase is in line with recent low single-digit annual increases. Mercer notes that the underlying medical plan cost trend has cooled from 6.5% to 5.3% heading into 2019 (the underlying trend is the estimated increase in medical plan cost if employers made no changes). In past years, common employer cost-control tactics included raising deductibles and offering less generous plans. For 2019, however, fewer than half of the responding employers (44%) will be making these types of changes. But many employers are adopting new technology-enabled tools and solutions to address the root causes of the high cost of health care without cutting benefits or increasing the financial burden on employees. ….

EITC Continues to Reach Families in Poor Places

Source: Andrew Schaefer, Beth Mattingly, Kennedy Nickerson, Jessica Carson, Carsey School of Public Policy at the University of New Hampshire, Data Snapshot, October 9, 2018

From the summary:
Recent proposals in the House and Senate (for example, the Grow American Incomes Now Act) focus on amplifying the Earned Income Tax Credit (EITC)—a refundable tax credit for low-income workers—to compensate for growing wage inequity. We find that the share of EITC filers who are families with children is especially high in the poorest counties (those counties outlined in black on Map 1), including many places throughout the South.

Key Findings:
The Earned Income Tax Credit provides tax relief to working people with low to moderate income, with much larger credits for tax filers with children. The credit is refundable, meaning that the EITC reduces the amount of tax owed, and any amount above that may be issued as a refund.

Municipal Equality Index – 2018

Source: Human Rights Campaign (HRC) Foundation, October 2018

From the press release:
Today, the Human Rights Campaign (HRC) Foundation, the educational arm of the nation’s largest lesbian, gay, bisexual, transgender and queer (LGBTQ) civil rights organization, in partnership with the Equality Federation Institute, announced that a record-setting 78 cities across the nation earned perfect scores in the seventh annual Municipal Equality Index (MEI), meeting the most demanding and pioneering criteria since the report’s debut in 2012. The MEI is the only nationwide rating system of LGBTQ inclusion in municipal law, policy and services.

The 2018 MEI evolved dramatically this year, instituting new benchmarks ensuring equal access to single-user facilities in public spaces, as well as protecting LGBTQ youth from bullying in city services and from dangerous so-called “conversion therapy.” Additionally, this year the MEI deducted points for laws that include provisions licensing discrimination against the LGBTQ community.

But even with these more stringent MEI requirements, cities and municipalities are meeting and exceeding our standards with innovative measures to protect LGBTQ people. A record 78 cities earned perfect scores for advancing LGBTQ-inclusive laws and policies — up from 68 in 2017 and 11 in 2012, the first year of the MEI. And in the current political reality, welcoming cities like these are more important than ever….