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Economic News Release
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Expenditures For Health Care Plans By Employers And Employees, 1992


TEXT
Table 1.  Expenditures for health care in private industry and state and local governments, 1992:                                   
Table 2.  STANDARD ERRORS TABLE Standard errors,4/ in billions of dollars, associated with estimates                                

                                                                                                                                    
                                                                                                                                    
Technical contact:                      USDL: 93-560                                                                                
Wayne Shelly   (202) 606-6199                                                                                                       
                                                                                                                                    
Media contact:                          FOR RELEASE: 10 A.M. (EST)                                                                  
Kathryn Hoyle  (202) 606-5902           Monday, December 20, 1993                                                                   
                                                                                                                                    
                                                                                                                                    
     EXPENDITURES FOR HEALTH CARE PLANS BY EMPLOYERS AND EMPLOYEES, 1992                                                            
                                                                                                                                    
                                                                                                                                    
     Employers and employees in private industry and state and local                                                                
governments spent $258.5 billion for health care plans during 1992.  Employer                                                       
expenditures for workplace-based health care plans ($221.4 billion) were                                                            
nearly six times those of employees ($37.2 billion).                                                                                
                                                                                                                                    
     These data are from a special survey of expenditures on health care plans                                                      
conducted by the U.S. Department of Labor's Bureau of Labor Statistics for the                                                      
Department of Health and Human Services' Health Care Financing Administration.                                                      
Expenditures included employer and employee costs for health care plans,                                                            
typically insurance premiums.  (See explanatory note below.)  Out-of-pocket                                                         
expenses by health care plan participants, such as co-insurance payments and                                                        
deductibles, were not included in the survey, nor were employee expenditures                                                        
for individually-purchased health care plans.                                                                                       
                                                                                                                                    
Expenditures by industry                                                                                                            
                                                                                                                                    
     Expenditures for health care plans in private industry totaled $203.7                                                          
billion in 1992--$74.0 billion in goods-producing and $129.7 billion in                                                             
service-producing industries.  (See table 1.)  Employer costs made up nearly                                                        
nine-tenths of total expenditures in goods-producing industries, such as                                                            
construction and manufacturing.  In contrast, the percent of total                                                                  
expenditures paid by employers in service-producing industries ranged from 93                                                       
percent in transportation and public utilities to 77 percent in retail trade.                                                       
                                                                                                                                    
     Expenditures for health care plans in state and local governments were                                                         
$54.8 billion in 1992.  Employer costs accounted for 85 percent of the total                                                        
expenditures.                                                                                                                       
                                                                                                                                    
Expenditures by size of establishment                                                                                               
                                                                                                                                    
     Expenditures for health care plans in 1992 were $92.2 billion in                                                               
establishments with fewer than 100 employees, compared with $53.5 billion in                                                        
establishments with 100 to 499 employees and $112.8 billion in establishments                                                       
with 500 employees or more.  The percent of health care expenditures accounted                                                      
for by employers were similar among the employment size categories -- nearly                                                        
85 percent in the two smaller size classes and 87 percent in establishments                                                         
with 500 employees or more.                                                                                                         
                                                                                                                                    
     The survey was based on a sample of establishments, typically defined as                                                       
single physical locations where economic activity occurs.  Small                                                                    
establishments (less than 100 employees) include companies with a single                                                            
location, such as a small retailer, and units of larger companies, such as a                                                        
service center for a large manufacturing company.  The data for small                                                               
establishments, therefore, may reflect health care plan expenditures of vastly                                                      
different establishments.                                                                                                           
                                                                                                                                    
Expenditures by region                                                                                                              
                                                                                                                                    
     Expenditures for health care plans in 1992 amounted to $67.0 billion in                                                        
the Northeast, $72.5 billion in the South, $63.6 billion in the Midwest, and                                                        
$55.4 billion in the West.  The percent of total expenditures accounted for by                                                      
employers ranged from 81 percent in the South to 89 percent in the Northeast.                                                       
                                                                                                                                    
Explanatory note                                                                                                                    
                                                                                                                                    
The data on expenditures for heath care plans were obtained from the June 1993                                                      
sample of establishments in the BLS Employment Cost Index (ECI) and Employee                                                        
Benefits Survey (EBS) programs.  That sample, selected on a probability basis,                                                      
included about 4,600 sample units in private industry and about 1,000 units in                                                      
state and local governments.                                                                                                        
                                                                                                                                    
Additional information on the ECI (a quarterly measure of change in the cost                                                        
of labor -- wages, salaries, and employer costs for employee benefits) may be                                                       
found in the BLS Handbook of Methods, BLS Bulletin 2414, chapter 8.                                                                 
Information on the EBS (an annual measure of the incidence and provisions of                                                        
employee benefits in private industry and state and local governments) may be                                                       
found in chapter 9 of the BLS Handbook of Methods.                                                                                  
                                                                                                                                    
The health care expenditure survey was developed to meet quickly the critical                                                       
needs of the Health Care Financing Administration (HCFA) in its role of                                                             
monitoring national health care costs.  The data were collected from an                                                             
existing sample of establishments to minimize cost, reduce turnaround time,                                                         
and minimize respondent burden.                                                                                                     
                                                                                                                                    
The data cover calendar year 1992 expenditures for all health care plans                                                            
available through the employment relationship.  The survey included expenses                                                        
for insured plans, plans self-insured by employers, and plans covering                                                              
retirees.  Benefits for former employees and dependents under the provisions                                                        
of the Consolidated Omnibus Budget Reconciliation Act of 1985 (known as COBRA,                                                      
which requires employers to offer continued access to health care coverage for                                                      
specified periods) also were included.  Contributions made by retirees and                                                          
other former employees were included in the tabulation of employee                                                                  
expenditures.                                                                                                                       
                                                                                                                                    
Health care plans included in the survey covered medical services and supplies                                                      
and prescription drugs.  Costs associated with employee assistance and                                                              
wellness programs, workers' compensation benefits, accidental death and                                                             
dismemberment, dread disease indemnities, disability income replacement                                                             
benefits, and cash in lieu of health care benefits were excluded.                                                                   
Expenditures were included for rebates, reserves, premium taxes, pre-funding                                                        
of retiree health care benefits, contributions to collectively bargained                                                            
health care benefits, and catastrophic (stop-loss) coverage.  Payments to                                                           
third parties for administrative services also were included, but internal                                                          
(within the establishment) administrative costs were not included.                                                                  
                                                                                                                                    
Standard errors were computed for all aggregate premium data presented.                                                             
Standard errors can be used to define a range (confidence interval) around an                                                       
estimate.  The interval described by 2 standard errors above and two standard                                                       
errors below the estimate would include the value of the population for 95                                                          
percent of the samples.  The standard error for the total employer and                                                              
employee expenditure -- $258.5 billion -- is $12.7 billion.  (See table 2.)                                                         
                                                                                                                                    
A standard error also was computed for the percent of the total health care                                                         
expenditure for all civilian workers that was paid by employers.  The standard                                                      
error for this estimate is 0.3 percent.                                                                                             
Table 1.  Expenditures for health care in private industry and state and local governments, 1992:                                   
By industry, region, and establishment employment size; total and the share by employers and employees                              
-------------------------------------------------------------------------------------------------                                   
                                            (Expenditures in billions of dollars)                                                   
                                                                                                                                    
                                    Total         Employer     Percent      Employee      Percent                                   
                                 expenditure     expenditure   of total    expenditure    of total                                  
-------------------------------------------------------------------------------------------------                                   
Civilian workers1/.............    $258.5          $221.4         86%        $37.2          14%                                     
                                                                                                                                    
 State and local government....      54.8            46.6         85           8.3          15                                      
                                                                                                                                    
 Private industry..............     203.7           174.8         86          28.9          14                                      
  Goods-producing industries2/.      74.0            65.6         89           8.4          11                                      
   Construction................       8.1             7.2         89            .9          11                                      
   Manufacturing...............      63.4            56.3         89           7.1          11                                      
  Service-producing industries.     129.7           109.2         84          20.5          16                                      
   Transportation and utilities      22.4            20.9         93           1.5           7                                      
   Wholesale trade.............      17.1            14.6         86           2.4          14                                      
   Retail trade................      20.2            15.6         77           4.6          23                                      
   Finance, insurance, and                                                                                                          
    real estate................      19.1            15.5         81           3.6          19                                      
   Services....................      50.9            42.5         84           8.4          17                                      
                                                                                                                                    
Establishments employing:                                                                                                           
 Fewer than 100 workers........      92.2            78.1         85          14.2          15                                      
 100 workers or more...........     166.3           143.3         86          23.0          14                                      
  100-499 workers..............      53.5            45.0         84           8.5          16                                      
  500 workers or more..........     112.8            98.4         87          14.4          13                                      
                                                                                                                                    
Region3/:                                                                                                                           
 Northeast.....................      67.0            59.3         89           7.7          12                                      
 South.........................      72.5            58.7         81          13.8          19                                      
 Midwest.......................      63.6            55.7         88           7.9          12                                      
 West..........................      55.4            47.6         86           7.7          14                                      
-------------------------------------------------------------------------------------------------                                   
  1/  Excludes agriculture, private households, and the federal government.                                                         
  2/  Includes mining in addition to industries shown.  Mining is not shown separately because                                      
  the standard errors on expenditure estimates are greater than 50 percent of those estimates.                                      
  3/  The regional coverage is as follows:  Northeast--Connecticut, Maine, Massachusetts, New                                       
  Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont; South--Alabama,                                         
  Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland,                                        
  Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West                                       
  Virginia; Midwest--Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska,                                      
  North Dakota, Ohio, South Dakota, and Wisconsin; and West--Alaska, Arizona, California,                                           
  Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.                                      
                                                                                                                                    
  NOTE: Components may not sum to totals because of rounding.                                                                       
                                                                                                                                    
Table 2.  STANDARD ERRORS TABLE Standard errors,4/ in billions of dollars, associated with estimates                                
of expenditures for health care in private industry and state and local governments, 1992: By                                       
industry, region, and establishment employment size; total and the share by employers and employees                                 
-------------------------------------------------------------------------------------------------                                   
                                    Total         Employer       Employee                                                           
                                 expenditure     expenditure    expenditure                                                         
-------------------------------------------------------------------------------------------------                                   
Civilian workers1/.............     $12.7          $10.9           $2.0                                                             
                                                                                                                                    
 State and local government....       7.2            6.1            1.2                                                             
                                                                                                                                    
 Private industry..............      10.2            8.8            1.6                                                             
  Goods-producing industries2/.       5.9            5.2            0.8                                                             
   Construction................       1.2            1.1             .1                                                             
   Manufacturing...............       6.3            5.5             .8                                                             
  Service-producing industries.       7.9            6.7            1.4                                                             
   Transportation and utilities       3.8            3.6             .3                                                             
   Wholesale trade.............       2.7            2.4             .4                                                             
   Retail trade................       2.5            2.0             .6                                                             
   Finance, insurance, and                                                                                                          
    real estate................       2.3            1.9             .5                                                             
   Services....................       5.0            4.2             .9                                                             
                                                                                                                                    
Establishments employing:                                                                                                           
 Fewer than 100 workers........       5.2            4.5            1.0                                                             
 100 workers or more...........       6.1            5.3            1.0                                                             
  100-499 workers..............       1.8            1.6             .3                                                             
  500 workers or more..........       4.1            3.7             .7                                                             
                                                                                                                                    
Region3/:                                                                                                                           
 Northeast.....................       7.2            6.4             .9                                                             
 South.........................       5.9            4.8            1.1                                                             
 Midwest.......................       6.1            5.4             .9                                                             
 West..........................       6.4            5.4            1.1                                                             
-------------------------------------------------------------------------------------------------                                   
  4/  Standard errors are a measure of the precision of the expenditure estimates.                                                  
  We can be 95-percent confident that the interval around the expenditure estimate bounded by two                                   
  times plus and two times minus the standard error contains the "true" expenditure.                                                
                                                                                                                                    
  NOTE:  See footnotes 1-3 on table 1.