Minnesota’s Small Group MarketSelect Statistics

Health Care Access CommissionSmall Group Insurance Market Work Group

September 23, 2010

Stefan GildemeisterAssistant Director, Health Economics Program

Overview

• Coverage distribution in Minnesota

• Statistics on employer-based coverage, comparing small and large firms

• Trends in health plan benefits in the small group market

• Health plan market shares and loss ratios

Size of Small Group Market

Distribution of Minnesota Population by Primary Source of Insurance Coverage, 2008

Uninsured7.3%

MA, GAMC, MNCare11.1%

Medicare14.4%

Individual4.8%

MCHA0.5%

Job-based coverage

61.9%

Source: MDH Health Economics Program; population estimates are from the U.S. Bureau of Census, July 2009MA is Medical Assistance, MNCare is MinnesotaCare, GAMC is General Assistance Medical Care

Total Population 5.2 Million

Distribution of Minnesota Population by Primary Source of Insurance Coverage, 2008

Uninsured7.3%

MA, GAMC, MNCare11.1%

Medicare14.4%

Individual4.8%

MCHA0.5%

Small Group7.8%

Large Group54.1%

Source: MDH Health Economics Program; population estimates are from the U.S. Bureau of Census, July 2009MA is Medical Assistance, MNCare is MinnesotaCare, GAMC is General Assistance Medical Care

Total Population 5.2 Million

Enrollment in Small Group and Individual Health Plans as a Share of the Population

4.5% 4.3% 4.1% 3.9% 3.8% 4.0%4.4% 4.6% 4.7% 4.7% 4.8%

9.4% 9.6% 9.8% 9.9%9.4%

9.0% 8.9% 8.8%8.5%

8.2%7.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Individual

Small Group

450,230483,665 469,474

449,890 437,493408,535

0

100,000

200,000

300,000

400,000

500,000

600,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Fully Insured market only.Source: MDH, Health Economics Program; estimates based on data from various sources.

Trends in Minnesota Small Group Health Insurance Enrollment, 1998 to 2008

Characteristics of Small Firms

Trend in the Number of Establishments, by Firm Size

0

20,000

40,000

60,000

80,000

100,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Nbr of Establishments in Firms 2 to 50 Number of Establishments in Firms 51 to 100

Source: Minnesota Department of Employment and Economic Development, Quarterly Census of Employee and Wages

Trend in the Number of Employees, by Firm Size

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Nbr of Employees in Firms 2 to 50 Number of Employees in Firms 51 to 100

Source: Minnesota Department of Employment and Economic Development, Quarterly Census of Employee and Wages

Percent of Minnesota Employers Offering Health Insurance Coverage, by Firm Size (1996/97 & 2008/09)

87.7%

52.2%

94.5%

42.8%

54.5%

97.3%

79.5%

41.3%

0%

20%

40%

60%

80%

100%

1 to 49 50 to 99 100+ All Firms

Number of Employees in Firm

1996/97

2008/09

Source: MDH analysis of data for private employers from the Medical Expenditure Panel Survey/Insurance Component (years are pooled to improve the statistical validity of the estimates.

Preliminary data; difference between estimates have not been tested for statistical significance.

Percent of Employees in Minnesota Establishments Offering Health Insurance Coverage, by Firm Size (1996/97 & 2008/09)

67.4%

92.1%87.7%

98.0%

87.7%

98.1%

89.2%

61.2%

0%

20%

40%

60%

80%

100%

1 to 49 50 to 99 100+ All Firms

Number of Employees in Firm

1996/97

2008/09

Source: MDH analysis of data for private employers from the Medical Expenditure Panel Survey/Insurance Component (years are pooled to improve the statistical validity of the estimates.

Preliminary data; difference between estimates have not been tested for statistical significance.

Percent of Employees Eligible for Health Insurance in Firms Offering Coverage, by Firm Size (1996/97 & 2008/09)

80.9% 77.4% 79.6% 79.8%75.5% 78.6%80.2%

68.9%

0%

20%

40%

60%

80%

100%

1 to 49 50 to 99 100+ All Firms

Number of Employees in Firm

1996/97

2008/09

Source: MDH analysis of data for private employers from the Medical Expenditure Panel Survey/Insurance Component (years are pooled to improve the statistical validity of the estimates.

Preliminary data; difference between estimates have not been tested for statistical significance.

Percent of Eligible Employees Who Enroll in Coverage (Take-up Rate), by Firm Size (1996/97 & 2008/09)

86.5% 84.7%76.1%

82.6%78.1%77.9%74.9%

79.9%

0%

20%

40%

60%

80%

100%

1 to 49 50 to 99 100+ All Firms

Number of Employees in Firm

1996/97

2008/09

Source: MDH analysis of data for private employers from the Medical Expenditure Panel Survey/Insurance Component (years are pooled to improve the statistical validity of the estimates.

Preliminary data; difference between estimates have not been tested for statistical significance.

Average Annual Health Insurance Premium in MN for Family Coverage, by Firm Size

$4,588 $4,982 $5,208 $5,067

$11,231

$13,375 $13,910 $13,426

0

5,000

10,000

15,000

20,000

1 to 49 50 to 99 100+ All Firms

Number of Employees in Firm

1996/97

2008/09

Source: MDH analysis of data for private employers from the Medical Expenditure Panel Survey/Insurance Component (years are pooled to improve the statistical validity of the estimates.

Preliminary data; difference between estimates have not been tested for statistical significance.

Average Employee Contribution to Family Coverage, by Firm Size (1996/97 & 2008/09)

24.2%23.1%

31.5%

26.6% 26.0%23.9%

31.2%35.4%

0%

10%

20%

30%

40%

50%

1 to 49 50 to 99 100+ All Firms

Number of Employees in Firm

Source: MDH analysis of data for private employers from the Medical Expenditure Panel Survey/Insurance Component (years are pooled to improve the statistical validity of the estimates.

Preliminary data; difference between estimates have not been tested for statistical significance.

Trends in Small Group Health Plan Benefits

Distribution of Family Level Deductibles in the Small Group Market, 2002 to 2008

45.6%34.2%

13.7%

34.9%

35.3%

23.1%

18.9%

21.5%

30.1%

9.0%

33.3%

0.9%

0%

20%

40%

60%

80%

100%

2002 2005 2008

Pe

rce

nt

of

En

rollm

en

t

Less than $1,000 $1,000 to $1,999 $2,000 to $3,999 $4,000 or higher

Source: MDH, Health Economics ProgramDeductible levels are per family. Distribution of deductibles only includes enrollment in plans with a deductible

Small Group Market Enrollment in High Deductible Health Plans with Savings Option, 2005 and 2008(by share of total enrollment)

3.6%

24.4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2005 2008

Qualified High Deductible Health Plan enrollment must meet the minimum deductible guidelines for the calendar year, as determined by the Internal Revenue Service (for 2008 the minimum deductible is $1,100), and be paired with (or have the option to pair with) a Health Savings Account.Source: MDH, Health Economics Program

Distribution of Office Visit Copayments in the Small Group Market, 2002 to 2008(by share of enrollment)

Source: MDH, Health Economics ProgramIncludes only enrollees who have an office visit copayment.

7.2%

75.5%

11.2%

6.1%

34.6%

14.9%

59.0%

7.0%2.9%

55.5%

0.0%

26.1%

0%

20%

40%

60%

80%

$10 $15 $20 $25 or more

2002 2005 2008

Family Level Out-of-Pocket Limits in the Small Group Market, 2002 to 2008(by share of total enrollment)

Source: MDH, Health Economics ProgramMedian calculation and distribution excludes enrollees with no out-of-pocket limit. Out-of-pocket limit applies to covered services only.

45.9%

20.7%13.2%

15.7%

15.6%9.7% 6.8%

64.4%

66.4%

37.6%

3.2%0.9%

0%

20%

40%

60%

80%

100%

2002 2005 2008

Less than $4,000 $4,000 to $5,999 $6,000 or more Family Size Dependent

Lifetime Limit on Benefits in the Small Group Market, 2002-2008(by share of total enrollment)

Limits on lifetime benefits define the maximum amount an insurance policy will pay over the life of a policy holder. Source: MDH, Health Economics Program

6.2% 0.2%0.9%

3.9%

40.6%40.8%

70.7%1.2%

1.8%

51.2%

25.2%

57.3%

0%

20%

40%

60%

80%

100%

2002 2005 2008

$2 Million or Less $3 Million $5 Million Unlimited

Market Shares in the Small Group Insurance Market

Health Plan Market Shares: Small Group Market, 2008

45.6%

27.2%

19.8%

3.2% 3.2%0.4% 0.2% 0.4%

0%

10%

20%

30%

40%

50%

Blue Cross BlueShield of MN

Medica HealthPartners PreferredOne FederatedMutual Ins. Co.

Time Ins. Co.(formerly Fortis)

Principal LifeIns. Co.

Other (3companies)

Note: Companies with common ownership were treated as one entity. For example, Blue Cross Blue Shield of MN includes Blue Cross Blue Shield of Minnesota and Blue Plus. Market shares based on premium volume; fully insured market only. Source: Minnesota Department of Commerce, "Report of 2008 Loss Ratio Experience in the Individual and Small Employer Health Plan Markets for: Insurance Companies Nonprofit Health Service Plan Corporations and Health Maintenance Organizations," August 2009.

Total Premium Volume in 2008: $1.54 Billion

Loss Ratio Experience in the Small Group Market, 1998 to 2008

0%

20%

40%

60%

80%

100%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Total Market BCBSM Medica HealthPartners

Statutory minimum for large companies

Note: Companies with common ownership have been combined for purposes of this analysis. Source: Minnesota Department of Commerce, "Report of 2008 Loss Ratio Experience in the Individual and Small Employer Health Plan Markets for: Insurance Companies, Nonprofit Health Service Plan Corporations, and Health Maintenance Organizations ," August 2009.

Contact Information

• Stefan Gildemeister(651) 201-3550stefan.gildemeister@state.mn.us

• www.health.state.mn.us/healtheconomics

• https://pqc.health.state.mn.us/mnha/Welcome.action