New Statistics for Health Insurance from the National Compensation Survey: Integrating Compensation Programs into the NCS Provides New Opportunities for Calculating the Relationships among the Percentage of Employers Offering Health Insurance, the Percentage of Employees Participating in Health Insurance Plans, and the Cost to Employers for Such Plans

By Lettau, Michael | Monthly Labor Review, August 2004 | Go to article overview

New Statistics for Health Insurance from the National Compensation Survey: Integrating Compensation Programs into the NCS Provides New Opportunities for Calculating the Relationships among the Percentage of Employers Offering Health Insurance, the Percentage of Employees Participating in Health Insurance Plans, and the Cost to Employers for Such Plans


Lettau, Michael, Monthly Labor Review


Over the last several years, the Bureau of Labor Statistics has consolidated several of its compensation surveys into the National Compensation Survey (NCS). Combining the separate surveys into one integrated program provides greater efficiency in data collection and processing, and also provides greater flexibility in the calculation of compensation measures. Several new statistics are planned for publication from the NCS, which should give data users a more complete understanding of the compensation package a U.S. worker typically receives.

Data are available from the first collection period of the NCS. It is now possible to calculate trial estimates for the proposed statistics. This article describes the integration of the separate surveys into the NCS and presents trial statistics for health insurance. (1) The calculation of the trial statistics is just the first step in the development of the new measures. It will take some time to incorporate their calculation into the production process for regular release. Nonetheless, the statistics in this article are examples of the types of measures BLS hopes to publish in the future.

Previous compensation surveys

The NCS combined the Employment Cost Index (ECI) Survey, the Employee Benefits Survey (EBS), and the Occupational Compensation Survey (OCS) Program. The ECI has been the most prominent of the compensation surveys. It shows employers' costs for wage and nonwage compensation relative to a base period using a Laspeyres formula. (2) Nonwage compensation covers an extensive list of employee benefits, including health insurance, pensions, paid leave, and legally-required benefits. BLS began reporting the ECI for benefits in 1981. From that time until 1995, growth in benefit compensation consistently outpaced growth in wage compensation. Then, during the second half of the 1990s, the trend reversed and benefits grew at a lower rate than wages. Since 2000, benefit costs have accelerated, growing more quickly than wages once again. (3)

As a measure of total compensation for U.S. workers, the ECI is the chief indicator of compensation inflation for the U.S. labor market. However, it does not provide any detail on the benefit packages workers receive. As a step to providing such detail, BLS introduced the Employer Costs for Employee Compensation (ECEC) in 1987. (4) The ECEC is based on the ECI data for the current period. It reports average compensation for wages and salaries and for 19 categories of benefits. In December 2003, the ECEC for total compensation was $22.92 per hour worked for workers in private industry. Wages and salaries made up 71.9 percent of compensation, with an average of $16.49. Benefits made up the remaining 28.1 percent, with an average of $6.43. Of particular interest among the individual benefits, the cost per hour worked for health insurance averaged $1.50 in December 2003, or 23 percent of total benefit costs.

Although the ECEC provides a good summary of the relative cost for the various pieces of the benefit package a worker typically receives, it does not describe the characteristics of those benefits. Detailed characteristics of plans have historically been the purview of the Employee Benefits Survey (EBS). The EBS reported the proportion of employees who participate in benefit plans with a particular provision or characteristic. The provisions ranged from the very broad, such as whether a health plan included dental coverage, to the very specific, such as whether a medical plan's limit to inpatient alcohol detoxification coverage was measured in days rather than dollars.

The EBS provided rich detail about benefit plans, but its drawback was the lag time between data collection and the published statistics. In contrast, the ECI is reported in the month after its reference period, and the ECEC is reported shortly thereafter, so their information is quite timely. Moreover, statistics from the ECI and the EBS programs did not connect employers' costs for the benefits with the provisions of the benefit plans.

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New Statistics for Health Insurance from the National Compensation Survey: Integrating Compensation Programs into the NCS Provides New Opportunities for Calculating the Relationships among the Percentage of Employers Offering Health Insurance, the Percentage of Employees Participating in Health Insurance Plans, and the Cost to Employers for Such Plans
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