Becky Briesacher, Bruce Stuart
"Employer-Sponsored Health Insurance and Prescription Drug Coverage for New Retirees: Dramatic Declines in Five Years," Bruce Stuart, Puneet K. Singhai, et al., Health Affairs Web Exclusive (July 23, 2003): W3-334341
Despite its reputation as the most reliable private source of prescription drug coverage for Medicare beneficiaries, employer-sponsored health insurance is becoming increasingly less dependable for new retirees. A Health Affairs Web Exclusive study (July 23, 2003) has found a sharp decline in the proportion of retirees ages 65 to 69 with medical coverage, including prescription benefits, from an employer.
All indications point to further erosion as employers continue to cut back on coverage for new retirees. Given that Congress is considering waiting until 2006 for the new Medicare drug benefit to take effect, many seniors are likely to have difficulty filling the coverage gap in the meantime.
Results from the Commonwealth Fund-sponsored study, Employer-Sponsored Health Insurance and Prescription Drug Coverage for New Retirees: Dramatic Declines in Five Years, show that from 1996 to 2000, the percentage of Medicare beneficiaries in the 65–69 age group covered by employer-sponsored health insurance fell from 46 percent to just over 39 percent. There was a similar decline in employer-sponsored drug benefits, from 40 percent in 1996 to 35 percent in 2000. Health coverage for older retirees (age 70 and older), meanwhile, has remained relatively stable.
For the analysis, authors Bruce Stuart and his colleagues at the University of Maryland School of Pharmacy used the Medicare Current Beneficiary Survey, which reports data from a nationally representative sample of approximately 12,000 beneficiaries each year.
Among new retirees, coverage of men has dropped the most rapidly. The share of men ages 65 to 69 receiving benefits from their own retirement policies fell 26 percent from 1996 to 2000. According to the authors, men have accounted for most of the loss in retirement benefits in this age group. The rate of decline for men (nine percentage points) was three times that of women (three percentage points).
The erosion would have been more severe during the study period had men not increasingly sought coverage under their spouses' policies. In 1996, only 17 percent of men with retiree benefits obtained them from a spouse; that percentage climbed to 25 percent in 2000.
Future retirees will experience further erosion of benefits from employers. The authors outlined a number of factors: