BLS Reports on Employee Benefits for Private Industry and Public Sector Workers
On July 21, 2017, the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) released its report on employee benefits for private industry and state and local government workers as of March 2017. The report provides information on the incidence of (i.e., access to and participation in) selected employee benefits as well as the share of premiums paid by employers and employees for medical care. The data is compiled from the National Compensation Survey (NCS) which conducts periodic updates on the provisions and incidence of employee benefit plans, and comprehensive measures of compensation cost trends.
The key findings include:
- For employer-provided medical care, 99% of full-time state and local government workers had access to employer-provided medical care, with 80% participating. By comparison, 85% of full-time private industry workers had access with 63% participating.
- For single medical plan coverage, state and local governments paid 86% of the premiums for full-time workers on average. By comparison, private industry employers paid 79% of the premiums. For family coverage, state and local governments paid 71% of the premiums for full-time workers and private industry paid 68%.
- For retirement benefits, 99% of full-time state and local government workers had access to retirement benefits with 87% participating. By comparison, 77% of full-time private industry workers had access with 60% participating. Note that retirement benefits include those provided through defined benefit and defined contribution plans.
- For life insurance benefits, 91% of full-time state and local government workers had access compared to 71% of full-time private industry workers. Most workers who had access to life insurance benefits chose to participate.
- For paid sick leave benefits, 99% of full-time state and local government workers had access compared to 81% of private industry workers.
The March 2017 NCS benefits survey is based on a sample with nearly 135 million civilian workers, including: 19 million state and local government workers and 116 million private industry workers.
The news release is available here.
NASRA Updates Issue Brief on Employee Contributions to Public Pension Plans
In September 2017, the National Association of State Retirement Administrators (NASRA) updated its issue brief, Employee Contributions to Public Pension Plans. The brief analyzes employee contribution plan designs, policies and recent trends.
As discussed in the brief, nearly all state and local government employees are required to contribute to the cost of their retirement benefits, with employee contributions typically ranging between 4% and 8% of an employee’s salary. In addition, the report indicates that 25%-30% of state and local government employees do not participate in Social Security. In many cases, those who do not participate in Social Security have a higher pension benefit and higher required contributions as compared with those who do participate in Social Security. The median contribution rates have increased to 6% of pay for employees who participate in Social Security and remain steady at 8.0% for those employees who do not participate in Social Security.
According to the brief, since 2009, more than 35 state governments increased their employee contribution rates. Moreover, an increasing number of states are exposing employee contributions to risk either by: 1) linking employee contribution rates to the pension plan’s investment return; or 2) establishing a hybrid or 401(k)-type plan, thereby transferring the related investment risk from the employer to the employee.
Other recent trends in employee contributions include:
- Maintaining a variable employee contribution rate based on the pension plan’s actuarial condition; and
- Increasing employee contribution rates when labor agreements are negotiated.
The legality of increasing employee contributions varies by state. In some states, courts have ruled that legislative efforts to increase employee contributions are a violation of the state constitution or contractual rights. However, in other states, higher employee contributions have either withstood or have not been subject to legal challenges.
The brief also includes an appendix of employee contribution rates for 120 individual statewide retirement plans and identifies whether or not plan members have Social Security coverage.
The issue brief is available here.
National League of Cities Releases 2017 City Fiscal Conditions Report
On September 11, 2017, the National League of Cities (NLC) released the results of its 32nd annual survey, 2017 City Fiscal Conditions. The survey of city finance officers indicates a potential slowdown in the municipal financial sector due to the second consecutive year of fiscal contraction following several years of post-recession growth. Some of the major findings that may signal a potential future slowdown include: 1) weakening confidence of municipal finance officers; 2) slowing local revenue and spending trends; and 3) inadequate post-recession revenue recovery.
The report’s key findings include:
- Confidence of city finance officers in the fiscal position of their cities has been weakening. While 69% of finance officers remain confident in 2017, the level of optimism was highest in 2015 at 82%.
- General Fund revenues are trending downward and are expected to grow 0.9% in 2017, down from 2.61% in 2016.
- General Fund expenditures are anticipated to grow 2.1%, down from 2.18% in 2016.
- Property tax revenues are expected to grow 1.6% in 2017, down from 4.3% in 2016.
- Sales and income tax revenues are projected to decline in 2017 to -0.2% and -2.7% respectively, down from 3.7% and 2.4% in 2016.
- City budgets are currently constrained by infrastructure costs (55%); public safety needs (48%); employee-related costs for pensions (45%); health care (45%); and wages and salaries (44%).
- Current positive influences on city budgets include their tax base (83%) and local economy (77%).
The 2017 survey data were based on a sampling of more than 1,000 cities with populations over 10,000. In total, the 2017 data were based on responses from 261 cities (26%) assessing their fiscal status, actions taken, and factors affecting fiscal conditions. The NLC advises that the data should be considered in light of variations in tax authority, functional responsibility, accounting systems and state laws influencing city finances.
According to the NLC’s Research Director, Christiana McFarland, “Our findings raise cautionary flags, despite improvements in economic indicators, like productivity and unemployment.” She added, “These countervailing trends point to the imperative to expand the fiscal tools available to cities.”
The report is available here.
U.S. Census Bureau Reports on Health Insurance Coverage in 2016
On September 12, 2017, the U.S. Census Bureau released its report, Health Insurance Coverage in the United States: 2016. This report presents statistics on U.S. health insurance coverage based on information collected from 2013 through 2016 for the Current Population Survey Annual Social and Economic Supplements (CPS ASEC) and the American Community Survey (ACS). The changes in the rate of health insurance coverage and the distribution of coverage types may reflect economic trends, shifts in the population’s demographic composition, and policy changes that affect health care access.
Some highlights include:
- In 2016, individuals without health insurance coverage for the entire calendar year was 8.8%, down from 9.1% in 2015;
- Those without health insurance declined to 28.1 million in 2016 from 29.0 million in 2015;
- Private health insurance coverage continued to be more prevalent than government coverage, at 67.5% and 37.3%, respectively; and
- Employer-based insurance covered 55.7% of the population for all or part of the calendar year, Medicaid covered 19.4%, and Medicare covered 16.7%.
The report is available here.
Kaiser Family Foundation/HRET Publish 2017 Employer Health Benefits Survey
On September 19, 2017, the Kaiser Family Foundation (KFF) and the Health Research & Educational Trust (HRET) issued their 2017 Employer Health Benefits Survey. The survey provides detailed information regarding health insurance premiums, employer and employee contributions, employee cost-sharing, wellness programs and other topics.
Some of the key findings include:
- Employer-sponsored health insurance covers about 151 million of the non-elderly population in the U.S. Approximately 53% of all employers offer health care benefits to at least some workers, and 62% of workers are covered. This is statistically unchanged from 2016.
- For employer-sponsored family coverage, annual premiums averaged $18,764 in 2016, up 3% from 2015. Workers paid an average of $5,714 towards family coverage.
- For employer-sponsored single coverage, annual premiums averaged $6,690 in 2016, up about 4% from 2015. Workers paid an average of $1,213 towards single coverage.
- Premiums for family coverage increased 30% (i.e., $12,106 to $15,745) over the period from 2007-2012. However, over the period from 2012-2017, premiums grew only 19% (i.e., $15,745 to $18,764).
- With regard to employee cost-sharing for health care, over 80% of all covered workers faced a general annual deductible, which averaged $1,505 for single coverage in 2017. Workers in small firms (i.e., with 3 to 199 employees) were more likely to have larger deductibles, with 58% having a deductible of at least $1,000 and 37% having a deductible of at least $2,000.
- Almost all large employers (i.e., with 200 or more employees) and most small employers provide at least one wellness program. About 52% of the large employers offer some form of biometric screening, and 37% provide some financial incentive for participation (e.g., cash, gift card, contributions to health-related savings accounts, etc.).
According to Dr. Jay Bhatt, President of HRET and Senior Vice President and Chief Medical Officer at the American Hospital Association, “This year’s findings continue a positive run of a slowing in premium increases and in the growth of health care costs overall.” He added, “As policymakers and providers continue to work to improve health care, ensuring it remains affordable and accessible is critically important. Wellness programs continue to be a popular way for employers to offer resources and financial incentives to their employees to help improve their overall health.”
Kaiser also updated an interactive graphing tool to examine trends in premiums and worker contributions among workers covered by employer-sponsored coverage at different types of firms. The tool uses a web-based interface to the underlying Kaiser/HRET data from the Employer Health Benefits Surveys from 1999-2017.
The survey report and interactive graphic are available here.
NIRS Finds DB Pensions Help to Recruit Teachers and Reduce Turnover
On September 25, 2017, the National Institute on Retirement Security (NIRS) released its research brief, Revisiting the Three Rs of Teacher Retirement Systems: Recruitment, Retention, and Retirement. The brief analyzes the effectiveness of defined benefit (DB) pension plans on teacher retention and overall productivity. The findings indicate that teacher effectiveness and productivity increases with experience.
Other key findings include:
- DB pensions help to recruit high quality teachers and retain highly productive teachers longer than defined contribution (DC) plans;
- A school district’s cost of teacher turnover is high due to financial expenses and loss of productivity;
- Teacher turnover in public schools is less than in private schools mainly due to higher compensation including pension benefits; and
- In 2009, DB plans helped to retain an additional 30,000 teachers which saved school districts between $130.7 million and $284.4 million nationally in turnover costs.
According to NIRS, “Because DB pensions play an important role in the retention of highly productive teachers, pensions have the dual benefit of both increasing the overall quality of our public education system while also reducing the costs to taxpayers. These findings are particularly important considerations for policymakers given the economic challenges facing states and localities as they attempt to keep taxpayer costs low while improving education for American children.”
The brief is available here.
CRR Issues Brief on U.S. Mortality Rates
On September 26, 2017, the Center for Retirement Research at Boston College (CRR) issued its brief, What’s Happening to U.S. Mortality Rates? The brief discusses: 1) the mortality trends and age patterns after 1900; and 2) the significance of the age variation in morality improvement. According to the brief, mortality rates are a key factor in the Social Security program’s cost projections. The importance of age variation affects the Social Security program since morality improvement at younger ages helps the program’s finances by expanding the number of workers paying into the system while mortality improvement at older ages tend to worsen it by increasing spending on longer-lived retirees’ benefits.
The key findings include:
- Over time, mortality rates steadily improve whereas the rate of progress fluctuates based on year, age and socioeconomic status;
- Over the last 40 years, progress has been affected by various drivers including medical advances, health care access, and behavioral factors such as smoking and obesity; and
- Future mortality improvements will consistently depend on those drivers, especially for lower educational groups, but the effects may vary.
The brief concludes that, “The key debate for long-range projections hinges on whether the future will mirror the past, with mortality rates of improvement fluctuating around the long-term rate of about 1 percent per year, or whether the big gains are behind us, with mortality improving less rapidly in the future.”
The brief is available here.