yyyyy yyyyy Report 14

Estimation of Expenditures and Enrollments 

for Employer-Sponsored Health Insurance

Methodology Methodology 

U.S. Department of Health and Human Services

Public Health Service

Agency for Healthcare Research and Quality

Agency for Healthcare Research and Quality
  yyyy yyyy

Abstract

The Agency for Healthcare Research and Quality

(AHRQ) conducts the Medical Expenditure Panel Survey

(MEPS), a survey of health care use and spending. The

MEPS Insurance Component (IC) is a survey of business

establishments and governments in the United States. It

is focused on employer-sponsored health insurance—by

far the largest source of health insurance in the United

States. Because of the size of expenditures for health

insurance in the Nation and their high rate of increase,

they are of great interest. This report gives details of the

enrollment and expenditure estimation process in the IC.

Parts of this process use very standard statistical

estimates. Where the estimation process deviates from

standard methods, more detail is provided. The report

also discusses changes in the data collected and in the

estimators used that have taken place since the first IC

survey year.

Suggested citation

Sommers JP. Estimation of expenditures and enrollments for

employer-sponsored health insurance. Rockville (MD):Agency for

Healthcare Research and Quality; 2002. MEPS Methodology Report

No. 14.AHRQ Pub. No. 03-0009.

Health Care Information and Electronic Ordering

Through the AHRQ Web Site

The Agency for Healthcare Research and Quality

Web site—http://www.ahrq.gov/—makes practical,

science-based health care information available in

one convenient place.

Buttons correspond to major categories of Web

site information, including funding opportunities,

research findings, quality assessments, clinical

information, consumer health, and data.

The Web site features an Electronic Catalog to the

more than 450 information products generated by

AHRQ, with information on how to obtain these

resources. Many information products have an

electronic ordering form and are mailed free of

charge from the AHRQ Clearinghouse within 5

working days.

http://www.ahrq.gov/ http://www.ahrq.gov/
 yyyyy

Methodology

Estimation of Expenditures and Enrollments

for Employer-Sponsored Health Insurance 

Methodology yyyyy Report 14 

U.S. Department of Health and Human Services 

Public Health Service 

Agency for Healthcare Research and Quality 

AHRQ Pub. No. 03-0009

March 2003 
The Medical Expenditure Panel

Survey (MEPS) 

Background

The Medical Expenditure Panel Survey (MEPS) is 

conducted to provide nationally representative estimates 

of health care use, expenditures, sources of payment,

and insurance coverage for the U.S. civilian

noninstitutionalized population. MEPS is cosponsored 

by the Agency for Healthcare Research and Quality 

(AHRQ), formerly the Agency for Health Care Policy

and Research, and the National Center for Health 

Statistics (NCHS). 

MEPS comprises three component surveys: the 

Household Component (HC), the Medical Provider

Component (MPC), and the Insurance Component (IC). 

The HC is the core survey, and it forms the basis for the 

MPC sample and part of the IC sample. Together these 

surveys yield comprehensive data that provide national 

estimates of the level and distribution of health care use 

and expenditures, support health services research, and 

can be used to assess health care policy implications. 

MEPS is the third in a series of national probability 

surveys conducted by AHRQ on the financing and use 

of medical care in the United States. The National 

Medical Care Expenditure Survey (NMCES) was

conducted in 1977, the National Medical Expenditure 

Survey (NMES) in 1987. Beginning in 1996, MEPS 

continues this series with design enhancements and 

efficiencies that provide a more current data resource to 

capture the changing dynamics of the health care 

delivery and insurance system. 

The design efficiencies incorporated into MEPS are 

in accordance with the Department of Health and 

Human Services (DHHS) Survey Integration Plan of 

June 1995, which focused on consolidating DHHS 

surveys, achieving cost efficiencies, reducing respondent 

burden, and enhancing analytical capacities. To

accommodate these goals, new MEPS design features 

include linkage with the National Health Interview

Survey (NHIS), from which the sample for the MEPS 

HC is drawn, and enhanced longitudinal data collection 

for core survey components. The MEPS HC augments 

NHIS by selecting a sample of NHIS respondents, 

collecting additional data on their health care 

expenditures, and linking these data with additional 

information collected from the respondents’ medical

providers, employers, and insurance providers.

Household Component 

The MEPS HC, a nationally representative survey

of the U.S. civilian noninstitutionalized population, 

collects medical expenditure data at both the person and 

household levels. The HC collects detailed data on 

demographic characteristics, health conditions, health 

status, use of medical care services, charges and 

payments, access to care, satisfaction with care, health 

insurance coverage, income, and employment.

The HC uses an overlapping panel design in which

data are collected through a preliminary contact 

followed by a series of five rounds of interviews over a 

21/2-year period. Using computer-assisted personal 

interviewing (CAPI) technology, data on medical 

expenditures and use for 2 calendar years are collected 

from each household. This series of data collection 

rounds is launched each subsequent year on a new

sample of households to provide overlapping panels of 

survey data and, when combined with other ongoing 

panels, will provide continuous and current estimates of 

health care expenditures.

The sampling frame for the MEPS HC is drawn

from respondents to NHIS, conducted by NCHS. NHIS 

provides a nationally representative sample of the U.S.

civilian noninstitutionalized population, with 

oversampling of Hispanics and blacks.

Medical Provider Component 

The MEPS MPC supplements and validates

information on medical care events reported in the 

MEPS HC by contacting medical providers and 

pharmacies identified by household respondents. The

MPC sample includes all hospitals, hospital physicians,

home health agencies, and pharmacies reported in the 

HC. Also included in the MPC are all office-based

physicians:

• Providing care for HC respondents receiving

Medicaid.

• Associated with a 75-percent sample of households 

receiving care through an HMO (health maintenance 

organization) or managed care plan. 

ii
   

yyyyy yyyyy yyyyy yyyyy

• Associated with a 25-percent sample of the 

remaining households. 

Data are collected on medical and financial

characteristics of medical and pharmacy events reported

by HC respondents, including: 

• Diagnoses coded according to ICD-9 (9th Revision,

International Classification of Diseases) and DSMIV (Fourth Edition, Diagnostic and Statistical 

Manual of Mental Disorders). 

• Physician procedure codes classified by CPT-4

(Current Procedural Terminology, Version 4).

• Inpatient stay codes classified by DRG (diagnosisrelated group).

• Prescriptions coded by national drug code (NDC), 

medication names, strength, and quantity dispensed. 

• Charges, payments, and the reasons for any

difference between charges and payments.

The MPC is conducted through telephone 

interviews and mailed survey materials. 

Insurance Component 

The MEPS IC collects data on health insurance 

plans obtained through private and public-sector

employers. Data obtained in the IC include the number 

and types of private insurance plans offered, benefits

associated with these plans, premiums, contributions by

employers and employees, and employer characteristics. 

Establishments participating in the MEPS IC are 

selected through three sampling frames: 

• A list of employers or other insurance providers

identified by MEPS HC respondents who report

having private health insurance at the Round 1 

interview.

• A Bureau of the Census list frame of private-sector

business establishments.

• The Census of Governments from the Bureau of the 

Census.

To provide an integrated picture of health insurance, 

data collected from the first sampling frame (employers

and other insurance providers) are linked back to data 

provided by the MEPS HC respondents. Data from the 

other three sampling frames are collected to provide

annual national and State estimates of the supply of 

private health insurance available to American workers

and to evaluate policy issues pertaining to health 

insurance. Since 2000, the Bureau of Economic 

Analysis has used national estimates of employer

contributions to group health insurance from the MEPS 

IC in the computation of Gross Domestic Product 

(GDP).

The MEPS IC is an annual panel survey. Data are 

collected from the selected organizations through a 

prescreening telephone interview, a mailed 

questionnaire, and a telephone followup for 

nonrespondents.

Survey Management

MEPS data are collected under the authority of the 

Public Health Service Act. They are edited and 

published in accordance with the confidentiality

provisions of this act and the Privacy Act. NCHS 

provides consultation and technical assistance. 

As soon as data collection and editing are 

completed, the MEPS survey data are released to the 

public in staged releases of summary reports and 

microdata files. Summary reports are released as printed 

documents and electronic files. Microdata files are 

released on CD-ROM and/or as electronic files.

Printed documents and CD-ROMs are available

through the AHRQ Publications Clearinghouse. Write or 

call:

AHRQ Publications Clearinghouse 

Attn: (publication number) 

P.O. Box 8547 

Silver Spring, MD 20907 

800-358-9295

410-381-3150 (callers outside the United States 

only)

888-586-6340 (toll-free TDD service; hearing 

impaired only)

To order online, send an e-mail to: 

ahrqpubs@ahrq.gov.

Be sure to specify the AHRQ number of the 

document or CD-ROM you are requesting. Selected 

electronic files are available through the Internet on the 

MEPS Web site:

http://www.meps.ahrq.gov/

For more information, visit the MEPS Web site or 

e-mail mepspd@ahrq.gov.

iii
Table of Contents 

Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

Original Estimation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 

Current Estimation for Active Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 

Estimates for Retirees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 

COBRA Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

Optional Coverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

Benchmark Comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

Tables showing MEPS statistics on private-sector employees with employer-sponsored health 

insurance compared to statistics from other sources:

1. Percent of total premium for single health insurance paid by employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

2. Percent enrolled in insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

3.Average annual premium for single health insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

4.Total annual premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

Appendixes:

A. 1996 Insurance Component Questionnaire. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 

B. 1998 Insurance Component Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 

v
1

Background

The Medical Expenditure Panel Survey (MEPS)

Insurance Component (IC) is a survey of business

establishments and governments in the United States. In

this report, business establishments (specific places of

business) are differentiated from firms, which are legal

entities that can own one or many establishments. The

survey has two samples, the list sample and household

sample. The list sample is a random sample of business

establishments and governments in the United States that

employ at least one person besides the owner. The

household sample is a sample of the employers of

respondents from the MEPS Household Component

(HC). 

The focus of data collected for the IC is information

on employer-sponsored health insurance. Employment

sponsorship is by far the largest source of health

insurance in the Nation. Among the data collected is

information on enrollments, premiums, contributions,

plan types, plan coverages, retiree coverage, and

employer characteristics. The nature of selection of the

two samples means that they have different purposes.

The household sample data are linked back to other data

for the HC respondent and can be used to analyze

persons and their medical expenditure choices. The list

sample is a nationally representative sample of a large

percent of employers and can be used to make national,

industry, State, and other levels of estimates of the

characteristics of employer-sponsored health insurance

(Sommers, 1999a).

A large number of tables of estimates are produced

from the list sample (www.meps.ahrq.gov/mepsdata/

icindex.htm). Most estimates are straightforward and

require no explanation concerning how they are made.

Weights that denote the number of establishments in the

universe represented by the sampled establishment are

created for each sample member in the list sample

(Sommers 1999b). Most estimates are made using

weighted sample sums and ratios of these sums using

techniques described in Kish (1965). For instance, an

estimate of the percent of private-sector establishments

that offer health insurance is the ratio of the sum of the

weights of private-sector establishments that offer health

insurance and the sum of the weights of all private-sector

establishments: the estimate of the total number of

establishments that offer health insurance divided by the

estimate of the total number of establishments.

Estimates of total expenditures, enrollments, and

contributions for employer-sponsored health insurance

and their breakdown into groups (such as by industry,

employer versus employee, and government versus

private sector) constitute a set of key estimates made

with IC data (www.meps.ahrq.gov/mepsdata/

icindex.htm). Because of the size of expenditures for

health insurance in the Nation and the large percent

represented by employer-sponsored health insurance,

estimates of these expenditures are of great interest. In

addition to their overall size, these estimates are of

interest because of their rate of increase. Government

agencies such as the Bureau of Economic Analysis need

good data to produce such estimates as part of the

production of important overall Gross Domestic Product

estimates, used to monitor the economy of the United

States (Interdepartmental Committee on Employment

Related Health Insurance Surveys, 2000a).

This report gives details of the enrollment and

expenditure estimation process. The parts of this process

that use standard statistical estimation procedures such

as those described above do not receive much discussion

in this report. Where the estimation process deviates

from standard methods, more detail is provided. 

The report also discusses changes in the data

collected and the estimators that have been used since

the first IC survey year, 1996. Future changes will be

reported in later reports in this series. Changes are made

as a result of learning what data used to make enrollment

and expenditure estimates are available from respondents

and what resulting changes and compromises are

required to produce estimates using the data that can be

collected.

Estimation of Expenditures and Enrollments for Employer-Sponsored

Health Insurance

by John Paul Sommers, Ph.D.,Agency for Healthcare Research and Quality
At the end of the report, selected estimates made 

using MEPS data are compared to estimates from other 

survey or administrative sources and conclusions are 

given.

Original Estimation Plan 

The original plan for estimation of total employersponsored health insurance costs was intended to be 

simple. Employers were asked to provide total 

expenditures for health insurance for establishments in 

the sample. They were also asked to provide total 

enrollment related to each establishment: active,

COBRA (optional extended coverage for former

employees who have left the employer but are not 

retired), and retirees. National totals and subtotals for 

various populations were to be estimated using the 

weighted sum of establishment costs for health 

insurance or enrollees of the particular type for which

an estimate was needed. 

It was soon apparent that this original estimation 

plan was problematic. Among the reasons were the 

following.

• Large multi-site employers, which pay a large

percentage of the costs, could not supply cost 

information at the establishment level because plans 

were offered over many establishments and data 

were not broken out by establishment. They could 

provide data only at the level that the bill was paid— 

regional national, etc. 

• Large multi-site employers do not keep retiree and 

COBRA information at the establishment level.

Furthermore, there may be no establishment that 

corresponds to an individual retiree. Establishments

move and close, so this link does not exist for all 

retirees. Thus, if a company did relate individual

retirees to establishments, many retirees would be 

missed and national estimates would be low.

• The estimates made were very different from 

estimates that could be made from other sources. 

Although the other estimates were not of the highest 

quality, the IC estimates using the original method 

were too markedly different to be credible.

Because of these problems, other methods were

developed to produce the weighted survey estimates. 

Questionnaires were changed between 1996 and 1998 to 

collect information that could support these estimates. 

(Appendixes A and B show the 1996 and 1998 

questionnaires.) In 1996 and 1997, interim estimation 

methods were used. This report describes the 1998 

estimation methods and also discusses the interim 

methods used in 1996 and 1997. 

Current Estimation for Active

Employees

The estimation process is broken into four parts:

• Hospital/physician coverage for active employees.

• Hospital/physician coverage for retirees. 

• Hospital/physician coverage for former employees

with COBRA coverage.

• Optional coverage, such as separate dental insurance. 

This division occurred because it provides

breakouts that are of concern to users and because the 

data available from respondents require it. 

Aside from breaking estimation into parts, a new

approach was developed that does not use totals of 

expenditures for each establishment, but instead builds 

these establishment totals when necessary.

The new process estimates hospital and physician

coverage expenditures and enrollments for active

employees at each business establishment or 

government as follows. Annual expenditure estimates 

for four items are made for each establishment: total 

family and single contributions for the year for 

employees at the establishment and total family and 

single contributions for the year for the employer at the 

establishment. Each estimate is made by taking the sum 

over all plans within the establishment or government of 

the enrollment for the type of coverage for each plan 

times the employer or employee annual contribution to 

the premium. Thus, if two plans are offered at an 

establishment or government, the total single employee

contribution for that establishment or government is the 

sum across plans of the product of the single enrollment 

and single contribution reported for the individual plans. 

These estimates assume a constant enrollment 

within the year at each establishment or government.

The enrollment for the year is set at the time of 

collection, which is late summer. Contributions per 

enrollee are set based on the contribution in effect at 

that time. These assumptions tend to work rather well.

Bureau of Labor Statistics monthly employment

2 
estimates for the late summer tend to be close to the 

annual average (www.bls.gov/ces).

Furthermore, total employment for the IC is also poststratified, so enrollments are estimated using these 

values and the percent enrolled (Sommers, 1999b). 

Also, contributions are fixed by plan year, and most 

establishments’ plan years run from January 1 to 

December 31, the estimation period. 

Establishment and government values are weighted

and summed to make national and subnational 

estimates. This was the original plan for all expenditure

estimates. Here the method is applied to active

employee expenditures and enrollments only. This

method creates annual estimates that benchmark well to 

other available national totals. (Comparisons with other 

estimates are shown later in this report.)

This type of estimate was used for active

employees, retirees, and those with COBRA coverage in 

1996. However, because total single enrollment 

collected included all types of enrollees—active,

COBRA, and retirees—which was not the case for later 

years (Appendixes A and B), no single enrollment for 

active employment was collected. Thus, for 1996 this 

value was calculated by taking the percentage of all 

enrollees that were single enrollees and applying it to 

total active enrollees to obtain active single enrollees. 

Estimates for Retirees

The primary reason for changing the original 

estimation methods was that there were problems with 

collection of data on retirees. Data for retirees are not 

associated with establishments (specific locations) but 

instead are available at the level of the firm (a legal

entity that can own multiple establishments). This is a 

common problem in business surveys. The sampling 

unit must be chosen carefully to accurately reflect how

data are collected and to allow the production of the 

estimates required. Sometimes not all data can be 

collected for the same unit, so special estimation 

methods are needed (Sommers, 2000). 

In the case of the IC and retirees, the sampling unit 

is the establishment but the reporting unit now used for 

retiree information is the firm. Data on the total 

number of single and married retirees enrolled with the 

entire firm, along with average contributions for the 

most common plan, are currently collected. (See 

questionnaire in Appendix B.) This change was made 

for data collected for calendar year 1998 and beyond.

Since only establishment weights are created for the 

IC, it is necessary to convert firm-level information on 

retiree enrollments to establishment-level information.

If this is done, the contributions reported at the firm

level can be used to build establishment-level

expenditures and produce estimates in the same manner 

as for active enrollees. 

To carry out this estimation procedure, a simple 

proration method is used. Each firm on the frame and 

establishment linked to that firm has a frame value for 

total establishment and firm employment. This means 

that if the proportion of firm employment for each 

establishment on the frame is calculated, the sum of 

these proportions across the establishments in the firm

adds to 1. Under these conditions, the weighted sum of 

the prorated enrollments is an unbiased estimate of total 

retiree enrollments (Sommers, 2000). Under the same 

assumptions used for active expenditures, this prorated 

enrollment can be multiplied by an average plan 

contribution to create a prorated total contribution for 

the establishment, and the weighted sum over the entire 

sample of establishments of these prorated contributions 

gives a national estimate of total retiree contributions. 

For example, if a firm has 1,000 retirees and 10,000 

employees, then an establishment within the firm with 

500 employees would be allocated 50 = 1,000 

(500/10,000) retirees for estimation purposes.

Estimates for subtotals across a subset of 

establishments are obtained using the weighted sum of a 

similar subset from the sample. An example would be 

estimates made for each industry. There is an exception:

currently, no information is collected about whether

retiree plans are purchased or self-insured (where the 

employer pays medical costs directly). To make

estimates that break expenditures and enrollees into 

these two types of plans, retiree enrollees are prorated 

using the percentage of active enrollees at the 

establishment in each type of plan. 

As mentioned previously, the new method of 

estimation for retirees was adopted beginning in 1998. 

Before 1998, respondents were asked to report retirees 

at the establishment level. Retirees were grouped into 

family or single coverage using the percent of all 

enrollees who had single coverage. Estimates were

made using weighted sums of these establishment-level

values. There was no requirement for an adjustment of 

3
firm-level information to the establishment level, as was

done for the 1998 results. The change in methods had a 

significant effect on the estimated number of retirees 

with health insurance and the total expenditures for 

retiree health insurance. In 1996 and 1997, using the 

direct estimator, the total national estimate of privatesector retirees with health insurance through their 

former job was about 3.1 million. With the new

estimator, the number for 1998 jumped to 5.7 million, 

with a corresponding increase in expenditures.

Although the reporting problems associated with the 

1996-97 method were well known, efforts were made to 

verify that the increase was caused by a change of 

estimators. This proved to be a somewhat difficult task, 

as no independent reliable estimates of numbers of 

retirees enrolled in employer-sponsored health insurance 

plans could be found. However, analysis of certain

weighted and unweighted numbers provided evidence

that the results for 1996 and 1997 were low.

The estimates of total enrollees for the private sector 

changed dramatically, from about 3.1 million for 

1996-97 to 5.7 million for 1998. Analysis of the total 

reported number of retirees for the largest 500 firms in 

the sample shows that 3.1 million is likely too low a 

result. In 1998, the first year this information was

collected, these firms reported approximately 2.5 

million retired enrollees. Less than half of the 

employees who worked in establishments that offered

health insurance were represented by this group of 

firms. Assuming that other establishments that offer

health insurance to retirees have a similar ratio of 

retirees with health insurance to active employees gives

an estimate of over 5 million retirees with employersponsored health insurance. Moreover, the fact that the 

top companies in the sample, which represent less than a 

quarter of the total employment, report retiree 

enrollment almost as large as the MEPS estimates for 

1996 and 1997 makes a compelling argument that the 

higher estimate for 1998 is a better estimate. 

The effect of this change on total annual 

expenditures for 1996 and 1997 is $8-$10 billion. This

change will be discussed in terms of the overall national 

estimates of expenditures for employer-sponsored health 

insurance later in this report when IC estimates are 

compared with other results. 

In comparison to private-sector enrollment, the 

estimates of retiree enrollment for State and local 

governments are similar for all three years (1996-98), 

which seems reasonable since in MEPS, governments

are asked to report for the entire government, so the 

problem of site (establishment) and controlling entity 

(firm) does not exist. Government-wide reporting is 

similar to private-sector reporting at the firm level.

Collection at this level was possible because State and 

local governments fall entirely within single States; thus, 

there was no need to gather data by location in order to 

make State estimates. 

COBRA Estimates 

COBRA is coverage under laws for continuation of 

benefits. It is a small portion of the total employersponsored health insurance market. Like retirees, 

COBRA enrollees were part of total reported

enrollments in 1996. This enrollment was divided into 

family and single using the percent of single coverage

for all enrollees, the same method used for active and 

retiree enrollments. In 1997, COBRA enrollment was

separate from the totals. Currently, the weighted sums 

method used for values for active employees is also used 

for COBRA enrollees. Estimates for family premiums 

are done in a similar manner. Since no data on breaks 

in single enrollment are collected for COBRA coverage,

the percent of people with COBRA single coverage is 

assumed to be the same as the percent of active

enrollment for the same plan at the establishment. Also,

it is assumed that all contributions for COBRA coverage

are made by the enrollee. 

Optional Coverage

Some employers offer coverage for single items, 

such as vision or dental care, as an optional coverage.

An employee can enroll in these plans separately from 

the more standard hospital/physician coverage normally

offered. Expenditures for this coverage are estimated by

obtaining the total employer costs for this coverage at 

the establishment and taking a weighted sum of these 

establishment totals over the sample. This method 

parallels the method that was originally intended for 

costs of hospital/physician coverage.

However, this original estimation method was not 

abandoned for estimates of costs of optional coverage.

Several factors prevented the change for optional 

coverage:

4 
• Very little is known about the levels of premiums, so 

it is difficult to evaluate results. 

• Optional coverage is only a very small portion of 

employer health insurance expenditures; thus, a 

major change in estimation method may have little 

effect on total expenditure estimates. 

• A single employer may offer many plan types. To

request enrollment and premiums for each plan type 

may increase respondent burden without a major 

payback in the quality of estimates. 

Steps have been taken to improve the estimates 

through changes in the questionnaire. Many

hospital/physician plans include coverage for items, such 

as dental care, that are obtained through a special thirdparty plan. For instance, a health maintenance 

organization such as Kaiser Permanente runs its own

medical clinics but provides dental coverage by

subcontract to a specialized dental provider. This can 

also occur with self-insured plans, where the employer

pays for medical costs directly. Such self-insured plans 

can choose to obtain dental coverage by buying a 

separate dental plan. In 1996, some employers reported

optional plans, which could only be obtained as part of 

their medical plan, as optional coverage. However, they

also included the plan premiums in the premiums for the 

main hospitalization coverage. Thus, some expenditures

were double-counted in the national estimates. 

Because of this problem, the questionnaire was

changed in 1997 and better instructions given to 

respondents (Appendixes A and B). The estimate for 

optional coverage expenditures dropped from 

approximately $12 billion in 1996 to $8 billion in 1997. 

The estimate for 1998 was $10 billion. At the same 

time, the number of employers reporting optional dental 

or prescription coverage in 1997 and 1998 was lower

than the number reporting these types of coverage in 

1996. Since these are the two most common types of 

coverage included in hospital/physician coverage to be 

subcontracted, it appears that the change in the 

questionnaire had the desired effect and that the 

estimates of employers reporting this optional coverage

were more accurate. 

Benchmark Comparisons 

Efforts were made to evaluate results produced by

the IC (Interdepartmental Committee on Employment

Related Health Insurance Surveys, 2000b). In this 

section, selected examples of these comparisons are 

given. Because the IC is unique, no single comparable

survey or set of comparable results is available. Thus,

individual estimates from the IC are compared to 

estimates from a variety of specific sources. 

Table 1 compares the MEPS IC estimate of the 

percent contributed by individuals in the private sector 

for single coverage with estimates from the 1993 

National Employer Health Insurance Survey, or NEHIS 

(National Center for Health Statistics, 2002; Westat,

1994) and the 1999 Employer Health Benefits Survey,

funded by the Kaiser Family Foundation (Levitt, Lundy,

Hoffman, et al., 1999). Values are generally within 

statistical error when considering error from the IC 

alone. (Errors are not available for any of the other 

estimates used for comparison in this report.) Although

the sample years are different, under the assumption that 

percent contributions are relatively stable across years,

the three surveys seem to agree among themselves.

Table 2 compares the percent of private-sector

employees enrolled in employment-related health 

insurance by industry as estimated by the 1993 NEHIS; 

the 1997 MEPS IC; and the 1996-97 Employee Benefits

Survey (EBS), conducted by the Bureau of Labor 

Statistics (Interdepartmental Committee on Employment

Related Health Insurance Surveys, 2000b). As with 

percent contributions, most of the estimates fall into line 

with each other when the likely standard error is 

considered. Estimates for the construction industry

group appear to be different. However, the sample size 

for construction in the EBS is small, so there could be a 

large standard error associated with that estimate. 

Table 3 shows single premiums by industry for the 

1993 NEHIS and the 1997 MEPS IC. Although one 

would expect some price change over this period of time, 

the general size and order of size of the premiums by

industry are well correlated.

Other available individual comparisons of IC results 

with data from other sources show similar results. The

total expenditure values for health insurance for the 

entire United States are of particular interest. Table 4 

shows estimates based on the MEPS IC along with 

official estimates produced by the Centers for Medicare 

& Medicaid Services, or CMS (formerly the Health Care 

Financing Administration). The CMS results are 

produced using data from industry, administrative

records, and surveys (Centers for Medicare & Medicaid 

5 
Services, 2002). Three estimates are produced, and then 

a final value is selected after judging their results. No

error interval is given with these results, nor is any

evaluation of past results given. The three results can 

vary among themselves by 5 percent or more within a 

single year. Considering the IC sampling error and the 

variability of the other three results in past years, the 

results seem to track rather well.

References

Interdepartmental Committee on Employment Related 

Health Insurance Surveys. Report: Data Needs 

Subcommittee. Washington; May 2000a. 

Interdepartmental Committee on Employment Related 

Health Insurance Surveys. Draft report: Data Evaluation

Subcommittee [unpublished report]. Washington; Oct 

2000b.

Kish L. Survey sampling. New York: John Wiley and 

Sons; 1965. 

Levitt L, Lundy L, Hoffman C, et al. Employer health 

benefits: 1999 Annual Survey. Chicago: Health 

Research and Educational Trust; 1999. Educational

Trust Cat. Number 097501. 

National Center for Health Statistics. Web site: 

http://www.cdc.gov/nchs/about/major/nehis/nehis.htm.

Accessed Nov 8, 2002.

Sommers JP. List sample design of the 1996 Medical 

Expenditure Panel Survey Insurance Component. 

Rockville (MD): Agency for Health Care Policy and 

Research; 1999a. MEPS Methodology Report No. 6. 

AHCPR Pub. No. 99-0037. 

Sommers JP. Construction of weights for the 1996 

Medical Expenditure Panel Survey Insurance 

Component. Rockville (MD): Agency for Health Care 

Policy and Research; 1999b. MEPS Methodology

Report No. 8. AHCPR Pub. No. 00-0005. 

Sommers JP. Methods to produce establishment and 

firm level estimates for an economic survey. In: 

Proceedings of the International Conference on 

Establishment Surveys II. Buffalo (NY); June 2000. 

Alexandria (VA): American Statistical Association.

Westat, Inc. National Employer Health Insurance Survey

(NEHIS): Survey design. Rockville (MD): Agency for 

Health Care Policy and Research; May 1994. Contract

No. 200-94-7003. 

6 
Table 1. Percent of total premium for single health insurance coverage paid by

employee for employer-sponsored insurance among private-sector employees:

United States 

Survey

1997 Medical Expenditure Panel 

1993 National Employer 1999 Employer Survey Insurance Component 

Health Insurance Health Benefits 

Industry Survey estimate Survey estimate Estimate Standard error

Total 15.1 16 15.6 0.52

Construction 17.0 13 15.6 1.71

Manufacturing 13.6 12 14.1 0.62

Transportation 10.4 11 11.0 0.92

Wholesale trade 15.4 13 15.0 1.48

Retail trade 23.0 26 22.6 1.39

Finance 15.4 16 16.6 1.15

Services 14.7 21 14.6 0.80

Sources: National Employer Health Insurance Survey—www.cdc.gov/nchs/about/major/nehis/meps_ic.htm#national%20data (accessed Nov. 8, 2002);

Employer Health Benefits Survey—Levitt L, Lundy L, Hoffman C, et al. Employer health benefits: 1999 Annual Survey. Chicago: Health Research and 

Educational Trust Cat. Number 097591; Medical Expenditure Panel Survey–www.meps.ahrq.gov (accessed Nov. 8, 2002). 

Table 2. Percent of all private-sector employees enrolled in employer-sponsored

health insurance: United States 

Total 57.5 57 57.2 0.43

Construction 42.4 61 44.3 1.22

Manufacturing 78.3 79 78.6 0.35

Transportation 72.5 73 75.1 1.24

Wholesale trade 67.5 73 71.7 1.18

Retail trade 34.3 32 36.8 0.68

Finance 67.9 75 70.5 0.99

Services 53.7 51 52.5 0.68

Survey

1997 Medical Expenditure Panel 

1993 National Employer 1996-97 Employer Survey Insurance Component 

Health Insurance Health Benefits 

Industry Survey estimate Survey estimate Estimate Standard error

Sources: National Employer Health Insurance Survey—www.cdc.gov/nchs/about/major/nehis/meps_ic.htm#national%20data (accessed Nov. 8, 2002);

Employee Benefits Survey—Interdepartmental Committee on Employment Related Health Insurance Surveys. Draft report: Data Evaluation Subcommittee 

[unpublished report]. Washington; Oct. 2000; Medical Expenditure Panel Survey–www.meps.ahrq.gov (accessed Nov. 8, 2002). 

7 
Table 3. Average annual premium for single health insurance coverage for

employer-sponsored insurance among private-sector employees: United States 

Survey

1997 Medical Expenditure Panel 

Survey Insurance Component 

1993 National Employer Health 

Industry Insurance Survey estimate Estimate Standard error

Total $2,069 $2,051 $20

Construction 1,924 1,931 45

Manufacturing 2,017 1,919 28

Transportation 2,271 2,199 106

Wholesale trade 1,980 2,088 49

Retail trade 1,868 1,843 29

Finance 2,195 2,122 25

Services 2,118 2,134 32

Sources: National Employer Health Insurance Survey—www.cdc.gov/nchs/about/major/nehis/meps_ic.htm#national%20data (accessed Nov. 8, 2002);

Medical Expenditure Panel Survey—www.meps.ahrq.gov (accessed Nov. 8, 2002). 

Table 4. Total annual health insurance premiums for employer-sponsored insurance 

for private-sector employees: United States 

Survey 1996 1997 1998

Billions of dollars 

Centers for Medicare & Medicaid Services $344.8 $359.4 $383.2

Medical Expenditure Panel Survey

Insurance Component: 

Estimate 346.4 347.7 392.8

Standard error 7.8 7.8 8.6

Sources: Center for Medicare & Medicaid Services—www.cms.hhs.gov/statistics/nhe/default.asp#business (accessed Nov. 8, 2002); Medical 

Expenditure Panel Survey—www.meps.ahrq.gov (accessed Nov. 8, 2002). 

8 
Appendix A 

1996 Insurance Component Questionnaire

9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
Appendix B 

1998 Insurance Component Questionnaire

21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
U.S. Department of Health and Human Services

Public Health Service

Agency for Healthcare Research and Quality

Official Business

Penalty for Private Use $300

AHRQ Pub. No. 03-0009

March 2003

ISBN 1-58763-126-1

ISSN 1531-5673

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