Medical Expenditure Panel Survey Agency for Healthcare 

Research and Quality

STATISTICAL BRIEF #160 

January 2007 

A Comparison of Employer-Sponsored 

Health Insurance Characteristics for 

the Private Sector for the Years 2001 

and 2004, by Average Payroll 

 

John P. Sommers, PhD 

Introduction 

One of the primary sources of health insurance coverage in the 

United States is through employers for their current employees. 

According to data from the Insurance Component of the 2004 

Medical Expenditure Panel Survey (MEPS-IC), approximately 60.9 

million of the 112.1 million employees in the private sector are 

enrolled in a health insurance plan sponsored by their employer. 

Between 2001 and 2004, the cost of employer-sponsored health 

insurance for the private sector increased much faster than inflation.

For instance, the average single premium in the private sector for 

employer-sponsored health insurance increased 28.2 percent over

that period compared with a 6.7 percent increase in the Consumer 

Price Index. During that time, offer and enrollment rates have 

dropped among private sector employers and employees. 

Many factors are associated with whether an employee has access 

to a health insurance plan sponsored by his or her employer, 

whether the employee enrolls, and the amount the employee 

contributes towards the cost of coverage. Among employer 

characteristics associated with employer-sponsored health 

insurance are the size of the employer, the industry, whether there

is a union present, and employee compensation levels. 

This Statistical Brief focuses on changes between 2001 and 2004 in

the offer, eligibility, and enrollment rates, and the level of employee 

contributions for private sector establishments (business location),

grouped by the average payroll per employee. Each group or

quartile contains 25 percent of the total number of employees in the 

private sector, and each group represents establishments with progressively higher average payrolls. 

Thus, the first group contains 25 percent of employment in the establishments with the lowest average 

payrolls per employee while the fourth group contains the highest 25 percent. Only those differences 

between quartiles or across years that are statistically significant at the 0.05 significance level are 

discussed. Additional details on the grouping methodology are contained in the Definitions section of this 

report. 

Highlights 

 The percentage of private sector establishments that offered 

health insurance fell 3.2 percentage points, from 58.3 to 

55.1 percent between 2001 and 

2004. Although rates differed 

by payroll quartile, the rates for 

all quartiles fell from 2001 to 

2004. 

 The percentage of employees

in the private sector who worked where health insurance was 

offered fell from 88.8 to 86.7 

percent between 2001 and 

2004. Although rates differed 

by payroll quartile, the rates for 

all quartiles fell from 2001 to 

2004.

 The percentage of private 

sector employees who worked

where health insurance was 

offered who enrolled changed

little between 2001 and 2004. 

 The percentage of premiums 

paid by private sector employees for both single and family

coverage rose between 2001 

and 2004; however, these 

percentages did not increase 

for employees across all payroll 

quartiles. 

 The percentage of private 

sector employees enrolled in 

employer health insurance who 

chose single coverage rose

between 2001 and 2004. 
Findings 

The percentage of establishments in the private sector that offered health insurance was 55.1 percent in 

2004, a drop from 58.3 percent in 2001 (figure 1). This decline was experienced by all payroll quartiles; 

for instance, the offer rate for the lowest payroll quartile fell from 40.5 to 37.5 percent between the two 

years while the rate for the highest quartile fell from 84.3 to 79.5 percent during the same period. 

Although the drop happened across all quartiles, within both years the percentage of establishments that 

offered health insurance rose as payroll increased. For instance, in 2004, 37.5 percent of establishments 

in the first payroll quartile offered health insurance while 79.5 percent offered health insurance in the 

highest payroll quartile. 

The percentage of private sector employees who worked where health insurance was offered fell from 

88.8 percent in 2001 to 86.7 percent in 2004 (figure 2). This drop happened in all the payroll quartiles; for 

instance, the rate for the second quartile fell from 89.4 to 86.4 percent over the time period. Within the 

two years, the rate patterns remained the same. In both years the rates increased as the quartile 

increased. For instance, the rate in 2004 for the lowest payroll quartile was 70.2 percent while the rate for 

the highest quartile was 96.5 percent. 

The percentage of private sector employees who worked where health insurance was offered who 

enrolled was 62.6 percent in 2004 (figure 3). The comparable rate in 2001 was 62.2 percent. Although the 

overall rate changed little, the rate for the second payroll quartile dropped significantly over the period, 

from 57.6 percent in 2001 to 54.9 percent in 2004. Within both years the enrollment rates become higher 

as the payroll quartile increased. 

The percentage employees contributed towards the premium, for those private sector employees enrolled 

in single coverage, rose from 17.3 to 18.1 percent during the period from 2001 to the year 2004 (figure 4). 

Employees in the second payroll quartile had a significant increase from 18.5 to 20.6 percent, as did 

employees in the fourth payroll quartile, who had an increase in single contribution rate from 14.4 to 15.9 

percent during the period. In both years, the pattern held that the single contribution rate decreased as 

the payroll quartile increased. Thus, in 2004, employees with single coverage in the first payroll quartile 

paid 21.0 percent of the single premium while employees who worked in the highest paying 

establishments contributed only 15.9 percent towards their single premiums. 

Employees enrolled in family coverage in the private sector also had the portion of premium they 

contributed increase between 2001 and 2004. In 2001, the portion of family premium contributed by the 

employee was 23.2 percent while in 2004 the employee contribution towards the same type of coverage 

was 24.4 percent of the premium (figure 5). 

The portion of private sector employees enrolled in employer-sponsored health insurance that enrolled in 

single coverage increased between 2001 and 2004. In 2001, the portion was 46.3 percent and in 2004 it 

was 47.3 percent (figure 6). All quartiles of establishments did not show an increase. For instance, the 

first quartile portion decreased from 56.2 to 52.9 percent. On the other hand, the second quartile showed 

a large increase from 51.5 to 54.0 percent. 

Data Source 

This Statistical Brief summarizes data from the 2001 and 2004 MEPS-IC. The data are available on the 

MEPS Web site at http://www.meps.ahrq.gov/mepsweb/survey_comp/Insurance.jsp or have been 

produced using special computation runs on the confidential MEPS-IC data available at the U.S. Census 

Bureau. 

Definitions 

Establishment 

In this Statistical Brief, an establishment is defined as a single business location. Multiple establishments 

can be controlled by a single entity denoted as a firm. Establishments from the same firm can be in 

different payroll quartiles defined in the Introduction. This analysis includes only establishments from the 

private sector. 
Quartiles 

Quartiles are groups of establishments, each of which contains 25 percent of the total employment. To 

determine the establishments within each of these employment quarters or quartiles, the following 

process was used: 

– The list of establishments was placed in order from lowest to highest average payroll per employee. 

– Starting with the establishment with the lowest average payroll, the employment was summed until the 

cumulative employment of the establishments on the list was 25 percent of the total employment of all 

establishments. The set of establishments on the list to that point are in the first quartile. 

– The second quartile begins with the next establishment on the list and includes all establishments from 

that point on the list until the cumulative employment reached 50 percent. 

– The third quartile includes all establishments after the second quartile and ends with the establishment 

that brings the cumulative employment to 75 percent of the total. 

– The fourth quartile includes all establishments above the third quartile. 

Using this process, the establishments were broken into groups of 25 percent of the employment, with 

each group having establishments that had higher average payroll per employee than the previous set. 

Payroll 

Payroll includes all forms of compensation, such as salaries, wages, commissions, dismissal pay, 

bonuses, and employee contributions to pension plans, but excludes fringe benefits. This definition is the 

same as that used by the Internal Revenue Service on Form 941. 

Percentage of premiums 

Percentage of premiums is defined as the ratio of the total of all contributions for all establishments within 

the payroll quartile divided by the total of all premiums for all establishments within the payroll quartile for 

the specific type of coverage for the given year. 

About MEPS-IC 

MEPS-IC is a survey of business establishments and governments that collects information on employersponsored health insurance, such as whether insurance is offered, enrollments, types of plans, and 

premiums. The survey is conducted annually by the U.S. Census Bureau under the sponsorship of the 

Agency for Healthcare Research and Quality. The yearly response rate has averaged 78 percent for inscope sample units. Approximately 4 percent of the original sample has been out-of-scope in a typical 

year. A total sample of 42,000 private sector establishments was selected for the 2004 survey, prior to 

accounting for losses due to nonresponse and out-of-scope cases. 

For more information on this survey, see MEPS Methodology Reports 6, 8, 10, and 14 on the MEPS Web 

site at http://www.meps.ahrq.gov/mepsweb/data_stats/publications.jsp and Insurance Component Survey 

Basics at http://www.meps.ahrq.gov/mepsweb/survey_comp/Insurance.jsp. 

Suggested Citation 

Sommers, J. P. A Comparison of Employer-Sponsored Health Insurance Characteristics for the Private 

Sector for the Years 2001 and 2004, by Average Payroll. Statistical Brief #160. January 2007. Agency for 

Healthcare Research and Quality, Rockville, MD. http://www.meps.ahrq.gov/mepsweb/data_files/ 

publications/st160/stat160.pdf

∗ ∗ ∗

AHRQ welcomes questions and comments from readers of this publication who are interested in 

obtaining more information about access, cost, use, financing, and quality of health care in the United 

States. We also invite you to tell us how you are using this Statistical Brief and other MEPS data and 

tools and to share suggestions on how MEPS products might be enhanced to further meet your needs. 

Please e-mail us at mepspd@ahrq.gov or send a letter to the address below: 

Steven B. Cohen, PhD, Director 

Center for Financing, Access, and Cost Trends 

Agency for Healthcare Research and Quality 

540 Gaither Road 

Rockville, MD 20850 
Source: Center for Financing, Access, and Cost Trends, AHRQ, Insurance Component of the Medical Expenditure Panel Survey,

2001 and 2004

70.7

84.3

37.5 40.5

61.7

57.7

76.6 79.5

58.3 55.1

0

15

30

45

60

75

90

2001 2004

1st quartile 2nd quartile 3rd quartile 4th quartile National average

Percent

Figure 1. Percentage of private sector establishments that

offered health insurance, by payroll quartile, 2001 and 2004

Source: Center for Financing, Access, and Cost Trends, AHRQ, Insurance Component of the Medical Expenditure Panel Survey,

2001 and 2004

Figure 2. Percentage of private sector employees who

worked where health insurance was offered,

by payroll quartile, 2001 and 2004

94.0 97.9

72.3 70.2

89.4 86.4

96.0 96.5

88.8 86.7

0

20

40

60

80

100

2001 2004

1st quartile 2nd quartile 3rd quartile 4th quartile National average

Percent
Source: Center for Financing, Access, and Cost Trends, AHRQ, Insurance Component of the Medical Expenditure Panel Survey,

2001 and 2004

Figure 3. Percentage of private sector employees enrolled

in health insurance who worked where health insurance

was offered, by payroll quartile, 2001 and 2004

71.0

76.8

40.2

36.8

57.6 54.9

71.1

77.9

62.2 62.6

0

20

40

60

80

2001 2004

1st quartile 2nd quartile 3rd quartile 4th quartile National average

Percent

Source: Center for Financing, Access, and Cost Trends, AHRQ, Insurance Component of the Medical Expenditure Panel Survey,

2001 and 2004

Figure 4. Percentage of average single premium

contributed by private sector employees who enrolled

in health insurance, by payroll quartile, 2001 and 2004

17.2

14.4

21.0 22.2

18.5

20.6

16.5 15.9

17.3 18.1

0

10

20

30

2001 2004

1st quartile 2nd quartile 3rd quartile 4th quartile National average

Percent
Source: Center for Financing, Access, and Cost Trends, AHRQ, Insurance Component of the Medical Expenditure Panel Survey,

2001 and 2004

Figure 5. Percentage of average family premium

contributed by private sector employees who enrolled

in health insurance, by payroll quartile, 2001 and 2004

24.9

20.5

24.2

27.7 26.5

29.1

22.8 21.8

23.2

24.4

0

10

20

30

2001 2004

1st quartile 2nd quartile 3rd quartile 4th quartile National average

Percent

Source: Center for Financing, Access, and Cost Trends, AHRQ, Insurance Component of the Medical Expenditure Panel Survey,

2001 and 2004

Figure 6. Percentage of private sector employees enrolled

in employer-sponsored health insurance who enrolled

in single coverage, by payroll quartile, 2001 and 2004

46.2

40.5

52.9 56.2

51.5 54.0

44.8 41.8

46.3 47.3

0

15

30

45

60

2001 2004

1st quartile 2nd quartile 3rd quartile 4th quartile National average

Percent