Study of One Company Finds Most Retirees Who Lose Health Insurance Either Have Medicare or Obtain Other Coverage
From 1996 to 1998, researchers from the University of Alabama at Birmingham School of Health Related Professions (now called the School of Health Professions) examined how retirees of John Morrell and Company, a meatpacking firm, were affected by the January 1995 cancellation of their health insurance benefits.
With the rapid escalation of health care costs in recent years, many companies have canceled health insurance benefits for their retired employees, but little is known about how this loss of coverage affects retirees and their dependents.
- About two thirds (62 percent) of retirees and their dependents were already enrolled in Medicare when their retiree health benefits were canceled.
- Of those left without any insurance coverage, more than half were able to obtain replacement coverage within a few weeks or months, while another 40 percent lacked coverage for a year or more.
- Among those who obtained health insurance coverage, more than three quarters (79 percent) got it through another employer, their spouse's employer, or by purchasing an individual or family health insurance policy.
- About one percent turned to veterans' benefits or Medicaid.
- Only about five percent of the total sample said they had experienced a serious medical problem but did not see a doctor due to the cost, about 10 percent did not see a doctor for minor problems or a routine checkup, and 12 percent did not fill a needed prescription.
The Robert Wood Johnson Foundation (RWJF) supported this project through a grant of $53,895.
This grant from RWJF funded a study of how retirees of John Morrell and Company, a meatpacking firm, were affected by the January 1995 cancellation of their health insurance benefits. Employers began to offer health insurance benefits to their retirees in the 1960s, but with the rapid escalation of health care costs in recent years, many companies have canceled such coverage. Little is known about how this loss of coverage affects retirees and their dependents.
Using a telephone survey, the investigators explored the experience of Morrell retirees to determine whether they obtained replacement health insurance coverage and how the cancellation of benefits affected their access to health care services. The company's decision to suspend retiree health benefits affected 3,000 retirees and their dependents nationwide, with groups concentrated in Sioux Falls, S.D.; Ottumwa, Iowa; and East Saint Louis, Ill.
The principal investigator visited Sioux Falls, S.D., and Ottumwa, Iowa, to speak with Morrell retirees affected by the cancellation. She then developed a telephone survey with assistance from the Survey Research Unit (SRU) at the University of Alabama School of Public Health. SRU interviewers called 1,314 households in South Dakota, Iowa, Illinois, Kansas, Minnesota, and Tennessee and completed 1,131 interviews in 680 households. (In most households, both the retiree and his or her spouse were interviewed separately.) Data analysis was limited to interviews conducted with 1,054 people (562 men and 492 women) in 650 households located in Iowa and South Dakota, where Morrell's two principal plants are located.
- Morrell retirees and their dependents experienced few lapses in health insurance coverage. Some 62 percent of retirees and their dependants were already enrolled in Medicare when their benefits were canceled; and in the two and a half years from the end of their Morrell coverage and the beginning of the interviews for this study, another 15 percent had become eligible. Of those not enrolled in Medicare, 30 percent were left without any insurance when Morrell canceled theirs. More than half (54 percent) of these individuals remained uninsured for a few weeks or months; 40 percent had no coverage for a year or more. After a year and a half, approximately 18 percent of those who had been left without health insurance still didn't have any.
- Half of the total sample purchased supplemental insurance, such as a Medigap policy. Among those who did not, half said they couldn't afford it. Among those who obtained coverage (non-Medicare) following the cancellation, half said their benefits were worse than those offered by Morrell.
- Among those not enrolled in Medicare when the cancellation occurred, or who obtained it shortly thereafter, there was no significant shift to public sources of care, such as the Veterans Administration or Medicaid. A majority of those without Medicare who obtained new coverage got it through a new employer (25 percent), a spouse's employer (13 percent), by buying an individual or family policy (41 percent), or by finding another job (19 percent). Only three individuals obtained Medicaid coverage, and two individuals gained benefits through the Veterans Administration.
- 50 percent of respondents reported that their new insurance was worse than that offered by Morrell.
- Few respondents reported problems in securing needed medical services or prescription drugs as a result of the cost. About 5 percent of the total sample said they had experienced a serious medical problem but did not see a doctor because of the cost. About 10 percent of all respondents reported not seeing a doctor for minor problems or for a routine checkup due to the cost, and about 12 percent had not filled a needed prescription.
The Morrell retirees and dependents surveyed were an extremely homogenous, nonminority population. Hence the findings may not be applicable to other, more diverse populations.
- Researchers who use primary data-collection techniques should consider interacting with the individuals in their target group before developing a survey or other research instrument. The principal investigator found her visits to the field to meet with Morrell retirees an invaluable aid in survey design.
A manuscript entitled "The Effects of Health Benefits Cancellation on Retirees" is in progress for submission to the journal Health Affairs.
GRANT DETAILS & CONTACT INFORMATION
Study of Retirees Who Have Lost Employer-Sponsored Health Benefits
University of Alabama at Birmingham School of Health Related Professions (Birmingham, AL)
Dates: September 1996 to April 1998
Cynthia Carter Haddock, Ph.D.
(Current as of date of this report; as provided by grantee organization; not verified by RWJF; items not available from RWJF.)
"Morrell Retirees Questionnaire." Survey Research Unit, University of Alabama at Birmingham, fielded JuneSeptember 1997.
Report prepared by: Kristine Conner
Reviewed by: Robert Narus
Reviewed by: Richard Camer
Reviewed by: Marian Bass
Program Officer: Nancy Barrand