Actuarial Value and Employer-Sponsored Insurance. Data and Methods


The actuarial values were derived by running a claims payment program against a standard population.  NCS data on provisions such as covered services (e.g., inpatient hospital, outpatient hospital, physician visits, mental health, and prescription drugs) and cost-sharing parameters (copayments, deductibles, coinsurance, out-of-pocket maximums, and presence of benefit maximums) were recoded for use in the claims payment program.

The provisional data were consistent with the publication “National Compensation Survey: Employee Benefits in Private Industry in the United States, 2005.”  According to this document:

“The National Compensation Survey (NCS) healthcare and retirement series provides information on detailed provisions of medical care, prescription drug, dental, vision, defined benefit, and defined contribution plans.  The portion of the NCS sample from which estimates on employee benefits are made covers all private sector establishments in the United States, with the exception of farms and private households.” In addition, “(t)he 2005 NCS data on provisions of healthcare… plans were obtained from 3,227 private industry establishments representing approximately 102 million workers.”


NCS data is collected from establishments with each observation called an occupational quote.  After imputations performed by BLS staff, the data set was provided to ARC containing 32,253 occupational quotes.  After zero-weight quotes, quotes without both medical and prescription drug coverage, quotes with premiums that did not cover medical coverage, and quotes with unknown plan types were dropped, ARC’s analysis was based on the remaining 24,702 quotes.

The individual plan specification records were then run through an automated ratebook to generate the expected benefit payments associated with each plan’s provisions.  [See ratebook logic description below].  The actuarial value for a given plan is the total dollars of benefits that would have been paid, divided by the total dollars of recognized charges.  Once an actuarial value was attached to each plan, the data was sorted by actuarial value.  The sorted data was split into weighted deciles by actuarial value.  Weights reflect the total number of covered workers represented by a given record, so the deciles are based on equal numbers of enrollees, not establishments.  Records were tagged according to their actuarial value deciles.  The data was then resorted according to total premium for single coverage and tagged with weighted decile tags according to single total premium amounts.

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