RESEARCH SUMMARY: Effects of Employer-Sponsored Health Insurance Costs on Social Security Taxable Wages

by Gary Burtless and Sveta Milusheva
Social Security Bulletin, Vol. 73 No. 1, 2013
Table equivalent for Chart 1. Employer nonwage contributions as percentages of employee compensation, by type, 1950–2010
Year ESHI Other insurance Pension plans Social insurance
1950 0.5 0.7 1.8 2.2
1951 0.5 0.7 2.0 2.3
1952 0.6 0.7 2.0 2.1
1953 0.6 0.7 2.0 2.0
1954 0.7 0.7 2.1 2.2
1955 0.8 0.8 2.2 2.3
1956 0.8 0.8 2.4 2.3
1957 0.9 0.9 2.6 2.5
1958 1.0 0.9 2.6 2.4
1959 1.1 0.9 2.8 2.8
1960 1.1 0.9 2.8 3.1
1961 1.2 0.9 2.8 3.1
1962 1.3 0.9 2.9 3.4
1963 1.3 1.0 2.9 3.6
1964 1.4 1.0 3.1 3.4
1965 1.5 1.0 3.2 3.3
1966 1.4 1.0 3.3 3.8
1967 1.4 1.0 3.4 3.8
1968 1.6 1.1 3.5 3.8
1969 1.7 1.0 3.6 3.9
1970 2.0 1.0 3.8 3.9
1971 2.1 1.0 4.2 4.0
1972 2.2 1.0 4.4 4.3
1973 2.3 1.0 4.5 4.9
1974 2.4 1.0 4.9 5.0
1975 2.7 1.1 5.5 4.9
1976 3.0 1.1 5.8 5.1
1977 3.3 1.2 6.1 5.2
1978 3.4 1.3 6.0 5.4
1979 3.5 1.3 6.0 5.5
1980 3.7 1.3 6.2 5.4
1981 3.9 1.2 6.1 5.7
1982 4.3 1.2 6.1 5.7
1983 4.5 1.1 6.1 5.9
1984 4.5 1.1 6.1 6.2
1985 4.6 1.2 5.9 6.1
1986 4.6 1.2 5.8 6.2
1987 4.6 1.3 5.5 6.1
1988 4.8 1.4 5.0 6.2
1989 5.1 1.4 4.9 6.2
1990 5.3 1.4 4.6 6.2
1991 5.6 1.4 4.8 6.3
1992 5.9 1.5 4.8 6.3
1993 6.2 1.5 4.9 6.3
1994 6.2 1.4 4.9 6.4
1995 5.8 1.3 4.8 6.3
1996 5.6 1.2 4.5 6.3
1997 5.3 1.1 4.3 6.2
1998 5.4 1.1 4.2 6.1
1999 5.6 1.0 3.9 6.0
2000 5.8 1.0 3.8 6.0
2001 6.1 1.1 4.0 6.0
2002 6.4 1.1 4.7 6.0
2003 6.8 1.1 5.4 6.0
2004 6.9 1.1 5.0 6.1
2005 7.1 1.1 5.0 6.1
2006 6.8 1.1 5.0 6.0
2007 6.7 1.0 4.8 5.8
2008 6.8 0.8 5.4 5.8
2009 7.2 0.8 5.8 5.9
2010 7.0 0.7 5.9 5.9
SOURCE: BEA (2012).
Table equivalent for Chart 2. Underlying indicators of the proportion of total compensation subject to Social Security taxes, 1960–2009
Year Money wages as a percentage of total compensation Money wages below the taxable maximum as a percentage of all wages in covered employment
1960 92.1 79.9
1961 91.9 79.3
1962 91.5 77.7
1963 91.2 76.4
1964 91.1 74.7
1965 91.1 74.1
1966 90.4 83.0
1967 90.3 81.0
1968 90.0 84.3
1969 89.7 82.3
1970 89.4 80.4
1971 88.7 78.5
1972 88.1 80.3
1973 87.4 83.8
1974 86.8 87.2
1975 85.8 86.6
1976 84.9 86.4
1977 84.2 86.8
1978 83.9 85.7
1979 83.7 88.9
1980 83.4 90.1
1981 83.1 90.2
1982 82.7 91.0
1983 82.4 91.1
1984 82.2 90.6
1985 82.2 90.3
1986 82.2 90.1
1987 82.5 89.2
1988 82.6 87.7
1989 82.5 88.5
1990 82.4 88.5
1991 81.9 89.0
1992 81.5 88.0
1993 81.2 88.4
1994 81.2 88.5
1995 81.8 87.2
1996 82.4 87.1
1997 83.0 86.5
1998 83.2 85.9
1999 83.4 85.3
2000 83.4 84.5
2001 82.8 86.1
2002 81.8 87.5
2003 80.7 87.4
2004 80.9 86.4
2005 80.8 85.8
2006 81.2 85.5
2007 81.7 84.3
2008 81.1 85.6
2009 80.4 87.5
SOURCE: BEA (2012); SSA (2009).
Table equivalent for Chart 3. Average private-sector ESHI premiums for individual and family coverage, 1996–2009 (in current dollars)
Year Family coverage Individual coverage
1996 4,954 1,992
1997 5,332 2,051
1998 5,590 2,174
1999 6,058 2,325
2000 6,772 2,655
2001 7,509 2,889
2002 8,469 3,189
2003 9,249 3,481
2004 10,006 3,705
2005 10,728 3,991
2006 11,381 4,118
2007 . . . . . .
2008 12,300 4,386
2009 13,028 4,669
SOURCE: MEPS employer survey files.
NOTE: MEPS data not available for 2007.
Table equivalent for Chart 5. Percentage of workers enrolled in an ESHI family plan, by wage decile, 1996–1997 and 2007–2008
Wage decile 1996–1997 2007–2008
Bottom 6.2 3.4
2 10.6 8.9
3 19.1 16.0
4 25.6 23.9
5 31.8 26.8
6 37.0 34.0
7 41.9 37.5
8 45.3 40.5
9 52.3 47.2
Top 57.2 54.1
SOURCE: Authors' calculations based on MEPS household survey files.
NOTE: Includes coverage in family or employee-plus-one plans with employee as the principal insured person.
Table equivalent for Chart 6. Estimated annual employer cost of providing health insurance, by wage decile, 1996–1997 and 2007–2008 (in nominal dollars)
Wage decile 1996–1997 2007–2008
1 261 364
2 448 1,134
3 914 1,957
4 1,357 2,771
5 1,598 3,210
6 1,844 3,911
7 2,105 4,169
8 2,142 4,577
9 2,372 5,015
10 2,587 5,337
SOURCE: Authors' calculations based on MEPS employer and household survey files.
NOTE: Estimates represent average employer-paid premiums for all workers in each decile, including workers who decline or are not offered ESHI.
Table equivalent for Chart 7. Employer cost of providing health insurance as a percentage of average annual wage, by wage percentile, 1996–1997 and 2007–2008
Wage percentile 1996–1997 2007–2008
4 12.9 8.3
5 9.5 9.2
6 9.9 8.5
7 9.0 9.2
8 9.6 8.0
9 9.2 8.4
10 9.9 8.6
11 9.0 8.7
12 8.4 8.3
13 6.8 8.5
14 7.0 9.4
15 8.0 11.6
16 7.9 12.7
17 6.7 12.1
18 5.7 12.1
19 6.0 11.3
20 6.4 11.6
21 7.6 11.2
22 7.9 11.0
23 8.3 11.9
24 8.2 11.6
25 8.5 12.4
26 8.3 12.1
27 8.3 12.8
28 9.1 12.4
29 9.8 12.6
30 9.3 12.4
31 9.0 12.1
32 9.0 12.3
33 9.5 12.2
34 9.5 12.5
35 9.4 12.4
36 9.2 13.0
37 8.9 13.4
38 9.0 13.4
39 9.1 13.0
40 9.5 12.2
41 9.1 11.5
42 8.6 11.4
43 7.9 12.2
44 7.8 12.1
45 8.4 11.9
46 8.6 11.0
47 8.7 11.7
48 8.4 11.8
49 8.4 12.1
50 8.3 11.9
51 8.2 12.0
52 8.0 12.1
53 7.9 12.5
54 7.7 12.4
55 7.7 11.5
56 7.7 11.4
57 8.0 11.1
58 8.3 11.6
59 8.1 11.0
60 7.5 11.3
61 6.9 10.7
62 7.3 10.6
63 7.8 9.8
64 7.9 10.4
65 7.7 10.1
66 7.2 10.2
67 7.1 9.5
68 7.1 9.8
69 7.2 10.0
70 7.2 9.8
71 7.0 9.6
72 6.8 9.5
73 6.5 9.5
74 6.5 9.1
75 6.2 8.8
76 6.2 8.7
77 6.1 9.0
78 6.0 8.9
79 5.8 9.0
80 5.8 8.5
81 5.9 8.1
82 5.7 7.9
83 5.6 8.2
84 5.5 8.5
85 5.4 8.2
86 5.6 7.9
87 5.4 7.5
88 5.3 7.4
89 5.0 7.1
90 4.7 7.1
91 4.7 6.7
92 4.5 6.5
93 4.7 6.2
94 4.5 6.1
95 4.3 5.8
96 4.0 5.3
97 3.7 4.8
98 3.5 3.9
99 2.8 3.3
SOURCE: Authors' calculations based on MEPS household and employer survey files.
NOTE: Estimates represent average employer-paid premiums for all workers in each percentile, including workers who decline or are not offered ESHI.
Table equivalent for Chart 8. Employer cost of providing health insurance by employee wage decile, 1996–2008
Wage decile Average annual percentage change in ESHI premiums per employee Change in ESHI premium as a percentage of average annual wage
Bottom 3.36 -1.27
2 7.77 3.38
3 7.24 4.23
4 5.89 3.03
5 6.27 3.47
6 7.11 4.33
7 5.91 2.62
8 6.90 2.99
9 6.96 2.51
Top 6.40 1.15
Average 6.57 2.46
SOURCE: Authors' calculations based on MEPS household and employer survey files.
Table equivalent for Chart 9. Average annual rates of change in real wages and employer cost of providing health insurance, by worker wage percentile, 1996–1997 to 2007–2008
Wage percentile ESHI premiums Wages plus ESHI premiums Wages
1
2 -3.5 2.1 3.2
3 1.0 2.8 3.0
4 -1.4 2.1 2.5
5 2.1 2.4 2.4
6 1.1 2.4 2.5
7 2.8 2.6 2.6
8 1.0 2.5 2.7
9 1.9 2.7 2.8
10 1.5 2.7 2.8
11 2.4 2.7 2.7
12 2.6 2.7 2.7
13 4.8 2.9 2.8
14 5.4 2.9 2.7
15 6.0 2.8 2.5
16 6.8 2.7 2.3
17 7.7 2.6 2.2
18 9.2 2.5 2.0
19 7.8 2.3 1.8
20 7.4 2.2 1.7
21 5.3 2.0 1.7
22 4.7 1.9 1.7
23 5.0 1.9 1.6
24 4.8 1.8 1.5
25 5.1 1.9 1.5
26 5.1 1.9 1.5
27 5.6 1.9 1.5
28 4.4 1.7 1.4
29 3.7 1.6 1.4
30 4.1 1.6 1.4
31 4.1 1.7 1.4
32 4.2 1.6 1.3
33 3.5 1.4 1.2
34 3.6 1.4 1.1
35 3.7 1.4 1.1
36 4.4 1.4 1.1
37 4.9 1.5 1.1
38 4.8 1.4 1.1
39 4.3 1.4 1.0
40 3.4 1.2 1.0
41 3.1 1.1 0.9
42 3.5 1.1 0.9
43 4.9 1.2 0.8
44 4.9 1.2 0.9
45 4.1 1.1 0.8
46 3.1 1.0 0.8
47 3.6 1.1 0.8
48 3.9 1.1 0.9
49 4.3 1.1 0.8
50 4.1 1.1 0.8
51 4.3 1.0 0.7
52 4.6 1.0 0.7
53 5.0 1.1 0.7
54 5.2 1.1 0.7
55 4.4 1.0 0.7
56 4.3 1.0 0.7
57 3.7 0.9 0.7
58 3.9 1.0 0.7
59 3.7 1.0 0.8
60 4.7 1.1 0.8
61 4.9 1.2 0.8
62 4.4 1.1 0.9
63 2.9 1.0 0.9
64 3.3 1.0 0.8
65 3.3 0.9 0.7
66 4.0 1.0 0.7
67 3.6 1.0 0.8
68 3.8 1.0 0.8
69 3.9 1.1 0.8
70 3.7 1.1 0.8
71 3.9 1.1 0.9
72 4.0 1.1 0.9
73 4.5 1.2 0.9
74 4.1 1.2 0.9
75 4.2 1.1 0.9
76 4.0 1.1 0.9
77 4.5 1.1 0.9
78 4.6 1.2 0.9
79 5.0 1.2 1.0
80 4.6 1.2 1.0
81 4.0 1.2 1.1
82 4.1 1.2 1.0
83 4.7 1.3 1.0
84 5.2 1.3 1.0
85 4.9 1.3 1.1
86 4.2 1.3 1.1
87 4.1 1.3 1.1
88 4.2 1.3 1.1
89 4.3 1.3 1.1
90 4.9 1.3 1.1
91 4.5 1.4 1.2
92 4.7 1.4 1.3
93 4.0 1.4 1.3
94 4.1 1.5 1.3
95 4.2 1.5 1.3
96 4.1 1.5 1.4
97 4.1 1.8 1.7
98 3.5 2.4 2.3
99 4.0 2.4 2.4
SOURCE: Authors' calculations based on MEPS household and employer survey files.
NOTE: Both wages and ESHI premiums are deflated using the CPI-U-RS to calculate annual percentage changes.
Table equivalent for Chart 10. Employer cost of providing health insurance as a percentage of average annual wages for US wage and salary workers: Estimates based on MEPS and NIPA wage data, 1996–2008
Year MEPS NIPA
1996 6.1 6.8
1997 6.1 6.4
1998 5.7 6.4
1999 6.1 6.7
2000 6.4 7.0
2001 7.1 7.4
2002 7.5 7.8
2003 7.9 8.4
2004 8.2 8.5
2005 8.6 8.7
2006 8.3 8.4
2007 8.5 8.2
2008 8.5 8.3
SOURCE: Authors' calculations based on MEPS household and employer survey files; BEA (2012).
Table equivalent for Chart 11. Estimated employer cost of providing health insurance as a percentage of average wages for workers with annual wages above and below the taxable maximum (MEPS and W-2 data), 1996–2008
Year Below taxable maximum (W-2) Below taxable maximum (MEPS) Above taxable maximum (MEPS) Above taxable maximum (W-2)
1996 7.8 6.8 2.8 2.1
1997 7.7 6.8 3.0 2.2
1998 7.3 6.4 2.6 1.9
1999 7.9 6.8 2.8 2.1
2000 8.1 7.0 2.9 2.0
2001 9.1 7.9 3.0 2.2
2002 9.8 8.4 3.2 2.5
2003 10.1 8.7 3.6 2.7
2004 10.6 9.3 3.6 2.7
2005 11.0 9.7 4.0 2.8
2006 10.6 9.3 3.9 2.8
2007 10.8 9.4 4.0 2.8
2008 10.8 9.5 3.5 2.6
SOURCE: Authors' calculations based on MEPS household and employer survey files; SSA (2009) and earlier editions.
Table equivalent for Chart 12. Employer cost of providing health insurance as a percentage of average annual wage for earners with wages above and below the taxable maximum (adjusted and unadjusted), 1996–2008
Year Below taxable maximum (adjusted) Below taxable maximum (unadjusted) Above taxable maximum (unadjusted) Above taxable maximum (adjusted)
1996 8.56 7.76 2.34 2.12
1997 8.14 7.69 2.33 2.20
1998 8.21 7.26 2.17 1.92
1999 8.62 7.89 2.26 2.07
2000 9.02 8.13 2.20 1.98
2001 9.45 9.06 2.34 2.24
2002 9.88 9.80 2.48 2.46
2003 10.48 10.14 2.77 2.68
2004 10.92 10.58 2.83 2.75
2005 11.25 10.97 2.90 2.83
2006 10.77 10.63 2.83 2.79
2007 10.72 10.80 2.75 2.77
2008 10.85 10.76 2.65 2.62
SOURCE: Authors' calculations based on MEPS household and employer survey files; SSA (2009) and earlier editions; BEA (2012).
NOTE: Adjusted data have been aligned to match NIPA trends.
Table equivalent for Chart 13. Postreform coverage status of employees covered by ESHI before reform, by wage decile, 2016
Wage decile ESHI Exchange Medicaid or CHIP Uninsured
Bottom 89.2 8.5 0.9 1.3
2 83.5 13.8 1.5 1.2
3 81.0 16.2 2.4 0.4
4 84.9 13.7 1.4 0.0
5 91.6 7.7 0.7 0.0
6 93.0 7.0 0.1 0.0
7 94.7 5.2 0.1 0.0
8 96.0 4.0 0.0 0.0
9 96.8 3.2 0.0 0.0
Top 95.6 4.5 0.0 0.0
SOURCE: Authors' calculations based on MEPS household and employer survey files.
NOTE: "Exchange" comprises subsidized or unsubsidized insurance obtained through a state insurance exchange.