A new report released today by the International Foundation and Horizon Actuarial Services, LLC, The Multiemployer Health Plan Landscape: A Ten-Year Look (2005-2014), provides a first-ever comprehensive look at multiemployer health plans, showing how these plans have evolved over the past decade and shedding light on where they may be headed in the future.
The ten-year period from 2005 through 2014 brought consistent increases in health benefit costs for multiemployer health plans, matched by increases in employer and worker/retiree contributions to cover the increased costs. During this period, the number of covered retirees increased, and the ratio of active to retired participants decreased, making it increasingly difficult for plan trustees to manage the financial shortfall for retired participants. Despite this, the number of covered participants has remained largely unchanged over the past ten years, and the financial condition of many plans has improved.
Plans in the Study
- The total number of plans in the study was 1,823 for the 2005 plan year, declined steadily to 1,595 in 2013, and then increased slightly to 1,602 for the 2014 plan year. Of the plans in this study, 60.2% are in the construction industry, 13.6% in the transportation industry, 7.1% in the retail or wholesale industries, 6.8% in the manufacturing industry, 4.7% in the service industry and 3.5% in the entertainment industry. Geographically, 40.0% are located either in the Northeast or Mid-Atlantic regions, 28.9% are in the Midwest, 21.4% are in the West and 9.7% are in the South.
- The 1,602 health plans in the study had more than five million covered participants. Over one-half (51.1%) of plans have fewer than 1,000 participants, while 32.6% have fewer than 500 participants. The median number of plan participants is 868, while the average number of participants is 3,215.
- The plans in the study reported more than 209,000 contributing employers. Over 5% of plans have at least 500 employers, 2.4% have at least 1,000 employers, while less than 1% have 2,000 employers or more. Two in five (42.1%) plans have fewer than 50 employers, while 24.7% have fewer than 25 employers. The median number of employers is 40, while the average number of employers is 150.
- Despite the slight decrease in the number of plans, the aggregate number of participants has remained relatively stable over the last decade, dipping to as low as 4.6 million in 2011 and peaking at 5.3 million in 2008. Although the overall total participant counts have remained largely unchanged, the mix of actives and retirees has shifted over the last three years.
- At the end of the 2005 plan year, the ratio of active participants to retired participants was 4.53. In 2009, the median ratio began to decline and hit its lowest point, 3.84, in 2011. By the end of 2014, the median ratio had increased back to 4.20.
- One in seven plans (14.7%) have costs above $14,000 per participant per year (PPPY), while one in seven (15.4%) have PPPY costs below $6,000. For 2014, the median PPPY cost is $10,017, while the average cost is similar at $10,008.
- Over 4% of plans have PPPY employer contributions above $18,000, while 2.4% have contributions above $20,000. One in seven (15.8%) plans have PPPY employer contributions below $6,000 and 9.5% have employer contributions below $4,000. The PPPY employer contribution for the median plan is $9,843, while the employer contribution for the average plan is larger—$11,375.
- When evaluating worker/retiree contributions, 6.6% of plans have PPPY contributions above $2,000, 2.4% have contributions above $3,000 and 1.4% have contributions above $4,000. Less than two in five (38.5%) plans have worker/retiree contributions below $500, and 27.3% have PPPY worker/retiree contributions below $250. One in six (16.9%) plans have contributions below $100. The PPPY worker/retiree contribution for the median plan is $448, while the worker/retiree contribution for the average plan is larger at $836.
Plan Cash Flows
- Aggregate income has increased over the past decade, from $33.6 billion in 2005 to $52.4 billion in 2014. Expenses have also increased, from $30.7 billion in 2005 to $46.8 billion in 2014. Net cash flows were positive from 2005 to 2007 before dropping to negative 0.9% in 2008. They then rebounded beginning in 2009 and have been positive every year since, although the cash flow levels as a percentage of end-of-year assets from 2009 to 2014 have not reached pre-2008 levels.
- Another way to evaluate the effects of positive or negative cash flows is to express the income and expenses as a ratio. The ratio of income to expenses has been above 1.00, meaning that income has exceeded expenses and cash flow has been positive for every year in the past decade except 2008. Investment and other income was positive each year except 2008. Average expenses PPPY increased from 2005 to 2007, dipped in 2008, and then increased each year from 2009 to 2014.
- One in twelve plans (8.4%) have assets measured as months of expenses above 42 months, 6.6% have assets above 48 months and 4.6% have assets above 60 months. The median level of assets measured as months of expenses is 12.7, while the average level of assets measured as months of expenses is larger at 25.2.
The Multiemployer Health Plan Landscape: A Ten-Year Look (2005-2014) was compiled using publicly available information from Form 5500 filings, with 2014 data being the most recent information available at time of the study. To view the full report, visit www.ifebp.org/MultiemployerHealth.
Justin Held, CEBS
Senior Research Analyst/Educational Program Specialist at the International Foundation