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Employment Cost Index

Tracking the Cost of Health Insurance Benefits using the ECI

The Employment Cost Index (ECI) measures changes in the cost of total compensation, including wages and benefits. Total benefits represents data for individual benefits within several benefit categories: paid leave, supplemental pay, insurance benefits, retirement and savings, and legally required benefits. The BLS does provide one specific series for health insurance benefits. This series is only available for private industry workers and only as a 12-month percent change.

The 12-month percent change in health benefit costs from the ECI should be used with caution. Employer nonresponse for the health benefit component is substantial, which may affect the quality of the estimate.  Additionally, there are fewer observations supporting health benefit estimates as compared with total benefit estimates.  Finally, in some cases, respondents are able to report only a single cost for a combination of benefits (for example, life insurance and health benefits); in these instances, BLS allocates the cost among these benefits. 

Users should also be aware that the ECI may understate health insurer increases for a fixed set of plans because employers may reduce their contributions or employees may switch to lower cost health plans where there is an employee contribution.  For these reasons, please exercise care in using and interpreting these estimates. For more information see “Health insurance series now available from the Employment Cost Index”. To better understand the reliability of the health benefits estimate, standard errors are available. Standard errors provide users with a tool to judge the quality of an estimate to ensure that it is within an acceptable range for their intended purpose. Standard errors can also be used to develop confidence intervals. The chart below shows the 90 percent confidence interval – meaning that there is a 90 percent chance that the estimated index percent change falls between the upper and lower bounds below.

All ECI data, including this health insurance data, can be found on the ECI Data Overview. The database search tool and Historical Data Tables can be used to pull the health insurance estimate and compare it against other ECI series. The Handbook of Methods contains other helpful information for breaking down and understanding ECI data.