cal, in-hospital medical, and maternity fees. Employer-financed extended coverage during layoffs or disability was broadened from 26 to 52 weeks. New pension benefits also were negotiated in the aerospace industry, approximately doubling previous levels, by the International Association of Machinists and the United Automobile Workers. In addition, the contracts called for liberalized early-retirement and disability pensions, improved hospital, surgical, and medical insurance, and group life insurance. Supplemental unemployment benefits plans (replacing the previous extended-layoff benefit plan) were also negotiated by the Automobile Workers.

There was significant liberalization of benefits in some major multiemployer plans. The improved financial position of the United Mine Workers of America Welfare and Retirement Fund prompted the trustees to reduce the retirement age from 60 to 55 and to increase pension benefits from $75 to $85 and then to $100 a month.

The Ladies' Garment Workers' National Retirement Fund raised pension benefits for retired workers to $60 (previously $50) and for cloak makers in New York to $70 a month (previously $65), effective January 1, 1966. These increases took place about a year after the merger of about 40 individual funds into a national plan estimated to cover about 400,000 workers. Retirement benefits for the Amalgamated Clothing Workers were increased from $50 to $55 a month in 1965. This change affected workers in the shirt and pajama, cotton garment, and outerwear industries.

With the spread of "special" early-retirement provisions in the past few years, attention was focused on the results of the 1964 Automobile Workers agreements that established special earlyretirement benefits, effective September 1965. Under these arrangements, amounts payable for early retirement were to be supplemented until the retiree reached age 65. A worker retiring at age 60 with 30 years of service, for example, could receive up to $400 per month or 70 percent of final monthly pay, whichever is smaller.

According to the Automobile Workers, about 9,000 workers in major auto plants retired under the special early-retirement provision in the first 3 months after its effective date, compared with 225 in a similar period in the previous year. These results are in line with the experience under previous liberalization of early-retirement benefits

in the automobile and primary metals industries. The termination of the Studebaker Corporation pension plan because of a plant shutdown in 1964, with final distribution of benefits in 1965, spurred public interest in the security of benefit expectations of workers in private retirement plans. In the Studebaker termination, enough assets were allocated to cover in full the benefits of retired workers and those workers aged 60 and over and eligible for retirement. About 4,500 vested workers who were aged 40-60 received, however, only a small portion of the value of their accrued benefits. This situation stimulated proposals for Federal reinsurance of private pension funds designed to prevent such losses from occurring.

HISTORICAL DATA

Employee-benefit plans have had a long history that antedates the figures presented in this series. Private pension plans were reported as early as 1875, and health and welfare plans go even farther back. In general, however, these plans were not widespread until after World War II, and the rapid growth after this time focused attention on the desirability of developing data on the magnitudes involved. Congressional committees, engaged in hearings and studies in the 1950's on the private employee-benefit plans, developed some basic data on coverage and contributions. These data were later consolidated with data on benefit outlays into an annual comprehensive series published in the BULLETIN. The first article in the series, appearing in March 1958,2 presented data for 1954 and 1956.

This year, the series on employee-benefit plans includes, for the first time, data for 1950 and 1955; comprehensive data are now available for the 5-year intervals beginning with 1950. Data for 1956 through 1959 are omitted here but are available from the earlier articles in the BULLETIN. The only changes this year in data previously published are the result of revisions in the national income accounts of the Department of Commerce. These revisions, which concern data on the wage and salary labor force and payroll, have an impact on the series in several ways. First, the

2 Alfred M. Skolnik and Joseph Zisman, "Growth in Employee-Benefit Plans," Social Security Bulletin, March

1958.

data on temporary disability benefits and contributions include sick-leave benefits, which are estimated through a formula correlated to payroll figures. Hence, the data on temporary disability plans from 1962 on have been revised in accordance with the changes in payroll data. Second, data from the national income accounts are used as base indicators for measuring the growth of coverage as a percent of the employed labor force and of contributions as a percent of

aggregate wages and salaries. With the revision of these indicators, the percentages shown in table 4 needed also to be revised, beginning with data for 1960.

Coverage

All types of plans registered gains in coverage in 1965, with the increases among health insurance plans the most impressive (table 1). The numeri

1 Plans whose benefits flow from the employment relationship and are not underwritten or paid directly by government (Federal, State, or local). Excludes workmen's compensation required by statute and employer's liability.

2 Group and wholesale life insurance coverage based on data from Institute of Life Insurance and Health Insurance Association of America, Group Insurance Coverages in the United States, annual issues, modified to exclude group plans not related to employment. Also excludes Servicemen's Group Life Insurance issued to cover 2,780,000 members in the Armed Forces. Self-insured death benefit plan coverage based on data for various tradeunion, mutual benefit association, and company-administered plans. Data from the Institute of Life Insurance (see footnote 2). Data from A Survey of Accident and Health Coverage in the United States (Health Insurance Council, 1950) and Extent of Voluntary Insurance Coverage in the United States (Health Insurance Council, 1955 and 1960-65) and from the Institute of Life Insurance (see footnote 2). In estimating number of employees covered under plans other than group insurance and union and company plans, 75 percent of all subscribers assumed to be employees. Data for hospitalization, surgical, and regular medical coverage adjusted to include employees and their dependents covered by group comprehensive major medical expense insurance.

Includes private hospital plans written in compliance with State temporary disability insurance law in California.

Represents coverage under group supplementary and comprehensive major medical insurance underwritten by commercial insurance companies. Comprehensive insurance, which includes both basic hospital-surgicalmedical benefits and major medical expense protection in the same contract, covered 4,215,000 employees and 7,066,000 dependents in 1965.

7 Includes private plans written in compliance with State temporary disability insurance laws in California, New Jersey, and New York. Date from the Health Insurance Council (see footnote 4) and Health Insurance Association of America (see footnote 2), adjusted to exclude credit accident and health insurance. Data for 1950 modified slightly to adjust for effect of state temporary disability insurance laws on formal paid sick leave and other self-insured plan coverage.

Based on trade-union and industry reports. Excludes dismissal wage and separation allowances, except when financed by supplemental unemployment benefit funds covering temporary and permanent lay-offs.

Estimated by the Office of the Actuary, Social Security Administration. Includes pay-as-you-go and deferred profit-sharing plans, plans of nonprofit organizations, union pension plans, and railroad plans supplementing the Federal railroad retirement program. Data exclude annuitants.

2

1 Excludes dividends in group insurance.

Plans whose benefits flow from the employment relationship and are not underwritten or paid directly by government (Federal, State, or local). Excludes workmen's compensation required by statute and employer's liability.

Group and wholesale life insurance premiums based on data from Institute of Life Insurance and Health Insurance Association of America, Group Insurance Coverages in the United States, annual issues, modified to exclude group plans not related to employment, and excludes premiums of $10 million for the Serviceman's Group Life Insurance plan which went into effect in late 1965. Self-insured death benefits costs based on data for various trade-union, mutual benefit association, and company-administered plans.

Data from Institute of Life Insurance (see footnote 3).

Data from "Private Health Insurance: Coverage and Financial Experience, 1965," Social Security Bulletin, November 1966. In estimating contributions for employees under plans other than group insurance and union and company plans, 75 percent of subscription income attributed to employed groups.

cal increases in employee coverage for hospital and for surgical insurance were the largest recorded since 1960-1.9 and 1.8 million employees, respectively. Major medical coverages was 1.9 million higher, and the increase in regular medical coverage was almost as large (1.7 million). The number of employees with life insurance coverage* rose by 1.6 million, and plans furnishing temporary disability protection showed a sizable increase, when compared to growth in previous years. On the other hand, private retirement plans increased by less than 1 million workers to a total of 25.4 million at the end of 1965.

A vigorous expansion in coverage of employeebenefit plans has occurred in the 15 years from 1950 to 1965. Regular medical expense insurance had almost 30 million more employees covered in 1965 than in 1950, and surgical expense insur

3 Data on major medical expense insurance refer exclusively to plans underwritten by commercial insurance companies and exclude plans of this type (covering about 15 million persons at the end of 1965) under Blue CrossBlue Shield.

4 The data on group life insurance in this series exclude the insurance provided members of the Armed Forces under the new program of servicemen's group life insurance enacted by Congress on September 29, 1965. This insurance is underwritten by commercial insurance companies but is excluded here because the series is confined to civilian wage and salary workers.

Includes private hospital plans written in compliance with State temporary disability insurance law in California; separate data not available for these plans.

1 Unpublished data from the Health Insurance Association of America. Represents premiums for group supplementary and comprehensive major medical insurance underwritten by commercial insurance carriers.

Data from "Income-Loss Protection Agains Illness," Social Security Bulletin, January 1967. Includes private plans written in compliance with State temporary disability laws in California, New Jersey, and New York, shown separately in next line.

Based on trade-union and industry reports. Excludes dismissal wage and separation allowances, except when financed by supplemental unemployment benefit funds covering temporary and permanent layoffs. For the steel industry plans, includes accruals of contingent liability contributions as well as regular contributions.

10 Estimated by the Office of the Actuary, Social Security Administration. Includes contributions to pay-as-you-go and deferred profit-sharing plans, plans of nonprofit organizations, union pension plans, and railroad plans supplementing Federal railroad retirement program.

ance had about 28 million more. Somewhat more modest gains were registered by life insurance and hospital expense insurance plans, which added about 22-24 million employees.

Though major medical expense coverage did not increase in such large absolute numbers, the growth is more dramatic since such coverages were first offered after 1950. Plans offering temporary disability and formal sick-leave benefits, on the other hand, reported a small rise of only about 72 million in the number of employees covered. Retirement plan protection did not have the striking increase registered by other types of employee benefits, and coverage grew from about 10 million in 1950 to more than 25 million in 1965. A leveling in growth is revealed by comparing percentage increases in employee coverage in successive 5-year periods since 1950. For every type of employee-benefit plan, the strongest growth was in the early fifties, and the percentage change declined in each subsequent 5-year period. Thus, the percentage growth in hospital and surgical insurance in 1950-55 was about 35 percent and 65 percent, respectively, but the increase since the end of 1960 was less than 20 percent. Growth in retirement and life insurance coverage shows a similar pattern. On the other hand, major medical expense coverage increased 80 percent since

1960 and regular medical expense coverage rose 28 percent, reflecting continued pressure for broadened health insurance protection.

Contributions

Total contributions (employer and employee) to employee-benefit plans were estimated at about $19.1 billion in 1965, or an increase of more than 11 percent over the 1964 contributions of $17.2 billion (table 2). The rate of increase was slightly higher than that of 1964 and was substantially greater than that for any year since 1960.

The 1965 rise of $1.9 billion was the largest in the historical series, reflecting the broadened coverage as well as benefit improvements and increased costs. Pension plan contributions of $7.8 billion (an increase of $860 million) and total health insurance contributions of $7.3 billion, (a $720 million rise) were new highs for these items in the series and accounted for the sharp rise in total contributions for the year. The substantial growth in contributions for temporary disability insurance also contributed to this upward movement.

The annual rate of increase for retirement plan contributions (12-13 percent) was the highest since 1950. On the other hand, total health insurance contributions were only 11 percent higher -though an increase of 12-15 percent was typical for most years from 1955 to 1964. Life insurance contributions maintained the same rate of growth -about 9 percent-as in 1964. The 12-percent increase in contributions for temporary disability benefits was high compared to the typical growth in previous years.

Despite sizable increases in contributions in all sectors during 1965 both absolutely and percentagewise, the long-term trend shows a definite declining rate of growth, as expansion in coverage slackens. Thus, between 1950 and 1955, contributions to private employee-benefit plans almost doubled, mainly because of the higher amounts for health benefit plans (with a rise of more than 150 percent) and for pension plans (with about an 85-percent increase). Between 1955 and 1960, total contributions increased 59 percent; between 1960 and 1965, they rose only 53 percent. Pension contributions rose about 43 percent in each of the two 5-year periods since 1955, reflecting in

creased contributions to meet benefit improvements. In the same time periods, however, the rate of increase of health benefit contributions fell from about 95 percent to about 70 percent.

The amount and pattern of employee-benefit plan contributions have also undergone remarkable change in this 15-year period. In 1950, when the total amount contributed was less than $4 billion, more than half went for retirement purposes. The three types of health insurance programs offered at that time-hospital, surgical, and regular medical-accounted for a little over a fifth of the contributions (chart 1). Since that time an increasing proportion of total employeebenefit contributions has gone for health insurance programs and a smaller proportion for retirement programs, with the portions going to the other benefit programs remaining more or less stable. Thus, contributions for health programs reached $7.3 billion or more than 38 percent of aggregate contributions in 1965, while retirement contributions in the same year achieved an impressive $7.8 billion but fell to 41 percent of aggregate contributions.

Benefits

Benefit expenditures were estimated at $13.0 billion in 1965, compared with $11.8 billion in 1964 a rise of more than 10 percent (table 3). Total health benefits accounted for $600 million of the $1.2 billion increase, and expanded retirement benefits accounted for $420 million. Temporary disability payments amounted to $1.3 billion -almost $100 million, or 8 percent, higher than the amount in the preceding year. The increase in death-benefit payments ($116 million) was the largest since the mid-50's, but the percentage rise was lower than that for most preceding years.

A review of the long-term trend shows that total benefits paid under private employee-benefit plans expanded from an annual rate of $1.8 billion. in 1950 to $13.0 billion in 1965. Although payments in all sectors advanced, health benefit payments had a greater increase in this period than any other item-an increase accounted for, in large part, by the rapid growth of major medical expense plans. Thus, total expenditure for health benefits were 10 times higher than they were at the beginning of the period, having risen from