This comparison is significant, the report said, since mid-sized employers compete with the largest employers for employees, and thus must offer a comparable benefit package. Yet the mid-size firms do not have the purchasing power of large employers, nor do they benefit from economies of scale to the same extent.

The nationwide study, "Marsh's Mid-sized Employer Health Plans 2002," is based on responses from 1,333 employers with 10-999 employees.

The research was conducted by Mercer Human Resource Consulting. Both Marsh and Mercer are operating firms of Marsh & McLennan Companies Inc., based in New York City.

In a statement, Roger Edgren, head of Marsh's Employee Benefits Services practice, said generous benefit programs are at least partly to blame. As traditional indemnity plans gave way to managed care over the past two decades, employee out-of-pocket costs were generally reduced.

It was expected that care management and provider discounts would hold down cost trends, Mr. Edgren said. Those savings have long since dried up, and employers must now work to reeducate employees about the real cost of health care, he observed.

"Faced with health care cost increases that are more than triple the rate of general inflation, employers are being forced to shift a greater amount of the cost to employees," Mr. Edgren said.

Employers are looking at other ways to hold down their costs, including tiered copayments for prescription drugs and increasing copay amounts. There are also employer-funded spending accounts backed up by catastrophic coverage for major, unplanned expenses.

"Dropping coverage is a bad option for everyone involved," said Mr. Edgren. "For mid-sized employers in this tough economy, the only viable way to avoid it may be for employees to take back more of the financial responsibility for their families' health care."

A copy of the report may be obtained from local Marsh offices or by contacting Sharon Sikkema by e-mail at [email protected].