Employers Cut Benefits To Rein In Health Care Costs
NU Online News Service, Aug. 11, 10:35 a.m. EDT–Small to mid-sized employers held health care cost increases to under 10 percent in 2003 by cutting benefits, a study finds.[@@]
According to the study of 1,900 employers by Marsh Inc., Minneapolis, the total cost of medical, dental and other health plans employers offered averaged $6,130 per employee in 2003.
Among employers with fewer than 50 employees, the average cost was $5,795 per employee. But mid-sized employers (1,000 to 1,999 employees) experienced an average cost of $6,472, more than larger employers, which averaged $6,324.
The smallest employers generally kept double-digit cost increases at bay by such tactics as discouraging coverage of dependents and imposing high deductibles, Marsh said.
"The dilemma for mid-sized employers is that they must compete with the largest employers for labor and thus must offer a comparable benefit package," said Judye Fawver, vice president of employee benefits for Marsh. "Yet they often do not have the purchasing power of large employers, nor do they benefit from the same economies of scale."
Marsh found that employers with 10 to 49 employees required employees to pay an average of 64 percent of the paid provider organization premium for family coverage. For that reason, just 44 percent of their employees elected family coverage. Among employers with 1,000 to 1,999 employees, the average family contribution was just 30 percent, and 57 percent of their employees elected it.
The percentage of employers requiring a PPO in-network deductible of $1,000 or more jumped from 22 percent in 2002 to 34 percent in 2003, while the percentage requiring an HMO physician office copay of $20 or more nearly doubled, from 18 percent to 34 percent, Marsh said.
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