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Life Health > Health Insurance

EBRI: Rising Health Costs Squeeze Small Employers

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NU Online News Service, Jan. 30, 12:48 p.m. – Nineteen percent of the small employers that offer health insurance changed their health benefits in 2002, according to a new survey co-sponsored by the Employee Benefit Research Institute, Washington.

Twenty-six percent of the small employers increased the scope of their health coverage.

But 65% increased workers’ co-payments or deductibles, 35% switched carriers, 30% raised the employees’ share of the premiums and 29% cut back on the package of benefits offered.

Some employers told researchers that they have coped with rising health coverage costs by reducing or eliminating pay raises or bonuses, reducing other employee benefits, or delaying investments.

But the news is not all bad for the agents selling the health coverage, says EBRI’s Paul Fronstin, who wrote a survey report that appears in the January EBRI Issue Brief.

“If you’re an agent, it may be easier to make the sale because the employer has more options than previously thought,” Fronstin says.

“The thinking is not linear,” Fronstin says. “It’s multi-dimensional. It’s not just, ?Premiums are going up, so let’s shift the cost to workers.’ It’s more like, ?Where can we get the money to pay?’”

Researchers also interviewed small employers that lack health coverage.

One-third of the small employers that are not offering health insurance say they are extremely or very likely to add health benefits in the next two years.

The small firms that are not offering coverage tend to pay less and have more part-time employees than firms that do offer coverage. The firms without coverage also tend to employ more women, more workers under 30, and more members of minority groups.

EBRI sponsored the survey, the 2002 Small Employer Health Benefits Survey, with the Blue Cross and Blue Shield Association, Chicago.


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