Employees to Pay More for Coverage as Business Anticipates Higher Costs

March 13, 2003

Large and small businesses in the U.S. reportedly see no end in sight to rising health care expenses, and foresee having to pass more of the costs for health insurance coverage along to their employees, according to a report for Cover The Uninsured Week released by several business and labor groups and The Robert Wood Johnson Foundation.

The national survey of 600 large and small businesses suggests that while American businesses remain committed to providing employer-sponsored health insurance, 92 percent say they are likely to increase the amount that their employees pay for health insurance premiums next year.

The business survey shows that companies of all sizes expect health insurance costs to jump an additional 18 percent over the next year. This comes on the heels of an increase of approximately 14 percent in 2002. And businesses do not foresee relief any time soon. According to the survey, businesses predict a 17 percent average increase per year in their health care costs for the next five years.

The survey shows:
*More than 70 percent of employers say the number of uninsured will grow in the next decade. According to Census figures released in 2002, 41.2 million people were uninsured for all of 2001, an increase of 1.4 million from the previous year – the largest single-year increase in nearly a decade. In Florida, 2.8 million residents were uninsured during that period;

*Nearly all businesses say employees will be expected to pay more for their health insurance premiums, deductibles and co-pays next year and for the next five years. Nevertheless, companies expect to bear the bulk of the anticipated cost increase, passing on just one-fourth of the cost increases to employees;

*To cope with the rising costs, 45 percent of employers say they will
reduce employee health benefits over the next five years;

*Just four percent of businesses say they are likely to drop employee
health care coverage entirely next year. But if faced with rising costs
for the next five years, businesses are increasingly likely to drop coverage, especially if it is a small business that has fewer than 50 employees. If faced with cost hikes for the next five years, one in
seven of the small businesses that currently offer insurance to employees say they would likely drop coverage entirely. These small
employers reported they expected an average premium increase of
approximately 20 percent per year over the next five years.

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