Fewer Small Businesses Offering Employee Health Insurance

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The cost of providingemployer-sponsored health insurance this year rose by 6.1%, roughly the samerate of increase as in 2006, according to highlights of a nationwide surveyconducted by Mercer, Reuters reports. The survey, released onMonday, included about 3,000 private and public companies with at least 10employees (Kenen, Reuters, 11/19).

The survey found the average cost per employee for health coverage was $7,983.Although the 6.1% increase is lower than the 15% increase in 2002, it still isdouble the rate of inflation, according to the survey (Davis, Denver Rocky Mountain News, 11/19).

The survey predicted a 5.7% increase for 2008, factoring in anticipated changesto benefits. If benefits were left unaltered, costs for 2008 would rise 8%,according to the survey (Jordon, OmahaWorld-Herald,11/19). The survey found that high-deductible health plans paired with tax-freesavings accounts cost $5,970 per worker per year.

According to the survey, 5% of insured workers have a lower-cost,high-deductible plan linked to a health savings account, compared with 3% in2006. Among businesses with 20,000 or more employees, 41% offer high-deductibleplans linked to HSAs, compared with 7% of employers with fewer than 500workers. The survey also found that fewer employers are offering coveragealtogether. This year, 61% of employers with 200 or fewer employees offeredsome kind of health coverage, compared with 63% in 2006.

Blaine Bos, a Mercer partner and an author of the survey, noted that eventhough lower-cost plans have emerged, fewer employers still are offeringcoverage. He said that determining what affordable coverage is "will be areal political and public policy issue" as the debate about health carereform "stays on the table" (Appleby, USA Today, 11/19).

The survey found that larger employers are addressing rising costs by shifting more expenses to the employees. The average PPO deductible this year increased 11% for employees of companies with 500 or more workers. Chris Watts, markets business leader for Mercer's Denver office, said, "Given that the majority of covered employees are in PPOs, an increase in deductibles of this size could dampen employers' total health cost increase by about a point" (Denver Rocky Mountain News, 11/19).

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The survey also found the following:

  • 5% of large employers charge higher premiums for employees who smoke;

  • 10% of large companies limit coverage for spouses who have access to health insurance from another source, compared with 8% in 2006;

  • 34% of large firms allow same-sex domestic partner coverage, an increase from 29% in 2006 (Wessel, Orlando Sentinel, 11/19);

  • 62% of large employers offered some health coverage to part-time employees (Reuters, 11/19); and

  • More than one-fifth of small employers that offer health benefits do not extend the coverage to family members (DenverRocky Mountain News, 11/19).

Mercer inMarch 2008 will make available an expanded version of the report that includesdata categorized by industry, size and region (Anstett, Detroit Free Press, 11/19).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.

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