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Businesses Slashing Medical Benefits

Most employers plan to pass some cost hikes on to workers, survey finds. And many small businesses are considering dropping coverage entirely.
Stephen Taub, | US
March 18, 2003

In case you're still not convinced that health care is the next great corporate crisis, read on.

According to a nationwide survey of 600 large and small businesses, 92 percent say they are likely to increase the amount their employees pay for health-insurance premiums next year.

The study was part of a report for Cover the Uninsured Week, and was released by several business and labor groups and The Robert Wood Johnson Foundation.

The survey found that companies of all sizes expect health-insurance costs to jump an additional 18 percent during the next year. This comes on top of the mid-teens growth forecasts in most surveys these days.

Meanwhile, more than 70 percent of employers say the number of uninsured will grow in the next decade. This is bad news, given that 41 million people were without health-care insurance for all of 2001. That's an increase of 1.4 million from the previous year, according to the most recent census figures. The rise in the number of uninsured was the largest one-year increase in nearly a decade.

The survey also found that for this year (and the next five years), employees will be expected to pay more of their health-insurance premiums, as well as larger deductibles and co-pays.

This does not mean workers will get stuck paying the entire bill, however. Companies in the survey expect to bear the bulk of the anticipated spikes in health-insurance premiums. The respondents said their companies will pass on just one quarter of the rising expenses to employees.

Other survey findings: