Health Care Costs Increase

Cost is a big part of the benefits decision. According to the Year 2000 Survey of Employee Benefits by Business & Legal Reports, Inc. (BLR), employers’ 1999 costs for health care alone rose to $3,681 per employee, nearly 12 percent higher than 1998. How are companies coping with rising health care costs while attracting and retaining a skilled workforce in the tightest labor market in more than a decade?

Typically, employers try to offset increased costs by passing some of the expense on to employees. Given the intense competition to get and keep skilled workers, however, there seems to be a real reluctance to do so. Two indicators from the survey of 3,051 employers, illuminate this trend:

1. When employers were asked what steps they’d taken this year to reduce employee health costs:

• 28 percent said they raised the employee premium
• 18 percent raised the co-pay
• 13 percent raised the deductible (31 percent of employees now pay more than $300 for health-care insurance deductibles, compared to 15 percent in 1996)
• 5 percent reduced other benefits

2. In 1998, most employers paid 100 percent of health care insurance premiums. This year, fewer offered 100 percent, with an equal number offering 81 to 99 percent.

SOURCE: BLR, Old Saybrook, CT.