NCPA - Health Care - Small-Firm Employees Pay More For Insurance

Health Care

Small-Firm Employees Pay More For Insurance

Employees in larger companies pay 30 percent of premium costs for health insurance -- the same proportion they paid in 1988 -- says a new study in Health Affairs. But employees who have family coverage at small firms saw their costs for health insurance jump an average 23 percent a year from 1988 to 1996.

For workers in small companies, those with fewer than 200 employees, the study found:

In 1996, the small-firm employees' share of the premium averaged $175 a month or $2,100 a year.
That was up from $34 a month or $408 a year in 1988.
Employees now pay 44 percent of the premium cost for family health coverage, up from 34 percent in 1988.

Single employees fared slightly better; their premiums rose 21 percent a year during the same period. But their share of the premium was a much lower $56 a month in 1996, up from $12 in 1988.

The cost shift to employees occurred even as small firms followed larger ones into managed care to reduce costs.

In 1988, 88 percent of workers in small businesses were enrolled in traditional insurance plans, which let workers choose doctors or hospitals.
By 1996, only 29 percent of small business employees were enrolled in traditional plans, while 71 percent were in managed care.

The current backlash against managed care may be driven as much by the higher cost of insurance as by consumers' concerns about treatment choices, say the authors.

Source: Jon R. Gobel, Paul B. Ginsburg and Kelly A. Hunt, "Small Employers and Their Health Benefits, 1988-1996: An Awkward Adolescence, " Health Affairs, September-October 1997.

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