NCPA - National Center for Policy Analysis

Companies Hold Line On Employee Insurance Costs

December 14, 1999

Workers can expect employers not to raise their health insurance rates thanks to a booming economy and a tight labor markets. But employers will be paying more for insurance for the third straight year according to a survey by the benefits firm William Mercer.

  • Companies will pay an average 7.5 percent more for insurance in 2000.
  • Despite the increases, only about 25 percent of employers expect to ask workers to pay more in monthly contributions, annual deductibles or office visit payments.
  • Insurance premiums rose an average 7.3 percent -- nearly three times the rate of inflation -- in 1999.
  • Meanwhile, worker contributions to their insurance plans actually dropped, from 24 percent of the total premium for a Health Maintenance Organization plan in 1998 to 20 percent in 1999.

Enrollment in HMOs, the most restrictive type of managed care, remained flat this year, trailing preferred provider organizations (PPOs).

While employees may not expect to pay more for insurance, however, the money will eventually have to come from somewhere, analysts say -- perhaps in the form of reduced wage increases.

Source: Julie Appleby, "Employers Hold Line On Health Costs," USA Today, December 14, 1999.


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