Employers Pay More For Health Insurance

CourierPostOnline – Wednesday, April 30, 2008

Gannett State Bureau

The average cost for New Jersey employers providing health insurance rose over 9 percent last year and has doubled over the past six years, said a report released Tuesday by the New Jersey Business and Industry Association.

A survey of New Jersey's businesses in January this year found the average cost for health insurance per employee rose to $7,139. Small companies saw their costs jump the most, as businesses with two to 50 employees experienced a 10 percent rise to $7,251 per employee. Large companies saw costs rise almost 8 percent to $6,598 per employee.

Although 98 percent of companies with more than 50 employees said they provide health insurance benefits, 75 percent of the smallest businesses – those with between two and 19 employees – said they provided coverage, down from 92 percent four years ago.

Christine Stearns, health affairs vice president for the NJBIA, said small companies "seem to be reaching a breaking point."

"Employers continue to sponsor health benefits for their employees, but costs are putting tremendous pressure on them in their ability to do so in the future if we don't figure out a way to rein in costs," said Stearns.

Companies reported they would have to cut back on hiring plans or salary increases to make up for the rising costs.

Nearly half of the survey's respondents said health maintenance organizations, or HMOs, were offered, meaning the plan that costs companies the least is the most widely offered. Forty-five percent offered a preferred provider, or PPO, plan, while 35 percent offered a point of service, or POS, plan. Preferred provider and point of service plans were roughly $2,000 more expensive per worker for employers than HMOs.

Stearns said that although there is no simple solution, market reforms and holding the line on mandated coverage would at least contain costs. Stearns said proposed legislation to provide universal health could help lower costs for businesses.

The legislation, sponsored by Sen. Joseph F. Vitale, D-Middlesex, would seek to reform both the individual and employer markets. NJBIA supports the reforms, but concerns have been raised that costs for senior citizens or those who need more care in the individual market could be raised significantly as costs are lowered for younger adults.

In the small-employer market, however, Vitale said changes such as requiring insurance companies to use more premium dollars on costs rather than administration could result in prices dropping for employers. Vitale said because most people get their insurance through their employer, driving down costs for companies is "critical."

"It seeks to manage costs and support small business so they can continue to provide policies for employees," said Vitale.

Advocates for lowering health care costs and increasing affordable access for consumers also met Tuesday. The group, calling itself "New Jersey for Health Care," agreed there was "a shared concern" with the NJBIA as costs rise for both businesses and consumers.

Coalition member Ev Liebman, director of organizing and advocacy for New Jersey Citizen Action, said the group was still reviewing Vitale's legislation. Although the group supports many aspects of Vitale's plan – including providing care for low-income families and children – the group had concerns with the proposed market reforms.

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