More Companies Pass On
New Insurance Costs to Employees
Excerpt By Dean Reynolds, ABCNews.com

Feeling sick from paying more for insurance? You're not alone. Only 61 percent of companies pay for their workers' health care.

Bob Wolters owns a company in Chicago called CookTek. He employs about 50 people who make equipment for high-end restaurants.

Business is booming, says Wolters. It has to.

As he surveyed his production floor today, he sighed when asked about how much it costs to cover his hourly wage earners with health insurance.

"Every year it's gone up at least 10 percent," he said in an interview, "and this past year it went up 37 percent."

Wolters said CookTek's management embarked on a very aggressive search for an alternative provider, and finally found one. But even now, his workers are paying 35 percent of the cost of coverage instead of the 20 percent they paid last year.

It's a big increase, he explained, because, "This is not like these [workers] are six-figure salaried employees."

Domino Effect

Many businesses have been confronting double-digit increases in health insurance rates for three straight years now. Some businesses have simply dropped coverage altogether.

Two years ago 65 percent of firms employing 200 or fewer workers provided health insurance. Today that number is down to 61 percent and dropping.

"If people see 10 to 15 percent increases every year in health insurance," said Wolters, "eventually that's got to start dragging the economy down."

Consider productivity.

Uninsured workers tend to avoid doctors. That means they get fewer health checkups and immunizations, are less able to avoid illnesses, and consequently miss more work.

To maintain coverage, companies are making tough choices which could, in turn, affect millions more workers.

"They defer doing computer server upgrades or adding a couple of more trucks to the fleet of delivery trucks," said Kate Sullivan of the United States Chamber of Commerce. "That really has a ripple effect across the economy."

Why Are Costs Escalating?

What's going on?

Hospital costs are rising rapidly, and so are the prices of prescription drugs.

The labor force is aging and more in need of health care.

Medical malpractice awards are increasing, meaning insurance companies are spreading out the cost to companies, and the companies are handing the bill down to the workers.

Finally, investors — once largely passive — are now demanding higher profits from companies. And those companies are looking at their payrolls and benefits for obvious cuts. That, in turn, creates tension on the job.

"Simply pushing the bill across the table to workers is not going to solve the problem," said Gerry Shea of the AFL-CIO. It's a problem Bob Wolters acknowledges.

"Employees will always look to the owners as being at fault for the continued increase in costs," he said. "Why haven't we done something about it? But there's really nothing we can do."

And that's the frustrating point.

National surveys say that while most companies will do their best to continue providing health coverage to their workers — at least for the time being — what really bothers business is the sense that nothing is being done to rein in health care costs.

That, and the fact that nobody really seems to know how.

Reference Source 104

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