Half of the companiesresponding to the survey said their health plan costs rose by 10% or morelast year, making double-digit inflation a painful reality for many employers.

Looking ahead, 44% of employers participating in the 2000 survey saidthey expect their health plan costs to rise at a double-digit pace againin 2001.

"The low inflation we enjoyed for a brief period in the mid-1990s isdead," said NJBIA President Joe Gonzalez, who presented the findings ina Trenton news conference. "Insidious, double-digit inflation is back andwill undermine the ability of small businesses to provide healthcare coverageto their employees."

Survey participants paid an average of $5,447 per employee for healthcarecoverage in 2000, up 8.8% from an average cost of $5,006 in 1999. Thisis significantly higher than the 6.6% rate of inflation found in the 1999survey. It is also the highest rate of inflation recorded by the surveysince its inception in 1993.

With 16,500 member companies throughout New Jersey, NJBIA is the nation'slargest statewide employer association. The Health Benefits Survey wasmailed on January 5 to 14,278 employers with two or more employees. Morethan 1,500 companies responded to the survey, a response rate of betterthan 10%.

The continued escalation of health plan inflation follows a brief periodof moderate inflation and even falling costs spurred earlier in the decadeby the rapid growth of managed care in New Jersey. Employers respondingto the NJBIA survey between 1995 and 1998 reported inflation rates averagingin the low single digits. At the low point in 1995, the average reportedcost increase was less than one percent.The 1999 and 2000 surveys together yield impressive evidence that the spreadof managed care in New Jersey and the accompanying cost savings for employershave run their course. 

The Association's annual Health Benefits Survey, first conducted in1993, remains the largest statewide survey of the experiences and opinionsof New Jersey employers in providing health benefits coverage to theiremployees. Among the survey's other findings:

Managed care plans, once the cost-cutting masters of the healthplan universe, were no refuge for inflation-weary employers last year.The average cost of a managed care plan rose 8.9% to $5,563 per employeein 2000, up from an increase of 5.9% in 1999.

The smallest companies, those with 2-19 employees, paid the most forhealthcare coverage. Their average cost of $5,719 per employee in 2000was $600 more (12% higher) than the average cost reported by larger companies. 

The proportion of companies anticipating rising inflation has grownrapidly over the last three years. Forty-four percent of respondents tothe 2000 survey said they expect their cost of providing health benefitsto rise by 10% or more in 2001. This compares with 36% of employers in1999 and 24% in 1998 who anticipated double-digit inflation in the yearahead.

Despite rapidly escalating costs, the proportion of employers offeringhealth benefits to their employees did not decline over the last year,at least not among the universe of employers responding to the NJBIA survey.Ninety-three percent of respondents provided health coverage to full-timeemployees, and 75% to full-time employees and their dependents, a findingessentially unchanged from the previous year's survey. Even among smallcompanies, the rate of coverage was essentially unchanged.
 
A majority of the cost-control actions taken by employers in 2000 involvedasking their employees to pay more through higher premiums, copaymentsand/or deductibles. In fact, 60% of the actions taken by employers involvedthis kind of cost shifting. Only 40% of cost-control actions involved changingplans or joining a managed care network. Not since 1993, the first yearin which this survey was conducted, have employers given more weight tocost shifting than to switching plans as a cost-control strategy. The abilityof New Jersey employers to save money by changing plans is now limitedsince most have already made the move into managed care. 

Back To News Releases
 

Copyright© 2001 NJBIA
All RightsReserved. Reproduction in whole or in part in any medium
withoutexpress written permission is prohibited.