Statement of Philip Kirschner
Executive Vice President
New Jersey Business & Industry Association
2003 Health Benefits Survey
March 31, 2003
Good morning and welcome to our news conference. I am Philip Kirschner, executive vice president of the New Jersey Business & Industry Association.
I will give you a brief overview of the findings of our 2003 Health Benefits Survey. Then Kelly Stewart Maer, our assistant vice president for health affairs, will present the findings in more detail.
As you may be aware, a number of national surveys have reported in recent months that employers' health plan costs last year rose at the fastest pace in well over a decade. Our 2003 survey, New Jersey's most comprehensive annual health benefits survey, finds that New Jersey employers are among the hardest hit in the country.
More than 1,800 employers, most of them small companies with 2-50 employees, participated in our survey in January. They told us that health plan inflation accelerated sharply last year, aggravating an already severe health insurance situation.
Our survey respondents reported paying an average increase of 15% to provide health insurance coverage in 2002. That's the biggest one-year jump in the ten-year history of this survey. It was also six times higher than the general rate of inflation.
If you include the average annual increase of eight and a half percent seen in 2000 and 2001, our survey participants have seen their health plan costs rise by a compound rate of 35% in just three years.
The outlook for 2003 is no better. No immediate relief is in sight. Two-thirds of employers said they expect their health plan costs to rise at a double-digit pace again this year.
Incidentally, our survey findings are consistent with national surveys. Mercer Human Resources Consulting found that employers nationally absorbed a 15 percent increase in health plan costs last year. The Kaiser Family Foundation survey found a 13 percent increase. Comparable increases are anticipated again this year.
Here's an important point. Because New Jersey employers already pay some of the highest health plan costs in the nation, high inflation here has a bigger impact on employers than it does in most other states.
According to the Mercer survey, employers nationally paid an average of $5,646 per covered employee to provide health benefits in 2002. Employers in our survey paid an average of $6,325 per employee for every policy. That's $679 or 12% more than in the rest of the country.
What can be done? Unfortunately, there is no easy solution or magic bullet.However, state and federal lawmakers are not powerless. In the short term, they have not only the ability but also a responsibility NOT TO MAKE THE SITUATION WORSE.
In particular, we are concerned with the passage of new health coverage mandates. Already, such mandates make up to 20% of the cost of health insurance or roughly $1,200 based on our survey, and more mandates are pending.
Let me give you an example of what I'm talking about. Legislation is pending in New Jersey that would mandate unlimited mental health coverage for almost any "behavioral disorder" you can think of, from malingering to sibling relational problems to caffeine addiction.
Essential mental health, such as treatment of depression, is already covered in New Jersey. But the proposed mandate is so expansive and so broad that it would add greatly to the cost of insurance, not only for New Jersey employers, but also for their employees, whose share of overall insurance costs is rising as well.
What is the responsible thing to do? NJBIA supports the creation of a Health Mandates Study Commission, already introduced as legislation, to review the potential impact of all mandates as a group before they are considered by the state Legislature. This will bring the true cost impact of these mandates into focus.
And now, I would like to turn the podium over to Kelly, who will tell you more about the results of our survey.
