Insurance Costs and Commitments

Chart representing medical insurance costs the possible future of medical benefits.

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Although medical-insurance costs add up to a hefty percentage of payroll costs, a recent survey of 1,825 growing companies, conducted by the accounting firm Crant Thornton, found that most intend to continue providing at least a basic level of coverage for their employees. That's impressive, given that surveyed companies reported average rate hikes of 18.3% last year alone. But it also reflects small businesses' realistic recognition that they need health insurance and other employee benefits to compete with large corporations for the best-qualified workers.

What percentage of total payroll costs does your company spend on medical insurance?
Less than 5% 16%

5% - 6% 12

6% - 7% 9

7% - 8% 12

8% - 9% 10

9% - 10% 9

10% or more 22

Don't know 10

If costs continue to rise, how likely would you be to drop medical-insurance benefits in the next two years?
Not very likely 88%

Somewhat likely 4

Very likely 2

Don't know 6

Source: Grant Thornton, "Managing Health Care Costs in the 1990s," Chicago 1991.

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