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.