HUMAN RESOURCES

Employee Health Costs Rising

Smaller employers continue to offer benefits despite a 30 percent hike in insurance prices, a study shows.
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Despite rising health insurance costs in recent years, most small businesses continue to offer the same level of employee benefits, a new study shows.

Between 2000 and 2005, employee insurance costs rose by 30 percent for businesses with fewer than 25 employees, according to a joint report by the Kauffman Foundation, a Kansas City, Mo.-based entrepreneurship advocacy group, and the RAND Corporation, a Santa Monica-Calif.-based research group. Because businesses of this size tend to require participation in insurance plans, they were most affected by higher insurance prices, researchers said.

Yet, over the same five-year period, the number of small businesses offering benefits remained steady, dropping by less than 1.5 percent, the study found.

"Perhaps these small businesses -- and ultimately, their employees -- were willing to accept the burden of rising health insurance costs, even if it meant giving up wage increases," Christine Eibner, an associate economist at RAND, said in a statement. "What we don't know is whether small companies and their employees will continue to make this tradeoff," she added.

The study, which was based on a survey of more than 2,500 businesses nationwide, also found that smaller businesses were slightly less likely to offer dental or drug coverage than larger firms, and often had higher deductibles.

Last updated: Apr 7, 2008




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