Companies Likely To Shift More Health Care Costs to Employees

More than three-fourths of large U.S. companies next year likely will require employees to pay more for health insurance and about one-fourth likely will reduce wage increases for employees because of increased health care costs, according to a survey released on Monday by PricewaterhouseCoopers, the AP/Detroit Free Press reports. According to the survey, which involved 150 companies, 70% of respondents said that increased health insurance deductibles for employees would reduce their discretionary health care expenditures, although 60% said that the practice would prompt employees to avoid necessary care.

More than 80% of respondents cited financial incentives for employees to adopt healthier lifestyles as the most effective proposal to reduce health care costs, but only 48% said that employees with unhealthy habits such as smoking should have to pay more for health insurance, the survey found. In addition, the survey found that about one-fourth of respondents attributed reductions in profit growth to increased health care costs and that about 20% likely will hire fewer new permanent employees next year. According to survey respondents, per-employee health care costs increased by 12% this year and likely will rise by 11% next year without reforms.

PWC consultant Barry Barnett said health care currently accounts for between 12% and 15% of payroll costs for large companies, compared with about 8% in 2000. "Health care costs are the reason job growth isn't where the Bush administration would like it to be," Barnett said (Agovino, AP/Detroit Free Press, 7/18).