MANAGED CARE: EASED COSTS FOR SMALL FIRMS IN 1995

      By moving toward less costly managed care plans, companies
 with fewer than 1,000 employees saw their average health benefit
 costs increase by 1.6% per employee, or $3,476, from 1994 to 1995,
 according to a new Johnson & Higgins Inc. analysis.  Richard
 Elliott, author of the study, said that small employers are being
 "aggressively" pursued by HMOs and PPOs, allowing them to "shop
 around for cheaper plans and even negotiate favorable rates with
 existing insurers."  According to the WALL STREET JOURNAL, the
 study found that the average HMO cost for small employers dropped
 11.4% last year, from $3,326 to $2,947 per employee.  
      THE WOOING WORKED:  The number of small employers offering
 HMOs to their employees rose six percent from 1994 to 1995, while
 the number of small businesses offering indemnity plans dropped
 eight percent.  The study also found that employees are "growing
 increasingly comfortable with managed care."  Although 30% of
 small companies in California, Washington and Oregon offered
 traditional indemnity plans to their employees, only six percent
 of those workers were enrolled in such plans.  Nationwide, the
 survey found that one-third of employees at small firms were
 enrolled in indemnity plans.  Noting the trend toward managed
 care, Elliot said, "Most people in our business suspect that in
 the next couple of years, indemnity plans will be rare."
      GEOGRAPHICALLY SPEAKING:  West Coast employers were more
 likely to offer managed care plans to their employees, with 69%
 offering such plans.  In New England and the mid-Atlantic region,
 60% of employers continued to offer indemnity plans to their
 workers.  But Elliot predicted that small employers on the East
 Coast "will follow their West Coast cousins" by offering more
 managed care options.  "Funneling more bodies into managed care
 has proven to be a tool for controlling costs," he said (Mehta,
 7/10).