Health costs decrease for small, midsized employers

The per-employee health benefit costs decreased for small and midsized employers in 1996, but the cost may be on the rise again.

The encouraging figures come from a survey of 1,751 companies selected at random by J&H Marsh & McLennan, a benefits consulting firm in New York City. The average health benefit cost-per-employee fell 1.6% from $3,476 in 1995 to $3,421 in 1996, according to the survey results. The cost of providing health benefits to employees differed substantially from one region to another, with employers in New England paying an average of $4,063, the highest, and employers in the South Central states paying an average of $3,055, the lowest.

The drop in employee benefit costs was the first ever in the 11-year history of the survey. In other results, the survey shows that the average cost of health maintenance organization care dropped 4.3% from 1995 to 1996 and employees with traditional indemnity plans are paying more for their health insurance. On average, their monthly health insurance payments rose from $61 in 1995 to $71 in 1996.

The employers surveyed say the drop in health benefit costs probably will not be repeated in 1997. A big increase in managed care enrollment in 1996 seems to have given employers a one-time reduction in costs by moving employees out of expensive indemnity plans, the authors of the study explain. But most of the employers in the survey predict that they will see an increase in health benefit costs of about 8% in 1997.