Some businesses dropping health plans

BY BETH FITZGERALD

Star-Ledger Staff



New Jersey employers paid a record $7,307 per worker for health- care coverage on average last year, the third year of double-digit increases, according to a survey.



The increase took an ominous toll: Some employers ceased providing coverage altogether, the first sign of retreat since the New Jersey Business & Industry Association first polled its members a dozen years ago about health-care spending.



The survey of 1,563 NJBIA members found 90 percent offering coverage, compared with 94 percent in 2003. The coverage erosion was steepest among small businesses: Of employers with two to 19 workers, 87 percent said they provided coverage last year, down from 92 percent. And the percentage of small companies offering coverage to the dependents of their employees fell to 61 percent, from 67 percent.



NJBIA President Philip Kirschner said the $7,307 average represented the share of the cost borne by employers; in some cases, workers contribute up to $2,100 a year toward coverage.



The 2004 figure was an 11 percent increase from 2003. The average had risen 15 percent from 2001 to 2002, and 13 percent from 2002 to 2003.



"The cost of a health-care policy is approaching $10,000 a year," Kirschner said. "Small employers have done all they can to avoid dropping coverage, because it's hard to attract good employees if you don't offer it. Employers are telling me that one of the reasons they are hesitant to hire more people is the uncontrollable cost of health insurance."



NJBIA Vice President Christine Stearns said the group is lobbying Trenton for regulatory changes to slow the growth in health coverage costs. One bill would encourage the adoption of federal Health Savings Accounts, which feature a high-deductible health policy. Another would provide more flexibility in the type of policies available to small employers, a market regulated by the state.



The measures are not expected to bring costs down, however.



"The cost has increased at an annual rate of 13 percent for the past four years, and employers are struggling to offer coverage," Stearns said.



Joel Cantor, director of the Center for State Health Policy at Rutgers University, said the cost of coverage is driven by the rising cost of health care.



"Medical technology marches on and so do health-care costs: People demand the best in technology and the industry responds and that adds costs, and I don't see that changing in the near term."



John Holub, state director of the National Federation of Independent Business, said the group estimates 63 percent of the 27 million employed Americans who don't have health insurance either work for a small business or are self-employed. The NFIB has been lobbying Congress for several years to allow small businesses to join forces across state lines to form health plans that can bargain for lower rates; such bills have passed the House but not the Senate.