Healthcare; Study: smaller firms trimming benefits.

• Author: Marshall, Jeffrey
• Position: BusinessBriefs

The nation's small and mid-sized employers cut benefits in their health plans in 2003, holding the cost increase to 9.8 percent among employers with fewer than 2,000 workers. According to a survey report released this summer by Marsh Inc., the total cost of health benefits (medical, dental and any other health plans offered) averaged $6,130 per employee in 2003.

The smallest employers generally are keeping costs down by discouraging coverage of dependents and imposing high deductibles. Among employers with fewer than 50 employees, cost averaged just $5,795 per employee. But mid-sized employers (1,000-1,999 employees) experienced an average cost of $6,472--more than all larger employers ($6,324). Marsh's Mid-sized Employer Health Plans 2003 survey was based on responses from 1,904 employers with 10-1,999 employees.

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"The dilemma for mid-sized employers is that they must compete with the largest employers for labor, and thus must offer a comparable benefit package. Yet they often do not have the purchasing power of large employers, nor do they benefit from the same economies of scale," said Michael Turpin, a managing director of Marsh and head of the firm's benefits operations.

According to the report, employers with 10-49 employees required employees to pay, on average, 64 percent of the PPO [preferred provider organization] premium for family coverage. Just 44 percent of their employees elected family coverage. Employers with 1,000-1,999 employees required a family contribution of just 30 percent, and...