Open up and say ouch! (Health Insurance).

• Author: Ascierto, Jerry

Like most small CPA firms, Rowbotham and Co. isn't holding its breath for health insurance rates to drop. While making a conscious effort to offer a good, low-cost health plan, the San Francisco-based firm doesn't know how much longer it can hold off the rising insurance rates.

"If rates continue to increase, we probably will have to start looking at passing on costs to the employee," says Eileen Thomas, Rowbotham's director of administration. "Just as the insurance companies are looking to pass more costs back to us."

Thomas' lament is a common one. With the cost of health insurance spiraling, many employers are wondering which is worse: the cost of insurance or the ailments themselves.

Double-digit rate increases, a trend that has worsened in the last several years, could render health benefits prohibitively costly going forward.

As a result, many businesses are exploring ways to offset the cost--even if it means passing those costs onto their employees.

MORE COST SHARING

According to a recent survey of 434 employers by Watson Wyatt Worldwide and the Washington Business Group on Health, a whopping 83 percent indicate they would increase employee premium contributions, with an additional 80 percent planning to increase employee co-pays.

"Business just can't continue to absorb the health care cost increases," says Dave Romans, a senior consultant with Washington, D.C.-based Watson Wyatt. "How many businesses can you point to where sales are increasing 20 percent or profitability is increasing 20 percent a year? We definitely see more cost sharing being passed on to employees in the future."

A mountain of evidence backs up this trend.

A survey by the Henry J. Kaiser Foundation and the Health Research and Educational Trust found that workers paid 27 percent more for health care in 2002 than they did in 2001. And in a survey of 600 large and small businesses, the Robert Wood Foundation found that 92 percent are likely to increase the amount their employees pay for health insurance.

But there's one type of business that's having a particularly hard

time.

"The small employer market has obviously been hit the hardest with these cost increases," says Romans.

Mercer Human Resource Consulting recently found that premiums for companies of 500 employees or less are expected to outpace those of larger companies this year.

But for companies with 50 or less employees, the challenge becomes even greater.

"I don't know anyone that sees any mitigation of...