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March 5, 2003

BUSINESSES FORESEE ANOTHER DOUBLE-DIGIT HIKE IN HEALTH BENEFIT COSTS, CBIA SURVEY SAYS

HARTFORD, Conn. - Connecticut businesses are bracing themselves for another round of double-digit increases in health benefit costs, according to a new Connecticut Business & Industry Association survey.

Companies responding to the survey, conducted once every two years by CBIA, reported their health benefit costs went up by an average of about 10 percent in 2000 and about 15 percent in 2002, and they are expecting double-digit increases again this year.

"Employers who want to hire and retain the best people try to make their benefits packages as attractive as possible. But with benefit-costs escalating, employers are struggling just to continue health benefits for their employees," said Janet C. Spegele, vice president and general counsel, CBIA.

In an attempt to contain these spiraling costs, employers say they have taken a number of steps:

  • Almost 40 percent said they increased employee contributions to premiums.

  • Twenty-eight percent increased deductibles.

  • Twenty-six percent increased employee co-insurance percentage.

  • Twenty-five percent increased employee co-pays for prescription drugs.

These costs are also affecting retirees, according to the CBIA survey. In 1998, 25 percent of companies responding said they offered benefits to retirees, but that number fell to 22 percent in 2000 and 17 percent in 2002. And of those offering benefits, just 11 percent offered group health insurance in 2002, compared to 50 percent in 1998.

"This is consistent with a national study conducted by Watson Wyatt, which concluded that 20 percent of large companies have discontinued health coverage for new employees and 17 percent will require new hires to pay the full premium for coverage when they qualify for retirement," said Phillip E. Montgomery, director of compensation services, CBIA.

CBIA's 2002-2004 Benefits Report summarizes information submitted by 364 CBIA-member companies with an average of 121 employees. The report contains information on health cost containment, holidays, vacations, group insurance, short-term disability insurance, long-term disability insurance and pension and retirement plan policies. Results are broken down for manufacturing and non-manufacturing sectors.

Copies of the full report are available by calling CBIA at (860) 244-1900.

CBIA is the state's largest business organization, with 10,000 member companies.

Media wishing to attend the event should contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com.

350 Church Street · Hartford, CT 06103-1126 ·
Phone: (860) 244-1900 · Fax: (860) 278-8562

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