BusinessWeek: January 18, 1993

Get Four
Free Issues

Subscribe to BW
Customer Service
ONLINE FEATURES Book Reviews BW Video Columnists Interactive Gallery Newsletters Past Covers Philanthropy Podcasts Special Reports BLOGS Auto Beat Bangalore Tigers Blogspotting Brand New Day Byte of the Apple Economics Unbound Eye on Asia Fine On Media Green Biz Hot Property Investing Insights Management IQ NEXT: Innovation NussbaumOnDesign Tech Beat Working Parents TECHNOLOGY J.D. Power Ratings Product Reviews Tech Stats Wildstrom: Tech Maven AUTOS Home Page Auto Reviews Classic Cars Car Care & Safety Hybrids INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads

Economic Trends

WHEN GETTING RID OF HEALTH COVERAGE MAKES ECONOMIC SENSE

At first glance, the development looks ominous: In 1989, when the Bureau of Labor Statistics surveyed large and midsize companies employing 31 million full-time workers, it found that 10% of employees were not covered by employer-provided health insurance. Now, the BLS reports that a similar survey in 1991 showed that 20% were not participating in such plans.

BLS officials note that while there was no change in the overall availability of health insurance between 1989 and 1991, more workers than in the past were required to pay part of the cost for their insurance plans. And average employee premiums for family coverage rose sharply, by 35%. Thus, higher premiums apparently induced many workers to opt out of their health plans.

That doesn't mean that they lack coverage entirely, however. According to benefits consultants, many large employers have been seeking to eliminate "redundant" coverage, where workers are covered both by their own plan and that of their spouse. Because plans differ in details, dual coverage lets many workers minimize out-of-pocket medical expenses. This is expensive for employers and reduces the cost sensitivity that experts claim could moderate soaring health-care spending.

The upshot is that many employers have boosted employee premiums for family coverage, both as a cost-sharing measure and to spur employees to drop redundant insurance. Indeed, consultants Towers Perrin note that some companies have actually begun to pay employees to drop out of their plans if they also have coverage elsewhere. One major corporation, which offered employees cash incentives of up to $1,500 each for such action, says it saved $500,000 a year.

GENE KORETZ
TODAY'S MOST POPULAR STORIES

  1. In-N-Out Burger: Professionalizing Fast Food
  2. The Challenges for McDonald's Top Chef
  3. Banking: Not Everyone Gets a Bonus
  4. Nokia Launches Critical N900 Phone
  5. Booming Gray Market Threatens Cell-Phone Industry

Get Free RSS Feed >>
  MARKET INFO
DJIA 10280.98 +34.01
S&P 500 1098.02 +5.01
Nasdaq 2164.24 +13.16

Portfolio Service Update

Stock Lookup

Enter name or ticker



 




Copyright 1991-2009 by The McGraw-Hill Companies Inc. All rights reserved.
Terms of Use | Privacy Notice