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Health costs force no-win situations at work

Health costs force no-win situations at work
Pay more, receive less, employers say
July 18, 2005
BY THERESA AGOVINO
ASSOCIATED PRESS

Employees are facing a double whammy when it comes to health care costs: Many companies are likely to ask workers to pay more for their insurance while rising health care costs means companies may dole out lower raises.

Half of large U.S. companies said increased health care costs have contributed to slower profit growth and as a result more than 75% may ask employees to bear a greater share of the cost, according to a study by PricewaterhouseCoopers to be released today.

Twenty-five percent of the companies said double-digit health care cost increases may force them to lower wage hikes for employees and one in five expects to slow hiring of new permanent workers in the year ahead. Executives at the 150 companies surveyed said per-employee health care costs had risen 12% over the last year and were expecting an 11% increase in the coming year if no changes are made to the plans.

While various indicators may point to improvement in the economy, health care costs are squeezing companies' ability to hire more workers and raise pay, said PricewaterhouseCoopers consultant Barry Barnett. Right now, he said between 12% and 15% of companies' payroll costs stem from health care, up from around 8% five years ago.

For example, in June 146,000 jobs were added to the economy -- less than the 195,000 economists predicted.

Barnett said that while the auto industry has been vocal about health care costs dragging on profits, the problem extends to many sectors with a large unionized work force.


LINK: http://www.freep.com/money/business/healthcost18e_20050718.htm