Employers Cut Back on Healthcare Contributions

May 8, 2001 (PLANSPONSOR.com) - The number of large US employers that are trimming their contributions to their employee healthcare premiums is increasing, a survey recently found.

The survey of corporate healthcare purchasing practices, comprising input from 408 Fortune 500 companies ranging in size from 4,458 employees to 204,250 employees, was undertaken by the publication Health Affairs.

Results of the survey show that since 1994:

  • the number of companies that pay 100% of their employee premiums has fallen by half, and
  • the number of companies that pay more than 90% of their employee premiums has dropped by 13%.

The lion’s share of the cuts were made in response to premium increases, however the drop also points to growing discontent with the managed care model and its ability to contain costs.

This is leading employers to consider abandoning the existing system in favor of a defined contribution approach, which would mean that companies would pay a fixed amount.

A number of those surveyed noted that quality is also becoming a growing concern and, in efforts to address this, an increasing number of companies are developing systems to assist administrators of the health plans to provide the correct services.