Garden State Workplace Health Coverage Declining

April 7, 2005 ( - The number of New Jersey employers offering health coverage to full timers dropped last year for the first time in more than a decade.

A news release from the New Jersey Business and Industry Association (NJBIA) said its 2004 survey found that 90% of respondents said they had such coverage – down from 94% in 2003. The drop was most pronounced among small firms (fewer than 20 workers) where 87% provided employee health coverage, down sharply from 92% in 2003.

“Years of relentless price increases have pushed the price of health insurance beyond the reach of many small companies,” NJBIA President Philip Kirschner said in a statement. “Now they are dropping coverage because they can’t afford it. This is an alarming trend.”

According to the survey, the average price of employee health coverage climbed by 11% in 2004 to a record $7,307 per worker – the third consecutive year of double-digit cost hikes. That amount is equal to 16% of reported average wages, according to the survey. In 1998, the cost of health coverage represented 11% of reported average wages. Survey participants said they expect their employee health benefits costs to rise by 12 % in 2005.

Expense-saving moves by employers included:

  • shopping for new plans or carriers
  • offering less comprehensive coverage
  • requiring employees to share the cost
  • in the case of larger companies, negotiating better deals.

Of the survey participants who reported taking cost control actions, 73% required employees to pay a greater share of the costs through higher deductibles or copayments or by paying a larger share of the premium. The survey also found that most health plans now include annual deductibles of $500 or higher.

The poll showed that the smallest companies not only paid the highest costs in 2004, but also suffered the highest cost increases and reported the biggest decline in coverage. The percentage of small companies providing coverage for full-time employees and their dependents fell to 61% in 2004 from 67% the year before, the lowest level since 1995.

In the New Jersey market, 33% of the plans in use in 2004 were preferred provider organizations, 30% were point-of-service plans, and 29% were health maintenance organizations, according to the survey. HMOs were the lowest-cost plans, at an average cost of $6,525 per employee. Costs at POS plans were $7,317 per worker; for PPOs, the cost was $7,782 per worker on average.

Results of the survey, which was conducted in January, are based on responses from 1,563 companies representing every industry in all 21 New Jersey counties. Small companies employing between two and 50 people accounted for 86% of the respondents.

Results of the survey can be found at .