Survey Finds Health Care Cost Concerns Still Problematic

April 6, 2006 ( - US business owners are adapting to higher energy prices and interest rates, but rising health care costs are dampening their plans to hire new employees and give pay raises during the next six months.

A news release about the biannual PNC Economic Outlook survey said that of those who offer health insurance, nearly six out of 10 said they are likely to reduce their employees’ coverage in the future. The survey of US small- and mid-sized business owners and senior decisionmakers also found that health care reform is the prime issue they would most like to see addressed in the 2006 mid-term elections, followed closely by the nation’s reliance on foreign energy sources and tax reform.

“The results show a stable outlook among business owners for their own sales and profits during the next six months, which suggests they are adapting to higher energy prices and interest rates,” said Stuart Hoffman, PNC chief economist, in the news release. “Many, however, are taking aggressive steps to counter continued increases in costs for employees’ health care coverage, which could mean reductions in benefits for some employees.”

The PNC poll found that 66% stated that rising health care costs are having a moderate to significant “adverse impact” on salary increases and 59% said the same about the hiring of full-time employees. By contrast, 34% said these costs would have little to no adverse impact on raises and 41% said the same about hiring. At the same time, 57% of those offering medical coverage said they are likely to reduce benefits of their employees in the future.

In terms of hiring plans, 32% said they expected increases (up 3% from last fall) and 5% expect decreases (down 1%), while 63% expect no change (down 2%).

The survey was conducted in January and February by Harris Interactive with responses from 1,041 business owners and senior decisionmakers.

Additional material about the survey is here .