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COOPERS & LYBRAND: CURRENT TREND OF SHIFTING HEALTHCARE COSTS FROM EMPLOYER TO EMPLOYEE WILL CONTINUE TO ACCELERATE

 NEW YORK, May 20 /PRNewswire/ -- Employers will continue to utilize an increasing array of cost shifting approaches for healthcare benefits and related responsibilities to employees, and indicate they will significantly accelerate this process, according to the findings of a newly released study of 541 companies across the nation conducted by Coopers & Lybrand, the international accounting and benefits consulting firm.
 According to the study, "Benefits Policies and Programs," employers have already initiated a variety of cost shifting efforts. These include increasing employees' share of premium costs (53 percent of employers surveyed), increasing deductible features of healthcare plans (37 percent), increasing co-payment features of healthcare plans (29 percent), reducing benefits provided by healthcare plans (18 percent) and increasing employees' share of healthcare insurance premium costs for dependents (14 percent).
 Increase Action Taken Action Planned
 Employees' share of premium costs 52.6 pct 33.1 pct
 Co-payment features of plan(s) 29.3 17.4
 Deductible features of plan(s) 37.4 22.4
 Employees' share of premium costs
 for dependents covered by health
 plans on their respective jobs 13.6 15.3
 Reduce benefits provided by the
 health plan 17.6 10.8
 Encourage greater use of HMOs or PPOs 41.6 34.6
 The study also found that employers are planning to continue this shift. According to the data, 33 percent plan further increases in employees' share of healthcare insurance premium costs, and 22 percent plan increases of deductible features of healthcare insurance coverage. Also 17 percent will increase co-payment features, 15 percent will increase employees' share of premium costs for dependents and 11 percent will reduce benefits provided by the healthcare insurance plan.
 Regarding managed care options, the study found 42 percent of employers have already taken action to encourage greater use of HMOs and PPOs among employees, while 35 percent of employers are planning to do so in the near future.
 "We are witnessing a fundamental shift in the relationship between employers and employees," said Timothy F. Ray, national director of healthcare for Coopers & Lybrand's Human Resource Advisory Group. "Where healthcare benefits were viewed as `fringe' benefits in the past, they are now seen as a principal element of the overall employee compensation program. These benefits are costly to employers and, in the current economic environment, are under intense scrutiny and pressure."
 According to Ray, Clinton's commitment to healthcare reform stems from concerns about:
 -- Lack of access to care for a significant group of people. This circumstance is largely blamed on the lack of financial resources to secure adequate insurance coverage; and,
 -- The costs of employer sponsored healthcare plans and the negative impact of these costs on competitiveness.
 Ray indicates three basic healthcare plans are prevalent today. First is the traditional indemnity plan, with the covered individual choosing the service provided, paying the provider's fee, and obtaining reimbursement up to pre-established maximum levels for various types of claims. Next is the preferred provider organization (PPO), which is a network of providers that have agreed to discount their normal fees for an increase in patient volume. Covered individuals may choose a provider from either within or outside the network, with disincentives for choosing providers outside of the network. The other plan is the health maintenance organization (HMO) in which a broad range of services are provided by a specified group of physicians, clinics, hospitals and other service providers in which participating individuals are limited to those services provided by the HMO.
 The study found that 75 percent of employers provide more than one alternative to the traditional indemnity plan. HMOs are offered by 69 percent of employers; however, only 42 percent indicate they have encouraged greater use of this alternative. Of those companies surveyed, 35 percent expect to encourage greater use of HMOs and PPOs within the next 12 months.
 "With the growth in managed care programs, employees are now finding themselves facing choices about benefit plans that previously were not available to them," observed Ray. "Employers must consider the impact of this change and assure their employees have information needed to make these decisions."
 Also, the study found that despite the trend toward increased cost-sharing by employees, 38 percent of all employers surveyed provide no-cost healthcare coverage to their employees. However, when considering levels of employee contributions to healthcare coverage, healthcare organizations and gas/electric utilities demonstrate much lower than average employee contributions (13 percent of the cost compared to more than 20 percent for other industries).
 According to Janet Fuersich, director of the Human Resource Advisory Group survey unit, "Benefits Policies and Programs" is a survey of 541 companies ranging in size in terms of annual revenues from under $30 million to more than $10 billion. The industry sectors covered by the survey include durable goods manufacturing, non-durable goods manufacturing, banking and financial services, insurance, healthcare, business and personal services, technical services, not-for-profit, retail trade, gas/electric utilities, and other miscellaneous industries.
 Copies of the "Benefits Policies and Programs" survey are available for $495 from Coopers & Lybrand, 1301 Avenue of the Americas, Room 9-56-L, New York, NY 10019-6013; 212-259-2447.
 Coopers & Lybrand is one of the world's leading professional firms, with offices in 101 U.S. cities and member firms in 120 countries worldwide. The Human Resource Advisory Group is ranked among the top ten employee benefits consulting practices in the world, and is the largest such practice to be associated with an international accounting firm.
 -0- 5/20/93
 /CONTACT: Doris Brown of Coopers & Lybrand, 212-536-2013; or David Fridling of Ruder-Finn, 212-593-6321, for Coopers & Lybrand/


CO: Coopers & Lybrand ST: New York IN: HEA INS SU: ECO

GK-ST -- NY067 -- 0844 05/20/93 14:14 EDT
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