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Employers shift more health costs to employees.

Employers are continuing to shift much of the burden of rising healthcare costs to employees and retirees, accordingly to a study prepared by the Employee Benefit Research Institute.

In 1980, 97% of full-time employees in medium-sized and large companies received health insurance coverage as a benefit. Those covered declined to 92% by 1988.

Group health plan designs changed considerably in the past decade. In 1980, 60% of all health plans included first-dollar coverage for basic medical services and a major medical plan to cover expenses beyond the basic plan, usually at a rate of 80% after a deductible.

By 1989, 68% of all plans were comprehensive plans subject to deductibles, coinsurance and benefit limitations for virtually all covered services. These plans increase out-of-pocket costs for the participant, thereby reducing the demand for healthcare services and keeping costs under control.

As basic coverage becomes more expensive, alternative delivery services are taking an increasing share of the healthcare market. Health maintenance organization participants rose from 2% in 1980 to 19% in 1988. Preferred provider organizations first became an option in 1986 but were used by 7% of participants in 1988.
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Publication:Journal of Accountancy
Date:Jul 1, 1990
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