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ONE OUT OF THREE SMALL BUSINESSES HIT WITH A 25-PERCENT OR GREATER INCREASE IN THEIR HEALTH-CARE COSTS

 ONE OUT OF THREE SMALL BUSINESSES HIT
 WITH A 25-PERCENT OR GREATER INCREASE IN THEIR HEALTH-CARE COSTS
 DETROIT, Aug. 6 /PRNewswire/ -- The vast majority (83 percent) of the nation's small-business owners who offer health-care benefits to their employees have been hit with cost increases over the past year -- and one-third (33 percent) experienced increases of more than 25 percent.
 Those are the findings of a nationwide Gallup survey of small- to middle-market business owners conducted for Arthur Andersen's Enterprise Group and the National Small Business United (NSBU).
 "Most smaller companies are more labor-intensive than larger companies," said Rick Fumo, managing director of Arthur Andersen's Enterprise Group.
 "Any expenses that relate to employees have a dramatic impact on the bottom line. The fact that health-care costs are so high and are increasing would be a major consideration in whether to add new jobs," said Fumo.
 John Galles, executive vice president of the NSBU, called the increases alarming. "The average per-employee cost of health insurance in 1991 was more than $3,600. When you add a 25-percent increase on top of that, you get costs closer to $4,500 per employee per year. If this situation continues, small-business owners will be forced to increase employee contributions, cut benefits or drop coverage altogether," said Galles.
 Survey results show that 97 percent of companies with 101 to 500 employees offer health-care benefits as do 90 percent of companies with 21 to 100 employees. In contrast, only 47 percent of companies with 21 employees or fewer offer coverage.
 "Companies with fewer than 20 employees find it much more difficult to obtain affordable health care," said Galles. "Businesses this small are forced to undergo individual underwriting."
 This means that if even one employee has a health problem -- such as diabetes or arthritis -- the business is likely to be charged very high premiums, or may even be turned down for coverage.
 Small-business owners, on average, pay 60 percent of their employees' premiums. More specifically, the survey found that of those small businesses that offer health insurance, 50 percent pay more than 75 percent of premiums. Sixteen percent pay half or less and 7 percent of small businesses pay between 51 percent to 75 percent of premiums.
 "We've seen more and more smaller companies being forced to shift costs to employees. Five years ago, it was very common to see small businesses paying 100 percent of health-care costs. That's impossible today," said Fumo.
 Arthur Andersen's Enterprise Group specializes in providing business consulting, audit and tax services to small and middle-market businesses. It is comprised of a distinct group of professionals specially trained and devoted full-time to meeting the needs of the closely held company. The Enterprise Group is part of the Arthur Andersen Worldwide Organization, a leading provider of professional services with more than 80,000 clients served in more than 300 offices in 67 countries.
 National Small Business United is a private, non-profit association representing small-business owners in each of the 50 states. Its total membership surpasses 60,000 from virtually all service and industrial sectors. NSBU takes a bi-partisan approach to working with members of Congress and other elected officials to improve the economic climate for small-business survival and growth.
 -0- 8/6/92
 /NOTE: The following provides information on the survey:
 THE SURVEY
 Findings
 In addition to the findings reported in the news release, other key findings include:
 -- Fastest-growing small businesses
 -- Banking issues facing small business
 -- Investment tax credit restoration
 -- Top challenges for growth/survival
 -- Issues facing family-owned small businesses
 Methodology
 In March 1992, Arthur Andersen's Enterprise Group and National Small Business United (NSBU) contracted with the Gallup Organization, Inc. of Princeton, N.J., to conduct a national research survey of small and middle-market companies.
 A mail survey was used to gather data for this project. Surveys were mailed to a total of 6,000 small businesses. In order to learn more about the different segments within the small-business population, the mailing was divided so that 2,000 surveys were sent to each of the following groups: businesses with one-20 employees, businesses with 21- 100 employees, and businesses with 101-500 employees. Six hundred thirty-four completed and usable surveys were returned to the Gallup Organization by late June 1992.
 To ensure that the results represented a proper distribution by company size, the results were weighted using information from CACI Marketing Systems of Arlington, Va. CACI Marketing Systems uses the Bureau of Economic Analysis and County Business Patterns, cross- referencing the information with Dun's Marketing Services.
 Results Booklet
 Media representatives who would like to order the survey results booklet, "Survey Results of Small and Middle-Market Businesses: Attitudes, Issues, and Outlook," should contact Doug Armstrong at 312-507-2147.
 CONTACT: Mary Guregian Jenkins of Arthur Andersen, 313-596-7875; or Marcia Bradford of NSBU, 202-293-8830/ CO: Arthur Andersen's Enterprise Group; National Small Business United ST: Michigan IN: FIN HEA INS SU: ECO


JG -- DE003 -- 7427 08/06/92 08:56 EDT
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Date:Aug 6, 1992
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