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Health Insurance Premiums Higher in Smaller Firms

Employees at small firms pay 18 percent more than those at larger companies

WEDNESDAY, May 10 (HealthDay News) -- Health care premiums for employees in firms with one to nine workers are on average 18 percent higher than those paid by employees in companies with 1,000 or more staff, after adjusting for the quality of the benefits, according to a study published in the May/June issue of Health Affairs.

Jon Gabel of the Center for Studying Health System Change in Washington, D.C., and colleagues examined 2002 national and state figures for the actuarial value of U.S. employer-based plans and premiums.

One of the key determinants of the actuarial value and adjusted cost of the health care plans was the type of plan used. The adjusted premiums are 25 percent and 18 percent higher for indemnity plans and preferred provider organization plans, respectively, compared with HMOs. Contributing factors include higher administrative costs from marketing and medical underwriting and costs from greater risks.

The report also compared value for money on a state-by-state basis, and found that states with large urban populations such as California and Massachusetts offer the best value for money, while employees in rural states such as Maine, West Virginia and Wyoming get the least value for money.

"The value of an insurance plan and the financial protection it provides are crucial for state and federal policymakers to consider when designing health care coverage strategies," according to a prepared statement from Karen Davis, president of the Commonwealth Fund, which supported the study.

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