Health Costs and Employer Participation Going in Opposite Directions: GAO

While the percentage of employers offering health benefit has fallen over the past five years, employers, individuals and government must share responsibility for providing heath and retirement benefits while allowing companies to remain competitive in the global marketplace, according to a study from the Government Accountability Office. In the report, the GAO examined the practices that employers are using to control the costs of benefits including * the current and emerging practices employers are using to control the costs of health care benefits; * The current and emerging practices employers are using to control the costs of retirement benefits and; * Employers' workforce restructuring changes. According to the auditor general, the share of employers offering health benefits dipped due in part to an 8 percent plunge in the small business sector offering benefits. Meanwhile, despite active participation in define- benefit plans falling from 29 million in 1985 to 21 million in 2003 as employers terminated existing plans or froze benefits for active employees, active participation in defined-contribution plans rose from 33 million in 1985 to 52 million in 2003, as employers increased their offerings of these plans. The GAO said that like health and benefits coverage for active workers, an increasing share of retiree health benefits costs is being shifted to retirees, and many employers have terminated benefits for future retirees. The study pointed out that the challenges workers face in assuming greater cost, risk, and control of their health and retirement benefits make it more difficult for low-wage earners to afford health care coverage and save for retirement -- trends the investigative arm of Congress said would continue.