Informal poll shows differences in employer spending on employee benefits

Business & Health, Sept, 1993 by Carolyn Cozine

A wide variation exists in the percentage of payroll that employers contribute to the cost of health benefits for their workers, according to an informal telephone poll of 45 employers conducted by Business & Health. B & H conducted the poll in July to gauge the impact of the payroll tax to pay for health care.

Clinton is believed to be considering adopting a hybrid version of a payroll tax under which employers would pay a portion of the premium for a health plan for employees and their dependents. To ensure that premiums do not adversely affect small businesses, the administration may also propose that each employer's share of the prmium not exceed a certain percentage of payroll, according to White House observers.

As recently considered by the Clinton administration, a payroll tax in its purest form would require that employers pay a tax (in lieu of health benefits) and enroll their workers in health alliances, also known as health insurance purchasing cooperatives. Companies paying much more of employee health care than a tax of somewhere between 7% and 12% of payroll might favor the tax. Of the 45 employers polled, 13 provided details of their current spending levels.

Employers who responded are contributing between 4.7 % and 20% of payroll toward the cost of employee health benefits. At the top end of the scale are automobile, truck, and aircraft engine manufacturers, such as General Motors, which contributes 20% of payroll toward the cost of benefits. Boeing Co., an aircraft engine manufacturer in Seattle, contributes 14%.

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At the bottom of the scale are small emplloyers, such as Prospect Associates, a health care consultancy in Rockville, Md., which spends 5% of payroll for its 130 workers; Plants by Grant, a corporate interior plant design company in Raleigh, N.C., (5% of payroll for 52 employees); amd Burge Building Co. Inc, a building remodeling company in Lorian, Ohio (7.5% for 20 workers).