Health Insurance:

Cost Increases Lead to Coverage Limitations and Cost Shifting

HRD-90-68: Published: May 22, 1990. Publicly Released: May 22, 1990.

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Pursuant to a congressional request, GAO examined the potential effects of private employers' attempts to control employee health care plan costs.

GAO found that: (1) private employers' health care spending almost doubled between 1980 and 1987; (2) although medium- and large-sized firms generally continued to offer health benefits to permanent full-time employees, such firms were reassessing the extent of coverage and provision of services; (3) private employers' attempts to control costs included reducing dependent and retiree coverage, hiring contingent workers who were not offered coverage, increasing employee contributions for costs, self-insuring, and controlling or coordinating employee use of health care services; (4) federal legislation exempted self-insured large businesses from state government mandatory coverage requirements; (5) less than half of companies with 10 or fewer employees offered health insurance coverage; and (6) medical underwriting was common among the small firms that did offer coverage.

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