Paying More For Health Care

With Christmas around the corner, they are as busy as elves at the Collin Street Bakery, but at this company, which has been spreading sweet Christmas cheer for 104 years, one ingredient is souring the season for these elves: Next year's health care costs are expected to soar.

"It'll certainly affect our business. From a cost standpoint it's obviously inflationary, but even more so I think it will affect our business in terms of what it may do to our personnel," said Bob McNutt, president, Collin Street Bakery.

As CBS News Correspondent Jeffrey Kofman reports, recent national surveys show that Collin Street is not alone. Starting in 2001, most companies' health plan costs are likely to go up an average 11 percent.

Some could go up as much as 20 percent, according to William M. Mercer of Hewitt Associates.

Some business owners will shoulder that increase themselves — an average $485 per worker, but many will ask employees to pay a share — at least a quarter, or about $122 more a year out of pocket.

Some could have to pay much more.

Some experts worry that an increase in health care costs could force many workers to drop their coverage.

"Many workers are saying no thank you, not because they don't realize the importance (of health care), but because they might have to shoulder $200 (more) a month," said Jack Meyer, a health policy analyst.

At Collin Street, workers will pay about 10 percent more next year, with the company picking up the remaining 90 percent. For now, management plans to continue paying most of the premiums, but two months from now the policy comes up for renewal.

"It is not our intention to change the 90/10 balance, but if we continue to see increases like this it is certainly an option we'll leave on the table," McNutt said.

Even during the record-breaking economy of the '90s, Americans without insurance numbered about 43 million. With signs that the economy is beginning to slow down, and health care costs continuing to rise, look for that number to go up.

©2000, CBS Worldwide Inc., All Rights Reserved