Survey Reveals Hidden Dimension of Health Care Crisis
Escalating Health Care Costs Have Become Top Concern for Many Nonprofits
Much of the attention in the current health care debate has focused on the impact of escalating health care costs on small businesses and the uninsured. But new data generated by the Johns Hopkins Nonprofit Listening Post Project reveal that health care costs are also producing a hidden crisis for America's nonprofit organizations and the more than 13 million workers they employ.
“This latest national research reinforces our recent special report, ‘A Respectful Warning Call to Our Partners in Government: The Economic Crisis Is Unraveling the Social Safety Net Faster Than Most Realize,’ which documents that more nonprofits are being forced to cut back the services they provide because of declining revenues and escalating operating costs – especially rising insurance costs,” said Tim Delaney, President & CEO of the National Council of Nonprofits.
Virtually all (98 percent) of the responding nonprofits offering health benefits indicated they are concerned about their organization's health care costs, and 59 percent ranked health care costs as one of their organization's top challenges. The impact is already being felt in organizational decisions to stop offering, or reduce coverage of, health benefits, in higher employee co-pays and shares of insurance costs, and in pressures to hold down wages, shift to part-time employees, and even reduce mission-critical services.
The nonprofit workforce is the fourth largest of any U.S. industry. With generally lower pay scales, the nonprofit stake in health benefit costs is unusually high since nonprofit employers have historically relied on decent benefits to attract and retain quality staff. But with steadily increasing health benefit costs, that is no longer possible for large numbers of nonprofits, according to the national survey conducted by Johns Hopkins researchers in July 2009.
"The evidence is now in," noted Lester Salamon, report author and director of the Johns Hopkins Center for Civil Society Studies. "Escalating health insurance costs are taking a dramatic toll on our nation's nonprofits and the devoted employees who work for them."
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Smaller nonprofit employers cannot afford the increasing costs of health insurance: while virtually all (99 percent) of the large nonprofits responding reported offering health benefits to employees less than half (46 percent) of the smallest organizations did, and cost was a major factor.
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Nearly three out of every four nonprofits offering health benefits reported that their organization's total direct health insurance costs increased during the past year, and for over a third of the respondents the increase was over 10 percent—well above the national average of 5 percent per year.
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These recent increases come on top of increases in previous years: based on an earlier Listening Post survey of a comparable set of organizations, average health benefit costs for these organizations grew by nearly 40 percent between 2004 and 2009. In the process, health benefits as a share of total employee compensation grew by over 12 percent, suggesting that health benefit costs are squeezing out pay increases and other aspects of employee compensation.
The 412 nonprofit organizations responding to the July 2009 Johns Hopkins Listening Post Project survey included children and family service agencies, elderly housing and service organizations, community and economic development organizations, museums, theaters, and orchestras.
The Listening Post Project report "Health Care and Nonprofits: The Hidden Dimension of America's Health Care Crisis," is available online at http://ccss.jhu.edu/pdfs/LP_Communiques/LP_communique_15healthbenefits.pdf.
The special report of the National Council of Nonprofits, “A Respectful ‘A Respectful Warning Call to Our Partners in Government: The Economic Crisis Is Unraveling the Social Safety Net Faster Than Most Realize,” is available online at http://www.councilofnonprofits.org/files/Special%20Report%208%20-%20A-Respectful-Warning-Call-to-Our-Partners-in-Government-The-Economic-Crisis-Is-Unraveling-the-Social-Safety-Net-Faster-Than-Most-Realize.pdf.