Study: Cost of health benefits jeopardizing nonprofits' viability

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Escalating health costs are creating a crisis for nonprofit nursing homes and others in the nonprofit sector, according to a report in the Nov. 10 issue of the Journal of the American Medical Association.

Although for-profit businesses are greatly impacted by rising health costs, it is the nonprofits that have been especially hard hit. The Center for Civil Society Studies at the Johns Hopkins Institute for Policy Studies surveyed more than 250 nonprofit organizations that serve the elderly, children, community and economic development organizations and the arts to reach its findings. The American Association of Homes and Services for the Aging (AAHSA) was one of the seven partner organizations that cooperated for this survey.

"The Health Benefits Squeeze: Implications for Nonprofit Organizations and Those They Serve," found that 63% or responding organizations reported health cost increases of 11% or more over the past year, well above the increases reported for all businesses. Also,  63% reported that they have shifted a larger share of healthcare expenses to their employees, many of whom are already not paid as well as their counterparts working at for-profits.

To compensate for the overall lower pay scale in the nonprofit organizations, 93% of the survey participants reported that they provide health insurance coverage for their employees, a significantly higher percentage than similarly sized for-profits.

Other findings: 63% of all organizations have increased healthcare costs to their employees; 33% have reduced or eliminated raises, bonuses or non-health benefits; 33% have reported cutting services or raising fees; 32% have reduced hiring or shifted to part-time or contract workers; and 31% of all organizations reported cutting employee health benefits.