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The newspaper of The Johns Hopkins University October 11, 2004 | Vol. 34 No. 7
Health Benefits Costs Impose 'Silent Tax', Hammer U.S. Charities

U.S. nonprofit organizations are being especially hard-hit by the escalating costs of health benefits, according to a new report issued by the Johns Hopkins Center for Civil Society Studies as part of its Nonprofit Listening Post Project.

Looking at a nationwide sample of more than 250 nonprofit agencies that serve children, the elderly, community development and the arts, the Johns Hopkins survey documents for the first time the impact of exploding health benefits costs on U.S. charitable organizations.

The survey found that nearly two-thirds (63 percent) of sampled organizations reported health benefit cost increases of 11 percent or more over the past year, well above the increases recently reported for all firms.

These increases affected virtually all types of charities.

Determined to avoid negative impacts on those they serve and unable to raise additional funds, nonprofits found it necessary to shift more costs onto their employees, who already make less than private sector workers. Altogether, more than 60 percent of the organizations reported increasing their employees' share of health costs. Still others eliminated raises or reduced other employee benefits in response to rising health benefits costs.

Escalating health benefit costs are particularly damaging to nonprofit organizations because health benefits are among the most important attractions of nonprofit employment. A striking 93 percent of Listening Post organizations reported providing health insurance coverage for their employees, well above the average for all firms.

"The extraordinary growth of health benefits costs revealed by this survey has imposed a silent tax on America's charities and the dedicated people who work for them," said Lester M. Salamon, who directs the Listening Post Project and the Johns Hopkins Center for Civil Society Studies.

Peter Goldberg, chair of the Listening Post Project Advisory Committee and president/CEO of the Alliance for Children and Families, a national association of children and family agencies, said, "Shifting more health care costs to nonprofit employees may be the path of least resistance, but it may also be the path to oblivion for our organizations, which depend on the dedication of our employees to meet the health and welfare needs of our often-disadvantaged populations."

If health insurance costs continue to escalate, as now seems likely, nonprofit executives say they expect even more severe impacts on their employees, their operations and ultimately those they serve.

"Health care affordability is a looming crisis in the theater field," said Ben Cameron, executive director of the Theatre Communications Group in New York City, one of the partner organizations in the Listening Post Project.

Audrey Alvarado, executive director of the National Council of Nonprofit Associations, another Listening Post Project partner organization, said, "While much has been written about the impact of rising health benefit costs on small businesses, the fact is that the impact has been even greater on nonprofit organizations, and this has a serious ripple effect on the quality of community life."

Larry Minnix, president of the American Association of Homes and Services for the Aging, also a Listening Post Project partner organization, said, "Recent proposals to fix the health insurance crisis by offering tax breaks to small businesses provide no relief to nonprofit organizations. We need to be more inventive if we want to fashion policy approaches that can effectively shield nonprofit organizations and those they serve from the crippling effects of continued health insurance cost increases."

For a copy of the Listening Post Project Health Benefits Report, or further information on the Listening Post Project, contact the Center for Civil Society Studies at the Institute for Policy Studies, or 410-516-4363.


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