According to a recent report released by the Department of Labor's Bureau of Labor Statistics, between 1996 and 2005 health insurance costs incurred by employers relative to total payroll increased 34 percent. The report, "Employers' Health Insurance Cost Burden, 1996-2005," conducted by economists at the RAND Corp, concluded that in 2005, health insurance accounted for more than 10 percent of total payroll costs.

The data suggests that the richness of a benefit package has changed to a less generous package with greater co-pays to deal with skyrocketing costs, however the authors were cautious in their evaluation of the data, citing that it could be due to changing characteristics in employers, rising costs, or changes in the health care delivery systems. Despite employee contributions rising, employers did not require workers to pay an increasing share of the total premium.

As expected, small-business owners had the highest growth in health care costs relative to payroll between 1996 and 2005. Businesses with one to 25 employees experienced a 35.4% increase in their health insurance cost to payroll ratios, the highest of any employer group.

The share of businesses in 2005 whose health insurance costs exceeded 10 percent of payroll was 47 percent, up 77 percent from 1996 when only 27 percent of businesses reported costs greater than 10 percent of payroll. Additionally, the number of businesses with health insurance costs exceeding 15 percent of payroll doubled from nine percent to 21 percent.

The report concluded that of the many solutions proposed, an employer mandate would impose substantial new costs on businesses that do not currently offer health insurance. They went on to say that any viable employer mandate would require substantial subsidies to ensure that all firms could afford to offer coverage, and to protect against wage inequality.

To view the full report, please click here.