At Ken Gough's custom machinery business in Johnson City, Tenn., health-care premiums for 37 employees and their family members are going up by 27 percent next year. At DaimlerChrysler AG, the giant automaker, the cost of health benefits for 409,000 employees, retirees and dependents in the United States is expected to increase on average by only one-third as much--about 9 percent.

DaimlerChrysler and Gough's family business, Accurate Machine Products Corp., illustrate a stark disparity in American health care: Costs are rising much faster for employees of small businesses than for those of big businesses.

The pattern is highlighted in survey data provided yesterday by William M. Mercer Inc., an employee benefits consultant.

While health-care costs increased an average of 8.8 percent per employee this year at companies with 20,000 or more workers, the increase at businesses with only 10 to 49 employees was 13.8 percent, Mercer found.

Many small businesses "are truly beginning to despair how they're going to be able to continue to provide health insurance to their employees," Gough said.

Health-care costs are going up for businesses of all sizes--an average of 7.3 percent this year compared with 6.2 percent last year at firms with at least 10 employees, Mercer found.

The aging of the population and the advent of costly new medical treatments, particularly prescription drugs, continue to drive up medical premiums much faster than the overall inflation rate.

Managed care provided relief from soaring premiums during much of the 1990s, but the savings are receding. Much of the advantage was the result of managed-care companies offering unsustainably low rates to attract subscribers. There was also a large one-time savings as people shifted from traditional insurance to less expensive managed-care plans, but with nine out of 10 employees now enrolled in some form of managed care, that shift has nearly run its course.

Though annual increases are still far below the 17.1 percent rise Mercer measured in 1990, "we don't seem to see any relief in sight," said Tracy Cassidy, health-care practice leader for Mercer's District and Baltimore offices. "There's nothing going on that would suggest that [annual cost increases] would decline."

Small businesses are especially vulnerable, analysts say. While big employers have the market clout to negotiate more favorable rates, small businesses have little if any bargaining power. From a medical standpoint, their employees tend to be a riskier population to insure, because the young and healthy are more likely to go without coverage, analysts say. Employees of small businesses are much more likely to be uninsured than employees of big businesses.

On average, small businesses and their workers pay lower premiums than their larger counterparts, but that is mainly because small businesses typically purchase more limited coverage, analysts said. This year, health benefits cost an average of $3,779 per employee at firms with 10 to 49 employees and an average of $4,587 at firms with 20,000 or more employees, counting both the employer's and the employee's share of premiums, according to Mercer.