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The Daily News of Los Angeles



by Evan Pondel, Staff Writer
March 17, 2004

California health insurance premiums grew by 15.8 percent in 2003, with many large companies poised to increase the amount workers pay for coverage in the coming year, according to a survey released Tuesday by The Kaiser Family Foundation.

Nationally, premiums rose 13.9 percent in 2003 compared with the previous year. During the past three years, total premiums for family coverage increased by almost 42 percent, while California saw worker contributions for family coverage jump by nearly 70 percent to $2,452 in 2003 from $1,450 in 2000.

Despite the across-the-board rise, California premiums remained slightly less expensive than the national average, according to the survey of 864 private firms in the state. The reason: Health maintenance organizations have more penetration in California, essentially keeping premiums moderately lower.

"But now, California is catching up to the national average. In the last three years we have seen rapid increases to make up for the very low rate of growth in the mid-1990s," said Gerald Kominski, associate director of the UCLA Center For Health Policy Research at the University of California, Los Angeles. "If we have another year of increases like this, we could see some broader effects among employees and employers in terms of dissatisfaction."

Though the increase in premiums is not causing employers to drop coverage, companies are shifting more of the cost to employees. In 2003, California worker contributions increased by nearly 35 percent for family coverage and by approximately 22 percent for single coverage from 2002 levels. Workers' average share of the premium costs for family coverage in 2003 grew to 30 percent.

Kominski said that premium increases are usually cyclical, with public backlashes among the greatest influences on the cost of health insurance. But more public outcry doesn't always fix the problem, and greater disapproval could lead to government intervention.

"Right now there is an inherent tension that has not been resolved," Kominski said.

Many health insurers have broadened their product offerings to meet the need for cost-effective alternatives. The survey found that 85 percent of large employers in California offered more than one health plan option, compared with 57 percent of large employers nationally. Meanwhile, 52 percent of those employers were enrolled in health maintenance organizations or HMOs last year, and 29 percent opted for preferred provider organizations or PPOs.

But offering different health plans doesn't necessarily increase the quality of care. "And premiums keep going up because of the huge profits and administrative costs these insurers are taking," said Jerry Flanagan, a lead advocate on health-care reform for The Foundation For Taxpayer & Consumer Rights in Santa Monica. "Furthermore, premiums are increasing 250 percent faster than medical inflation."

To counteract soaring drug costs, California companies are increasingly using a tiered cost-sharing formula for prescriptions. The Kaiser Family Foundation said 41 percent of the companies in the survey reported tiered plans.
Contact Evan Pondel: (818) 713-3662 or [email protected]