Kaiser Permanente

Kaiser Permanente covers 7.3 million Californians. A company official said the HMO’s rate hikes for employers are running slightly below the 5% trend nationally and in California. (Bryan Chan / Los Angeles Times)

By Chad Terhune
November 19, 2014

Southern California employers expect their health-benefit costs to rise 4.8% next year as the economy recovers and mandates under the federal health law kick in, a new survey shows.

Nationwide, more people are expected to sign up for health benefits at work during the current open enrollment season as new federal rules begin taking effect in 2015 and penalties increase for being uninsured.

Insurance offered by employers is the primary source of health coverage for Americans, providing benefits to about 150 million workers and their families. Employees typically pick up 20% to 30% of the tab. In recent years, many employers have been cutting their financial exposure by foisting more costs onto workers.

In Southern California, health maintenance organizations remain the most popular health plan option and are often the cheapest. At large employers, 55% of covered employees in the Southland pick an HMO, compared with 16% nationally, according to the survey released Wednesday by benefits consultant Mercer.

The average worker at a large firm in Southern California pays $95 a month for employee-only HMO coverage. A preferred-provider organization, or PPO, plan costs $145 per month.

The overall cost increase predicted for the Southland is slightly above the 4.6% figure among employers nationwide. Those numbers reflect employer changes, like higher deductibles, to reduce cost.

The increases for 2015 are below the 7% average rate of growth during the past 15 years, Mercer said. But the rate of growth had dipped to 2% in 2013, part of a historic slowdown in U.S. medical spending.

Many researchers attributed that to consumers spending less on healthcare in the aftermath of the financial crisis.

Now many employers face the added expense of covering more workers.

“Growth in enrollment is truly the wild card for employer costs next year,” said Clay Levister, a Mercer consultant in Los Angeles. “That will increase the pressure to find new ways to manage cost.”

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