Employer-Sponsored Insurance Costs Rise in California, Across U.S.

Thursday, November 18, 2010

In 2010, the cost of employer-sponsored health coverage increased by 6.9% nationwide, to $9,562 per employee, the largest increase since 2004, according to the results of a national survey released by benefits consulting firm Mercer on Wednesday, McClatchy/Sacramento Bee reports.
For the report, Mercer surveyed 2,836 public and private employers with 10 or more employees.

Report Details.  The survey found that the average PPO deductible increased to $1,200 this year.

In addition, the survey found that employers expect total costs to increase by about 10% in 2011. Employers largely attributed the expected increase to:

• Changes from the federal health reform law;
• Increased health services usage; and
• Rising health care prices.

However, most employers are expected to make changes that will limit their exposure to the increased costs, such as raising deductibles and passing costs on to employees.
Steve Graybill, a senior health consultant for Mercer, said the reform law is increasing costs, but "employers are pulling out all stops" to keep their spending on health coverage down (McClatchy/Sacramento Bee, 11/18).

California Findings

In California, employers have seen an 8.4% rise in health benefit costs this year and could face an 11.4% increase next year, according to the survey.
The survey found that California employers are spending an average of $9,960 per worker on health care in 2010.

According to Mercer, California's health benefit costs might exceed nationwide averages because of the state's relatively high expenses and the prevalence of HMOs.  California employers said they aim to restrict their health cost increases to about 7.8% next year by modifying their benefits and selecting new insurers (Helfand, Los Angeles Times, 11/18).

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