Health Insurance Premiums in California Increase by 11.4% in 2004, Study Finds
Health insurance premiums in California increased by an average of 11.4% this year, more than six times the state's 1.7% rate of inflation, according to a study by the California HealthCare Foundation and the Health Research and Educational Trust released Thursday, the Sacramento Bee reports (Rapaport, Sacramento Bee, 12/17). The rate increase is lower than last year's 15.8% increase, but it marks the fourth consecutive year of double-digit premium increases (Goldeen, Stockton Record, 12/17).
The study is based on a survey of 790 randomly selected private firms statewide released in September by the Kaiser Family Foundation (Colliver, San Francisco Chronicle, 12/17). The study found that:
- Employee contributions to health insurance plans increased by 5% for family coverage and 13% for individual coverage. In 2004, employees paid on average $2,580 per year for family coverage and $474 annually for individual coverage.
- The annual cost of family health insurance coverage increased from $8,504 in 2003 to $10,013 in 2004. The annual cost of individual coverage increased from $3,101 in 2003 to $3,685 (Sacramento Bee, 12/17).
- About 50% of California workers are enrolled in HMOs compared with about 25% of workers nationally. Enrollment in PPOs increased from 29% of California workers in 2003 to 36% in 2004. The average cost of a PPO for a California family increased by 17.5%.
- The cost difference between PPO and HMO coverage increased, with monthly PPO premiums averaging $981 for family coverage, compared with $721 per month for HMO premiums (San Francisco Chronicle, 12/17).
- "Nearly all" employers with 200 or more employees offered health insurance to employees, and 55% of firms with three to nine employees offered health insurance, the Record reports.
- About 44% of large firms said they were very likely to increase employees' contributions to premiums in 2005.
- Between 13% and 15% of employers said cost-containment strategies -- such as disease management, higher employee cost sharing or tighter managed-care networks -- were highly effective (Stockton Record, 12/17).
According to Glenn Melnick, professor of health care financing at the University of Southern California and health economist at RAND, the premium increase might be lower this year because employers are offering plans with fewer benefits or requiring workers to pay more out-of-pocket expenses (Jablon, AP/Contra Costa Times, 12/17).
Jon Gabel, vice president at HRET, said, "The annual cost of health insurance for a California family of four is now equivalent to 75% of the annual earnings of a fully employed minimum-wage worker. This is one more indicator that the cost of health insurance is prohibitively expensive for many employers and workers" (San Francisco Chronicle, 12/17).