Employers in Orange County are expected to pay 6.5% more next year toward providing health insurance for their workers—about $550 per policy, on average.
That will put the average OC employer’s cost at $10,678 a person, according to a recent report from Chicago-based human resources consulting company Aon Hewitt Inc.
The expected increase locally is a bit higher than this year’s average employer premium increase of 6.2% in OC. Aon initially had projected a 7.2% increase for 2012 but adjusted that downward.
This year’s increase was the lowest percentage hike in six years. Rates jumped 8.2% in 2011 and 10.1% in 2010.
OC’s anticipated cost increase next year is projected be a bit higher, on a percentage basis, than the national average. Nationwide, employers are expected to pay 6.3% more on average at $11,188 per worker.
The actual costs of healthcare costs locally are lower than the national average because of how it’s delivered, said Johan DeKeyzer, an Aon Hewitt senior vice president in Newport Beach.
For years, health plans throughout Southern California have used “capitated” approaches, meaning the plans give contracted providers a set monthly amount to care for its members, he noted.
DeKeyzer added that clients have been showing increased interest in the “accountable care organization” approach to healthcare, involving incentives for doctors, hospitals and insurers to work together to cut costs. Participants in such groups share clinical and case management information and coordinate comprehensive healthcare services.
Aspen Medical Products Inc., an Irvine-based maker of orthopedic braces with about 100 workers, has had healthcare premium increases that have “been a little bit higher” that what Aon Hewitt has predicted, said Kathryn Gray, director of human resources.
“It’s been a crapshoot the last couple of years,” Gray said. “The insurance companies, in our opinion, aren’t sure what’s going to happen, and they’re trying to hedge their bets. It looks like we really are going to get Obamacare [and] insurance companies are going to play catch-up on us.”
Aspen offers HMO and PPO plans through Anthem Blue Cross of California. It pays 80% of its employees’ HMO costs and 70% of PPO costs for individual and family plans, according to Gray.
“What we’ve tried to do is keep our employees as whole as possible,” she said. “As the large increases have occurred over the past few years, we’ve just sucked it up, frankly, and taken it.”
State Exchange
California will begin operating a health-insurance exchange to provide coverage for state residents meeting income requirements. Gray said Aspen prefers to provide employees with choices.
Irvine-based Sonnet Technologies Inc. expects just a 1% increase in its healthcare costs next year, said Chief Executive Robert Farnsworth.
Sonnet makes storage systems, media readers, computer cards and other products used in the film, video and broadcast industries.
“I was very pleasantly surprised,” Farnsworth said of the company’s projection.
“I don’t know if we were too high this year or got a great deal,” Farnsworth said with a laugh, adding that Sonnet isn’t making any changes to coverage.
Sonnet pays most of its 25 Orange County workers’ healthcare costs, including dental coverage, and offers an HMO and PPO through Minnesota-based UnitedHealth Group Inc., which has over 3,000 workers in Orange County. Employees who enroll in the company’s base plan—the HMO—pay about $30 a month toward the insurance, Farnsworth said.
Farnsworth said his company has paid 100% of its employees healthcare costs in the past but had to change that after some years of 12% to 15% increases.
“We also went to a plan with higher deductible and lower co-pay,” he said.
The new collaboration between St. Joseph Health System and Hoag Memorial Hospital Presbyterian will bear watching for possible impacts on the local healthcare coverage, said Kelly Moore, president of Irvine-based brokerage Moore Benefits Inc., which serves businesses with 200 or fewer workers.
Certain HMOs won’t work with certain medical groups, Moore noted. She cited a situation involving Irvine-based Monarch HealthCare, which was booted from San Francisco-based Blue Shield of California’s HMO network after the former’s purchase by Optum, a UnitedHealth unit.
Several Moore Benefits clients expect small premium increases or possible decreases next year, she said.
“Carriers are scrambling to get business right now,” Moore said. “I feel the cost increases will be easing somewhat.”
