Orange County employers will pay more for healthcare for their workers next year, but the rate of growth is forecast to be the lowest since 2001.
Local businesses are projected to pay 6.7% more on average for health insurance in 2009, down from a 7% increase this year and a recent peak of 19% growth in 2003, according to Hewitt Associates Inc., a Chicago-based human resource services company.
This is the sixth straight year of lower increases in premium rates.
It’s not all good news: OC employers’ costs are expected to increase slightly more than the national projected increase of 6.4%.
But local companies still are paying less than the national average for health benefits.
Hewitt projects OC employers to pay $8,234 per worker next year to provide healthcare versus $8,863 for employees across the country.
OC has a larger share of workers in health maintenance organizations, which keep medical costs low but have higher administrative costs.
Rising HMO expenses from more claims and demands for higher payments from doctors are behind OC’s higher rate of costs growth versus the rest of the country, according to Lee Reichenbach, a Hewitt principal who works out of the company’s Newport Beach office.
“The HMO increases are higher,” he said. “They’re averaging about 8% across the country. I’d say that’s the primary reason (for the higher rate of increases).”
Drug costs, new medical technologies and an aging population also play a role in rate hikes, Reichenbach said.
Some local businesses are bracing for even bigger hikes than what Hewitt projects. Smaller companies often end up seeing more of an increase than the projected average.
For more on this story see the Sept. 29 issue of the Business Journal.
