Insurance News

California hospitals’ group health plan costs jump 10.6%

Posted on: September 11, 2011

Group health care plan costs continue to surge for California hospitals, according to a survey.

Health care costs jumped 10.6% to an average of $10,992 per employee this year compared with last year, according to the survey of 231 hospitals by Keenan HealthCare, a Torrance, Calif.-based broker and consultant. Costs increased an average of 7% in 2010 and 8% in 2009.

“Like every other enterprise, hospitals are facing increased health insurance costs and are actively looking for ways to stop or at least slow that trend. Just because you are a health care provider doesn’t mean you get a break on your insurance,” Keenan Senior Vp Steve Richter said in a statement.

Unlike most other employers, though, hospitals are absorbing much of the increased costs. For example, 53% of respondents this year offer at least one health plan that provides single coverage at no cost to employees, while 30% offer at least one plan in which employees do not have to pay premiums for family coverage.

Competition a factor

“Most employers have moderated costs by cost-shifting. Hospitals continue to offer rich benefit packages,” said Mr. Richter, adding that both an “entitlement philosophy” and competition to attract and retain employees are factors.

In addition, where employees pay a part of the premium, those contributions as a percentage of the total premium are low. For example, employee contributions for the most popular health care plan offered by hospitals on average was just 8% of the total premium for single coverage and 15% of the total premium for family coverage, according to the Keenan survey.

While zero-deductible health care plans are rare among most other employers, they still are fairly common among California hospitals. For example, 33% of the respondents said they did not impose a deductible for in-network services in their preferred provider organization, point of service or exclusive provider organization plan, while 30% imposed a deductible of $250 or less.

Copyright © 2011. Crain Communications, Inc.

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