Los Angeles is the most expensive place in the country to buy group health insurance, with a typical company of 45 employees paying $144,000 more in premiums a year than the national average, according to a study released this week.
The average monthly premium per employee for such companies is $631 in Los Angeles--more than $300 above the national average, according to a survey of 400 cities by Milliman & Robertson Inc., a New York-based consulting and actuarial firm. Total annual health insurance costs are almost $341,000 a year.
Experts said the high figures reflect in part the expense of providing services to Los Angeles' huge uninsured population--the largest in the country--which they estimate raises insurance costs by up to 25%.
Business leaders said the study deepened their concerns that health-care costs are contributing to a flight of aerospace, service and other businesses from Southern California.
"This does not bode well for making the economic climate friendly to businesses," said Julia Thomas, chairwoman of the Health Issues Committee of the Los Angeles Area Chamber of Commerce.
By relocating from high-cost areas such as Los Angeles, businesses can "reduce their health insurance costs by more than half, without reducing any benefits," said Mark Alan Chesner, a consultant with Milliman & Robertson. In such low-cost areas as Glens Falls, a town in Upstate New York, the monthly cost for health insurance was only $266 for the type of policy surveyed.
The survey showed that costs were significantly higher in Los Angeles than even New York City, where the monthly per-employee premium was $507. San Francisco came in at $489 and Chicago at $427. The national average was $365.
While experts were not surprised that Los Angeles was a more expensive health insurance market than small towns and cities in the Midwest, they struggled to explain why it would be so much costlier than New York, which is generally considered to have a higher overall cost of living. The study did not offer a reason for the difference.
Health-care experts cited the Los Angeles area's relatively higher proportion of uninsured, the city's large number of doctors and hospital beds relative to the population and the prevalance of health maintenance organizations as factors driving the cost of traditional health insurance in Los Angeles even higher than in other big cities.
