Healthcare costs at big L.A. firms up 4.5% this year, survey shows

November 26, 2013|By Chad Terhune

U.S. employers think their healthcare costs will climb more than 5% in 2014,… (Barbara Davidson / Los Angeles…)

Healthcare costs for Los Angeles employers climbed 4.5% this year to $11,625 per employee, a new survey shows, and firms expect a bigger increase in 2014.

Nationwide, health-benefit costs in the workplace rose just 2.1% in 2013 to $10,779 per worker, which includes employer and employee contributions for medical, dental and other health coverage.

The figures come from a survey of employer health plans by Mercer, a benefits consulting firm.

Full coverage: Obamacare rolls out

Employers nationwide and in Southern California expect their healthcare costs to climb more than 5% next year.

Mercer says many employers anticipate spending more next year to cover additional employees and dependents because of the federal Affordable Care Act, which will requires most individuals to have health insurance or pay a penalty.

Nationwide, 22% of an employer's eligible employees, on average, waive coverage for themselves, either because they have insurance elsewhere or choose to be uninsured. Of those who do enroll, 53% add dependents.

Fewer people may opt out and more could add family members during the current season of workplace open enrollment, Mercer says.

"There are a lot of unknowns when it comes to enrollment," said Clay Levister, a consultant in Mercer's Los Angeles office. "Cost increases from higher enrollment would be on top of the normal increase in the per-employee cost of coverage."

In response, large employers are increasing the employee contribution for dependent coverage and more firms are imposing a surcharge for adding a spouse who has coverage available elsewhere. Mercer found that 7% of large employers have made spouses ineligible for coverage.

Another way employers are trying to shave costs is the promotion of high-deductible health plans paired with a health savings account. Those consumer-directed health plans cost 17% less than coverage in a PPO and 20% less than an HMO per employee.

In Los Angeles, more than half of workers at large firms are enrolled in HMOs, a much bigger proportion than in the U.S. overall. Employees pay $105 per month, on average, for employee-only coverage in an HMO. They pay $159 a month for a PPO plan in the Los Angeles area.

Mercer's annual survey included 2,842 employers nationwide and nearly 200 in California.

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