The much-feared spike in health insurance premiums has arrived.

After several years of slowed growth in health care costs for California employers and an actual decrease of 6 percent in 1994 health care costs are again on the rise, according to Foster Higgins, a health care consulting firm.

Insurance brokers are reporting increases for next year, generally ranging from 3 percent to 12 percent, depending on the type of coverage selected by enrollees, the firm said.

That's up from the 2.1 percent increase that occurred from spring 1996 to spring 1997, according to a recent survey by KPMG Peat Marwick.

Less competition between managed care groups as a result of industry consolidation, and pent-up pressure to pass along the costs of expensive new pharmaceuticals and medical technology, are being blamed for the surge.

"Health care premiums are increasing," said Kari Schneider, vice president of Sedgwick James of California Inc., an insurance brokerage.

While brokers had been warning that premiums would be going up, many of them conceded that they didn't anticipate the magnitude of the increases that health plans are quoting for next year.

In April, the California Public Employee Retirement System announced a 2.7 percent rise in HMO premiums for its members starting next year.

The announcement sent a message of premium rate increases to come, but many brokers predicted at the time that most Southern California companies wouldn't see an increase above 6 percent .

But now, only the most stringent HMO plans are expected to hold the line at about 5 percent , whereas higher premiums are likely for point of service plans, which allows enrollees to choose an HMO doctor, or for an additional fee, a doctor outside of the network.

Currently, enrollees with various health plans are paying typically $100 to $110 per year for an HMO plan, $125 to $155 for a POS plan, and $250 to $280 for a PPO plan.

Sam Cunningham, executive vice president and chief benefits officer at Irvine-based Anderson and Anderson Insurance Brokers Inc., said they are quoting the following rate increases for next year: HMOs, a 3 percent to 5 percent increase; POS plans, a 6 percent to 10 percent increase; and PPO plans, a 10 percent to 12 percent increase.

"Rates are going up more by changes occurring in the industry than anything else," said Cunningham.

Consolidation is said to be a major factor, including the acquisition of FHP International Corp. by PacifiCare Health Systems earlier this year.


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