When Hollywood Supports was founded in 1991 as an advocacy group for gays and lesbians in the entertainment industry, not a single studio offered health benefits for same-sex domestic partners. Seven years later, every one of the major studios offers the benefit.

“The entertainment industry responded in a remarkable way,” said Executive Director Richard Jennings. “This has been a growing trend among other employers as well, and we’ve seen HMOs and other insurers come on board as a result of the economic pressure, as more employers say, ‘This is important to us.’ ”

With gay and lesbian employee groups increasingly vocal in the workplace, and competition for skilled employees intense, an increasing number of companies is offering benefits to same-sex and opposite-sex unmarried partners.

According to a recent national survey completed by KPMG Peat Marwick, 10 percent of companies offer coverage to “nontraditional partners.” For many of those companies, that means covering only heterosexual couples living together, although 5 percent of U.S. employers offer benefits to same-sex domestic partners.

Large firms lead the way in domestic-partner coverage, with 19 percent of companies with over 5,000 employees providing such benefits. Only 8 percent of firms with between 1,000 and 4,999 workers do so.

“More and more companies are offering it, and the coverage is more mainstream,” said Mike Powers, who leads an L.A.-based national resource group on domestic-partner benefits for William M. Mercer Inc., a human resources management consulting firm. “And the controversy surrounding the benefit has diminished.”

Besides entertainment, another industry leading the trend is high-tech, where the labor market is tight. Municipalities and educational institutions have also been leaders. L.A. County provides the benefit, as does the city of Los Angeles.

Barbara Decker, benefits director for Edison International, said the potential for controversy “was in my consciousness” when she and other executives were considering whether to add the benefit. But other issues were more important, such as the potential cost incurred and the likely enrollment.

The cost, it turned out, was minimal, because enrollment is typically quite low in the plans.

On average, less than 1 percent of the eligible population takes advantage of the coverage when it is offered to same-sex partners only, said Powers. That number rises to between 1 percent and 3 percent when different-sex partners are included.

Nonetheless, many industries have been slow to offer the benefit. In the L.A. area, aerospace, manufacturing and banking have been particular laggards.

Chris Ranieri, director of pensions and group insurance for Litton Industries Inc., said her employer does not provide the coverage because, “traditionally, Litton is a little conservative. I don’t know if there’s any firm answer other than that. There’s never really been any big pressure from employees to add domestic partners to our plans, and there’s no pressure from management to do so.”

Nonetheless, the trend has been accelerating, particularly since San Francisco adopted an ordinance in 1996 requiring businesses that contract with the city to offer domestic-partner benefits.

“One of the driving forces was San Francisco’s ordinance,” said Peter Winter, vice president of employee benefits for TriWest insurance Services Inc.

Chuck Caldwell, senior vice president of employee benefits for Lockton Insurance Brokers Inc., said that virtually all his clients have explored the issue. “They see the law change in San Francisco, and people are starting to realize that if it affects 1 percent of the population, (and) they get bad press because they don’t provide it, it’s not worth it not to provide it. And it’s not a major cost item for employers,” he said.

The insurance industry has also been responding to the demand. “When we were starting this process there were no insurers willing to write this into a policy on a fully insured basis,” said Hollywood Supports’ Jennings. “About two and a half years ago that started to change.”

Most of the top HMOs, including Kaiser Permanente, Health Net, and Blue Shield of California, do provide the coverage if it is desired by an individual employer.

“It kind of evolved based on what the employers wanted,” said Carol Herzberg, California benefit manager for Kaiser Permanente. “There were one or two employer groups that asked for it, and as those kinds of benefits became more popular, more people would ask for it.”

The insurance works much the way it does for spouses or dependents, although covered employees may be required to prove they live with an eligible partner, and/or that the two are financially interdependent. For domestic partners, there is a tax consequence to the benefit, which is not deductible because the partner does not qualify as a spouse or dependent under federal laws.

At first, the insurance industry was concerned that domestic-partner coverage would result in a high incidence of HIV-infected individuals obtaining benefits. Indeed, HMOs often used to require a surcharge on top of the premium for coverage.

“There was a fear that covering this meant an increase in AIDS. None of that has proven to be true,” said Bill Corba, vice president of sales and marketing for Blue Shield.

While participation in the domestic-partner plans tends to be low, “even if participation increased, we probably would not see a marked increase in costs,” Corba added. “It would be the same as covering conventional partners in marriages. There’s even an argument it might be less, because you don’t have children being born.”

Corba said the trend started with large employers, but as of last year, Blue Shield now provides the coverage for small-group employers with between two and 50 employees. The San Francisco ordinance prompted that change, he said. “We view (domestic-partner benefits) as a trend for the future.”