CALIFORNIA HMO RATES TO RISE STATE'S PRICES FORMERLY WERE BELOW-AVERAGE.

Byline: JULIA M. SCOTT Staff Writer

The price of managed health care in California caught up with the rest of the nation for the first time this year and many workers will see their contributions increase, according to a study released Wednesday.

But rates here should not rise much past the national average, said Jill Yegian, director of the health insurance program at the California HealthCare Foundation, who oversaw the study.

``I don't see any reason that California should become significantly more costly than the rest of the country,'' Yegian said.

Previously, California enjoyed below-average HMO rates. In 2002, single Californians paid a monthly HMO premium of $196, compared with $233 nationwide. This year it was $342 while the national average was $337.

Half of California workers with health insurance get care through HMOs, which are networks of hospitals and doctors. Nationwide that rate is just one in five.

Historically, California had lower HMO rates because so many workers were covered and because HMOs here were ``very good'' at managing their resources by requiring patients to get referrals before seeing costly specialists, Yegian said.

On top of higher HMO rates, Californians will face raises in their out-of-pocket contributions at work. Of companies employing at least 200 workers, 41 percent are ``very likely'' to raise employee health care contributions, the study found.

Overall insurance premiums rose 8.7 percent this year, or twice the rate of inflation in California, according to the study.

Rising rates mean the pool of 6.5 million Californians who are uninsured will swell, said E. Richard Brown, director of the UCLA Center for Health Policy Research.

``Each time that we see these increases it makes health insurance unaffordable for more people,'' Brown said.

Higher prices also make U.S. companies less competitive, he said.

For every new car that rolls off a Ford or General Motors assembly line, $1,500 of the price goes to pay for workers' health insurance, Brown said.

``That's not true of companies in Japan, China or Germany,'' Brown said. ``They don't have that same level of cost.''

Brown blames the rising cost of health care on an increase in chronic illnesses such as diabetes, asthma and obesity that are expensive to treat. Paying for cutting-edge technology and new drugs is also partly to blame.

The solution is to create a national system that can negotiate better rates than individual providers can, Brown said.

Mark Morgan, a spokesman for Health Net, a Woodland Hills-based insurer, believes the private marketplace can keep costs down better than the government.

Instead, eliminating doctors and hospitals that charge higher prices but don't deliver added quality could reduce heath care costs, Morgan said.

``If I just eliminate two of the 10 hospitals and 2,000 of the 10,000 physicians, I might be able to maintain or improve the quality and reduce the cost,'' Morgan said.

CHCF's results are based on interviews with 802 benefit managers at private companies between April and July. The Center for Studying Health System Change, a policy research organization in Washington, D.C., jointly produced the study.

WellPoint, which owns Blue Cross of California in Thousand Oaks, declined to make a representative available for comment.

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SOURCE: California HealthCare Foundation