RISE SEEN IN '97 FOR HEALTH COSTS : STUDY: EMPLOYER EXPENSE TO GO UP 4%.

Byline: Deborah Adamson Daily News Staff Writer

The cost employers must pay to provide health insurance to workers is expected to climb by 4 percent this year, according to a national study conducted by a benefits consulting company.

However, the increase - substantially higher than in the past three years - still would be modest compared with 1980s-era price hikes when costs went up by as much as 18.6 percent, figures show.

The survey to be released today by the New York-based Foster Higgins benefits consulting firm, said costs increased 2.5 percent in 1996 and 2.1 percent in 1995. Costs actually dropped by 1.1 percent in 1994. The figures relate to employers with 10 or more workers.

Foster Higgins credited health maintenance organizations and other managed care plans for holding health insurance costs down.

In fact, the high percentage of workers belonging to HMOs in Southern California led to costs dropping by 4.7 percent - when employers with 500 or more workers were surveyed in the region in 1996.

That's lower than the mean for large employers in the West region, where costs increased by 3.9 percent, and for the country as well, where the gain was 3.6 percent.

But higher HMO rates, diminished competition due to mergers and acquisitions and the need to boost profits will raise costs nationally this year, the consulting firm said.

``HMOs have been under significant pressure to increase profits,'' said Glenn Meister, a principal at Foster Higgins' Century City office. ``Profits have been down because of competition.''

In addition, the survey said that a continuing backlash against managed care will raise costs as federal laws mandate longer hospital stays and other requirements to protect patients.

Managed care plans include health maintenance organizations, preferred provider organizations and point-of-service plans. Patient choice is restricted in managed care to control expenses. That compares with traditional indemnity plans where patients visit any doctor they choose but they also pay more.

The 11th annual health plan survey gathered information from 3,200 private and public sector employers. The report includes retired workers who continue to benefit from an employer-paid health plan.

Separately, a University of California, Los Angeles, and UC Berkeley study on the state of health insurance in California showed that there are 6.6 million uninsured Californians - 23 percent of the population under age 65.

Not only does the figure include 1.8 million children, but it also includes a disproportionate number of Latinos, African-Americans and Asian-Americans, the study reports.

Los Angeles has the state's highest uninsured rate, with one-third of its non-elderly population lacking insurance, the report said.

But the uninsured aren't slackers: More than eight out of every 10 people lacking coverage work or are in families headed by a worker. Nearly half work full time. Almost half work for businesses with fewer than 25 employees.

More than half say they don't have insurance because either their employers don't offer it or they lost coverage when they switched or lost jobs.

CAPTION(S):

Chart

Chart: (Color) COST OF HEALTH PLANS

Annual change in costs of employer-sponsored plans.