L.A. Health Coverage Rates Top Survey : Insurance: But the methodology overlooks the fact that HMOs are becoming the rule in California.

A national survey says Los Angeles--for the second year running--has America’s highest health insurance rates, but the finding may say more about how Angelenos are insured than at what cost.

The survey by the New York actuarial and consulting firm of Milliman & Robertson ranked Los Angeles No. 1--most expensive--among 1,050 U.S. cities, with small employers paying an average monthly premium of $668 for a typical package of health benefits.

That was 78% higher than the national average of $375.

An interesting statistic in the survey was that all of the 89 most-expensive cities are located in either California or Florida. New York City ranked No. 90.

But the catch is that the survey--in order to be comparable nationally--considered only traditional indemnity-style health plans, which are being outstripped in popularity by “managed-care” styles of coverage, including health maintenance and preferred provider organizations.

That point was underlined in a separate survey by the accounting and consulting firm of KPMG Peat Marwick, which said that for the first time ever, a majority of workers in mid-size and large companies nationwide belong to some type of managed-care plan.

What’s true nationally is even more so in California, which was years ahead of the national bandwagon in embracing HMOs.

With more and more employers pushing their workers away from more expensive indemnity coverage, the employees who remain in such plans tend to be those who “will hang on until they’re absolutely forced to switch,” said Roy Oliver, who directed the KPMG Peat Marwick study. Such employees tend to be older and to have more health problems than those enrolled in managed-care programs, Oliver said.