CSUN University News Clippings

CalPERS board to vote on health premium increase

(June 17, 2009)

By Jon Ortiz

State workers’ HMO premiums are set to increase next year – but by their lowest rate in 14 years – after a key committee of the California Public Employees’ Retirement System approved the new schedules on Tuesday.

CalPERS’ basic health maintenance organization premiums for 2010 would increase from last year by an average 3.43 percent overall, down from the 2009 increase of 6.6 percent. Its basic preferred provider organization rates would rise by 3.29 percent.

The Medicare HMO plan would increase 0.27 percent and Medicare PPO members would see a 1.68 percent hike.

CalPERS’ Board of Administration is scheduled to vote on the rate proposals today.

The conditional 2010 self-funded health premiums and those negotiated with Kaiser Permanente and Blue Shield of California affect 1.29 million active and retired public workers and their family members. About 784,000 of those are state employees, retirees and their dependents.

Premiums for public agencies that contract for coverage vary by location.

Greg Franklin, an executive in CalPERS’ health benefits branch, told CalPERS’ health benefits committee members before their vote that the relatively low rate increases are “the best we’ve seen in years.”

The fund’s 2009 average basic HMO rates rose 6.6 percent over 2008 and its Medicare HMO rates rose by 1.6 percent. PPO premiums didn’t rise.

Insurers and employers watch CalPERS’ premium announcements each year as a bellwether for the health industry. Only the federal government spends more than Cal-PERS on medical insurance. This year the fund estimates it will spend $5.72 billion on health care, roughly $15.7 million per day.

That money comes from employee and employer contributions, and the government is falling behind on its part of the deal.

In fiscal 2007-08, the state paid the bare minimum $1.25 billion of the $3.59 billion annual bill for state worker retiree health and dental benefits. The $2.34 billion difference is a future liability. The state estimates that unless it sets aside more health insurance money, the total “unfunded liability” for future benefits will stand at about $48 billion.

The individual insurance premiums are split between the employer and employee based on union contracts or terms worked out with exempt employees.

A few examples of the proposed monthly rate changes:

• Kaiser HMO coverage for a family will go from $1,226.86 to $1,286.97 next year, up 4.9 percent.

• A single PERS Choice member’s PPO premium is $477.70. Next year it would be $487.25.

• Medicare Kaiser HMO membership for two people would go from $560.32 to $596.72, up 6.5 percent.

• A single Blue Shield Access+ member on Medicare would see his or her premium drop 12.27 percent, from the current $341.44 per month to $299.53 next year.

Kaiser won’t cover chiropractic services next year and will boost co-payments for 100-day supplies of prescription drugs.

CalPERS also held down its self-funded PPOs by putting $46.7 million in surplus money back into those plans.

Health benefits committee chairwoman Priya Mathur said that the relatively lower rate hikes are the product of hard work by CalPERS to cut costs and acceptance by members of lower-cost treatments such as generic drugs, coupled with more healthy lifestyles.

Publication: Sacramento Bee