CalPERS Approves 8.7% Increase in HMO Premiums
The California Public Employees' Retirement System on Wednesday voted to approve an average increase of 8.7% in premiums for its HMO plans and an average 9.5% increase in premiums for its PPO plans, the smallest premium increases without major coverage changes since 1999, the Los Angeles Times reports (Vrana, Los Angeles Times, 6/16). The approved increases are lower than the projected 12.4% average premium increases analysts expect nationwide (Pondel, Los Angeles Daily News, 6/15).
The exact change in premiums will vary from plan to plan. For example, for members enrolled in Kaiser Permanente plans, which cover about one-third of CalPERS members, premiums will increase by 8.7% for basic plan enrollees and decrease by 10.1% for Medicare beneficiaries (Los Angeles Times, 6/16). CalPERS will spend $4.3 billion on its 2006 health program, which includes a projected savings of $45 million compared with 2005 (Colliver, San Francisco Chronicle, 6/16). The new rates will take effect Jan. 1.
CalPERS is the nation's third-largest buyer of health insurance, providing health insurance to 1.2 million state and public agency employees, as well as their dependents and retirees. CalPERS' health insurance rates "are widely seen as a bellwether" for other groups that provide private health insurance, the Times reports (Los Angeles Times, 6/16).
CalPERS spokesperson Clark McKinley said, "We're not satisfied by any means with single-digit rate increases. It's certainly not dramatic enough to alleviate these rate increases" (San Francisco Chronicle, 6/16).
George Diehr, chair of the CalPERS heath benefits committee, said, "We have been able to slow down the escalator. Yet we find even these relatively low rate increases unacceptable."
Peter Lee, president of Pacific Business Group on Health, which purchases health insurance for an alliance of employers, said, "The trends are coming down, but its hardly news to celebrate" (Los Angeles Times, 6/16).
Larry Levitt, a vice president of the Kaiser Family Foundation, said, "Single digits are better than double digits, but most people out there are not going to get deals like CalPERS'."
Jerry Flanagan, who monitors health care for the Foundation for Taxpayer and Consumer Rights, said, "Individuals will still see double-digit increases next year, and while 8.7[%] ... is good news, CalPERS is taking advantage of their bulk purchasing clout. Consumers don't have that" (Los Angeles Daily News, 6/16).