CalPERS’ Committee Approves 17% Premium Hike
The California Public Employees' Retirement System health committee yesterday approved a 17% premium hike to help the program "rebound" after two of its self-insured plans suffered nearly $100 million in losses last year, the Sacramento Bee reports. The rate hike, which would take effect next year, is designed to "rebuil[d]" CalPERS' claims reserves, which have "hovered" around $95 million since Dec. 31, 2000, enough to cover expenses for only 1.9 months. Although CalPERS needs at least $230 million by the end of this year to cover up to four months of claims, the pension expects to have enough reserves to cover only 2.7 months by Dec. 31. The proposed rate hikes, slated to begin Jan. 1, include:
- 22.4% for PERSCare Basic
- 15.9% for PERSCare Supplement
- 15% for PERS-Choice Basic
- 16.1% for PERS-Choice Supplement
CalPERS health committee member Sean Harrigan said, "The rate increases are huge, and I understand the concerns of all the families that are going to have to pay more for health care, but we have no choice but to act now and prevent further deterioration" (Rapaport, Sacramento Bee, 5/16). Last month, CalPERS approved contracts for 2002 with eight managed care companies that included a 6% increase in premiums and a significant rise in copayments for prescription drugs and doctor visits. CalPERS premiums have increased 9.2% and 9.7% over the past two years (California Healthline, 4/19). The full CalPERS board will vote on the premium rates today (Sacramento Bee, 5/16).
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