CalPERS: Committee Approves 9.2% Premium Hike, Board Votes Today
The California Public Employees Retirement System health benefits committee approved a 9.2% premium increase for its health maintenance plans Tuesday, the Los Angeles Times reports. The full board will likely "rubber stamp" the increase today. The proposal is a significant change from an earlier plan that would have shifted health care costs to CalPERS' sickest members by increasing co-payments for doctor visits and prescription drugs. The increase instead will be absorbed by all members, who will pay more next year for coverage. The proposal also includes a 20% increase for its less restrictive PPO health plans.
CalPERS hopes the increase will boost the quality of the care it is receiving from its HMOs. Because both CalPERs and the California Teachers' Retirement System fear that increases "will boost profits or pay for administration," the systems also are exploring the idea of direct contracting with health care providers. Consulting firm Deloitte & Touche presented a study to the health benefits committees of both groups Tuesday that said direct contracting could cost up to $12 million annually. While such an effort would "revolutionize health care in California," it also would leave the groups open to "regulatory scrutiny and litigation." Under state law, anyone who contracts with a physician to provide managed health care must be licensed and regulated as a health plan. Therefore, CalPERS would have to apply to the new Department of Managed Care and be scrutinized "just like the health plans they aim to replace." Another challenge to direct contracting is the "shaky financial state of the medical groups that provide most of the state's managed care." Deloitte & Touche told the committee that physicians and hospitals are not eager to enter into such an arrangement because of the financial pressures they already face. Despite the report, the CalPERS health benefits committee will likely press on with the idea, potentially holding hearings in August and voting to set up a pilot-project by mid-fall. CalPERs committee Chair Phil Angelides said the subject could be analyzed for years, but "we live in an environment where experiments are warranted ... You try new approaches and see if they work" (Bernstein, 6/21).