CalPERS Health Committee Recommends Average 11.4% HMO Premium Rate Increases for 2005
The CalPERS health committee on Tuesday recommended HMO premium rate increases of about 11.4% for 2005, "more moderate" than increases of 26% and 18% in 2003 and 2004, respectively, the Contra Costa Times reports. Among the HMO plans offered by CalPERS, premium rates will increase 12.6% for Blue Shield of California, 9.9% for Kaiser Permanente and 15% for Western Health Advantage. Medicare HMO premium rates will decrease by 7.4% (Silber, Contra Costa Times, 6/16). The proposed HMO premium rate increases are less than the estimated national average increase of about 14% (Colliver, San Francisco Chronicle, 6/16). CalPERS also recommended moderate premium rate increases for its preferred provider organization plans, averaging 6.4%, as a result of its decision to apply reserves to keep premiums down. Among PPO plans offered by CalPERS, premium rates will increase by 4.8% for PERS Choice and by 12.7% for PERSCare. Medicare PPO premium rates will rise by 2.8% (Contra Costa Times, 6/16). PPO premium rates increased by 20% in 2003 and by 13.2% in 2004 (Girion, Los Angeles Times, 6/16).
The proposed increases, which the full CalPERS board is expected to approve Wednesday, are statewide averages; premium rate increases in Northern California will be higher because of a regional pricing plan the CalPERS board voted to approve last month (Contra Costa Times, 6/16). Some members enrolled in HMO plans in Los Angeles, San Bernardino and Ventura counties will have premium reductions of 8.7% for Blue Shield and 3.5% for Kaiser. Premium rates for members in those counties enrolled in PERS Choice will decrease by 1.5%, while PERSCare premium rates will increase by 5.4% (Los Angeles Times, 6/16). The regional rate differences will not affect state workers or Medicare beneficiaries who receive supplemental coverage through CalPERS. The proposed premium rate increases will bring the total cost of CalPERS' health program to more than $4 billion, up about 7.3% from almost $3.8 billion in 2004 (San Francisco Chronicle, 6/16). CalPERS is expected to post details of the proposed HMO and PPO premium rates for all state workers and retirees on its Web site Wednesday, after the board votes on the proposals.
Also yesterday, the CalPERS health committee recommended a change in prescription drug coverage that would require beneficiaries to use more over-the-counter medications before filling prescriptions (Rapaport, Sacramento Bee, 6/16). Under the committee's recommendation, CalPERS also would manage specialty and biotechnology drugs more closely (San Francisco Chronicle, 6/16).
CalPERS officials said that the proposed HMO premium rate increases did not exceed 11.4% because of their decision last month to drop 38 of the most costly hospitals from its Blue Shield of California HMO network to save an estimated $36 million in 2005 and as much as $50 million in subsequent years. Without that move, the proposed premium rates would have been at least 3% higher, some CalPERS officials said. According to the Bee, it is unclear "whether the savings would satisfy critics" of the move. J.J. Jelincic, president of the California State Employees Association, said, "Seeing these rates, I do not see how CalPERS has convinced us of a savings that is sufficient to justify all the difficulty it is going to cause to so many patients." CalPERS Board President Sean Harrigan said, "Controlling health care rates has been the biggest challenge facing the CalPERS board. Where we are today is so much better than where I thought we would end up" (Sacramento Bee, 6/16). Sid Abrams, chair of the CalPERS health committee, said, "This has been a hard negotiating year, but we have created fairness in our rates and will be using some surplus reserves to cushion the financial impact where we can" (Los Angeles Times, 6/16).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.