CalPERS May Lower Earnings Predictions, Raise Premiums for Long-Term Care Plan
CalPERS officials yesterday announced that they might lower earnings predictions for the program's long-term care investment fund in response to investment losses of approximately $99 million over the previous two fiscal years, the Sacramento Bee reports. CalPERS trustees will vote today on whether to lower the expected investment return on the plan's long-term care fund from 8% to 7.5%. The Bee reports that the trustees also might vote to increase the plan's premiums; CalPERS actuaries have proposed a 1% premium increase for all long-term care policies to offset the investment losses. Further, CalPERS' annual report suggests that improvements in nursing home and assisted-living benefits could lead to 10% to 25% premium increases for new long-term care plan enrollees. CalPERS spokesperson Clark McKinley said, "We are not at a point where we are close to raising premiums, but it is something that could come up as early as this fall -- if the board votes to change the actuarial assumption for the long-term care plans." CalPERS' long-term insurance program, the largest and oldest not-for-profit plan in the nation, offers nursing and assisted-living benefits to 1.2 million state workers and retirees and their siblings, spouses, parents and in-laws. The long-term care plan has approximately 165,000 enrollees, who pay monthly premiums averaging $100. CalPERS' most popular long-term care plan covers personal care, respite care, homemaker services, home health care, residential assisted living care and nursing home care.
Because of the large number of CalPERS members, many health care industry officials look to it as an indicator of how well private insurance plans will be able to handle the expected influx of baby boomers, the Bee reports. Some state workers express concern that some long-term care benefits may be eliminated or may become more expensive, according to Kurt Hahn, president of the Retired Public Employees Association. "It's prudent for CalPERS to take into account their declining investment return when considering the long-term care program, but changes should be balanced against the costs to employees and retirees," Hahn said. The Bee reports that any changes to the long-term care plans would not affect other CalPERS health plans (Rapaport, Sacramento Bee, 9/19).
CalPERS has named Fred Buenrostro, the chief deputy director of the state Department of Personnel Administration, as its CEO, the Sacramento Bee reports. Buenrostro replaces James Burton, who left in August to become the CEO of the World Gold Council. Buenrostro is a long-time member of the CalPERS board and has worked for more than a dozen years on CalPERS and State Teachers' Retirement System boards (Sacramento Bee, 9/19).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.