CalPERS Members Feel Anxiety Over Increased Premium Costs
With CalPERS' approval last week of an average 25% health premium increase next year, many state government workers are saying they will have to make sacrifices to afford the higher costs, the Los Angeles Times reports. CalPERS members remain "better off than most" Americans in terms of health insurance, the Times reports. Next year, the California government will pay at least 85% of members' premium costs. In contrast, private companies nationwide paid an average of 76% of premiums for individual coverage and 67% for family coverage, according to a 2001 survey by Mercer Human Resource Consulting. But the 2003 premium increase, along with CalPERS' warning that rates could increase again next year, has the system's 1.2 million workers, dependents and retirees -- many of whom will see out-of-pocket increases next year of up to 66% -- feeling "distresse[d]." The Times reports that because of the increases in copayments for office visits that went into effect this year, some CalPERS members have reduced the frequency of their trips to the doctor. Some CalPERS retirees have begun visiting the emergency room for care because there is no copayment for an ER visit. But the biggest burden will fall on current state employees, as the 5% wage increase they will see could be "wiped out" by higher medical costs (Lee, Los Angeles Times, 4/20).
The fact that CalPERS, the nation's second-largest purchaser of insurance behind the federal government, could not "get insurers to lower their premium increases" signals that a "full debate" on "how to rein in health care costs" is needed in California, a San Jose Mercury News editorial says. Although managed care previously "trimmed costs" and helped lower insurance premiums in the state, the "limits of cost savings from managed care and stingy public policy have been reached," and the state's health care problems "must be tackled some other way." The Mercury News writes that state legislators should consider allowing insurance coverage with high deductibles "so that insurance only pays catastrophic expenses," creating state oversight of health insurance premiums and "streamlining regulations" to reduce "unnecessary red tape." The editorial concludes, "Otherwise, the solution we end up with might not be the one that's good for our health" (San Jose Mercury News, 4/22).
CalPERS' decision to drop contracts with the for-profit HMOs Health Net and PacifiCare gives not-for-profit insurers an opportunity to take the lead in holding down health costs, a Sacramento Bee editorial says. The decision means that two out of CalPERS three statewide plans will be not-for-profit -- Kaiser Permanente and Blue Shield of California -- with WellPoint Health Networks the sole remaining for-profit HMO serving the entire state. The Bee writes that while managed care has traditionally meant cutting costs in order to boost profits, "at least for the moment, for-profit insurers can make more money by moving consumers out of HMOs into benefit packages that offer more choice of doctors and hospitals," which leads to higher premiums and "apparently" higher profits. But CalPERS "continue[s] to hold out some hope that HMOs will actually ... manag[e] care while managing costs," leading to its decision to drop Health Net and PacifiCare, the editorial says. The editorial concludes, "If not-for-profits can truly keep down costs for consumers by obsessing over them rather than Wall Street analysts, now is their golden moment to shine. Not-for-profit health care certainly isn't cheap. But for CalPERS, it's cheaper than the alternative" (Sacramento Bee, 4/23).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.