HMO Costs Up for Northern California Federal Workers

Federal employees and retirees in Northern California this year are experiencing double-digit increases in HMO monthly premiums, while rates in the south are increasing at a slower rate, the Sacramento Bee reports.

The federal government used $500 million of reserve funds to reduce premium costs for the 75% of federal workers, retirees and their dependants who are enrolled in national fee-for-service health plans. However, the government did not provide additional funds to decrease the premiums for the remaining 25% who are enrolled in HMO plans.

Federal law sets a limit on the percentage of a premium that the government must pay, while employees must pay at least 28% of the overall cost.

As a result of federal guidelines, Kaiser Permanente's premium for its top-tier family plan for 2007 increased by 15%, while the employees' share increased by 51%. The government's share rose by 8%.

Similarly, family coverage for Blue Cross of California HMOs last year increased by 20%, while employees' share of the premium increased by 62%. The share this year will increase by an additional 25%.

Kaiser officials attribute the increase over the past two years to an aging work force in Northern California. However, Kaiser's premiums for family coverage beneficiaries in Southern California have increased at a slower rate -- 10% this year. As a result, Southern California members are paying $167.35 per month less than their counterparts in Northern California.

Kaiser officials and health care experts cite a disparity in health care costs of as much as 20% to 40% between the two regions. Southern California residents benefit from greater hospital competition and lower real estate costs for medical facilities (Chan, Sacramento Bee, 2/11).