MANAGED CARE: Premiums Will Increase Next Year
Health care premiums will continue to rise next year, with most California health insurers increasing rates between 7%-9%, analysts and industry experts announced Tuesday. Experts attributed the increase to rising drug costs, technical advances and consumer demand for broader benefits packages, the Contra Costa Times reports. Walter Zelman, president of the California Association of Health Plans, warned, "There are some circumstances where we will see double digit increases. There's no question that there are inexorable upward pressures." Kaiser Permanente already has announced rate hikes of between 8%-10% for 2001. The price of a family membership will jump from $478 to $526 per month, and senior members with individual enrollments in the Senior Advantage program will have to pay a monthly premium of between $30 and $40 beginning in January. Prior to the change, Medicare covered the entire costs excluding small co-payments for medicine and office visits. Kaiser's rate increases are part of an effort to recuperate from financial losses in 1997 and 1998. Kaiser spokesperson Beverly Hayon said, "We had really misjudged our premiums. They were far too low for a period of time." Although Kaiser announced Monday that it earned $143 million during the second quarter, Hayon said that the premium hikes still are necessary to carry Kaiser through the coming years. She said the company will need "massive capital" to keep up with costly technological advances and finance seismic retrofitting at its 30 California hospitals. Hayon said, "You're looking at massive investments over the next decade without which we won't be able to sustain our health care program."
CalPERS Joins the Crowd
Keeping pace with Kaiser, the California Public Employees Retirement System also plans on raising premium rates next year. After completing negotiations with 10 HMOs, CalPERS spokesperson Bill Branch said that the system's rates will rise an average of 8.6% in 2001. Branch cited increasing drug costs as the primary reason for premium hikes. Branch said, "We think we made out as best as could be expected, given the strong inflationary pressures across the country in health care" (McMillan, 8/2).