On Tuesday, CalPERS' pension and health benefits committee approved a plan to raise health insurance premiums by an average of 9.6% next year for 1.3 million public employees, retirees and their families, the Sacramento Bee reports.
The full CalPERS governing board will consider the proposal on Wednesday.
Details of the Increase
The proposed 9.6% hike in health insurance premiums is one of the largest increases in recent years and more than twice the 4.1% premium increase that took effect this year (Kasler, Sacramento Bee, 6/12).
The proposal would increase health insurance premiums by:
- 13.9% for PPO plans; and
- 8.7% for HMO plans.
Rates would decrease by an average of 10.5% for Medicare plans, according to CalPERS.
If approved, the rate increases would cost members an average of $30 more per month (Terhune, Los Angeles Times, 6/12).
CalPERS on Rate Increase
Priya Mathur -- chair of the CalPERS committee -- said, "We introduced a number of initiatives over the past three years to help stabilize rates, but today's rates reflect the overall continuing upswing of health care costs."
The pension fund also cited the end of the federal Early Retiree Reinsurance Program as another reason for the rate hike. CalPERS used more than $200 million in funds from that program to offset premium hikes in previous years.
Reaction, Implications
Joanne Spetz -- an expert on health care finance at UC-San Francisco -- said that the increases seem "a little high, given the recession" but that costs are going up everywhere. She said, "The hospitals are ... billing more for each service, and the labor costs are going up."
Spetz added that CalPERS has significant influence on the health care marketplace. She said CalPERS tends "to push back (on insurers), so if they accepted it that kind of sets the tone for what the rest of us can expect" (Sacramento Bee, 6/12).