On Wednesday, the CalPERS board of administration 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 Los Angeles Times reports (Terhune, Los Angeles Times, 6/14).
CalPERS' pension and health benefits committee approved the plan Tuesday.
Details of the Increase
The 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.
Health insurance premiums will increase by:
- 13.9% for PPO plans; and
- 8.7% for HMO plans.
Rates will decrease by an average of 10.5% for Medicare plans, according to CalPERS.
The rate increases will cost members an average of $30 more per month (California Healthline, 6/13).
The new rates will take effect Jan. 1, 2013 (Los Angeles Times, 6/14).
CalPERS on Rate Increase
Priya Mathur -- chair of the CalPERS pension and health benefits committee (since this story is not about the committee – it’s totally clear which one we’re talking about) -- 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 (California Healthline, 6/13).
According to the Sacramento Bee, the rate hike likely will affect taxpayers -- who will shoulder the portion of the costs that must be absorbed by government agencies -- in addition to the 1.3 million residents who have health plans through CalPERS.
Some experts cite CalPERS' older member base as a reason for rising costs, since older residents tend to use more health services.
Anthony Wright of Health Access California said, "CalPERS is often touted ... as having a lot of market power. But at the same time it has a population that's a little older and a little sicker than the general population" (Kasler, Sacramento Bee, 6/14).