CalPERS Panel Releases 2007 Recommended Health Rates

June 21, 2006 ( - A panel of the California Public Employees Retirement System (CalPERS) has recommended that health maintenance organization (HMO) premiums be boosted by an average of 11.6% for 2007.

CalPERS staff tried to moderate premium increases for next year by charging higher co-payments for physician visits and emergency room care and by adding co-payments for hospital care and outpatient surgery. All proposals were nixed.

Benefits professionals around the country are closely watching the recommendations of CalPERS health care, the nation’s third largest purchaser of health benefits after the federal government and General Motors. The California pension system provides health benefits to state and public agency employees, retirees and their dependents.

“We’ve been able to moderate premium increases in recent years with several initiatives, but costs continue to soar and our aging enrollees are requiring more care,” CalPERS Health Benefits Committee Chairman George Diehr said in a Web statement . “We negotiated the best rates possible, but we remain very concerned. We need fundamental reforms and will continue to aggressively pursue them at the state and national level.”

Under the proposed HMO rates package, Blue Shield member premiums would increase by 13.09% in 2007. Kaiser Permanente Basic plan rates would rise 10.07%. Western Health Advantage, a regional plan in the greater Sacramento area, would increase Basic premiums by 11.8%. Medicare plan HMO rates would rise by 24.98%.

According to the announcement, Basic plan rates would vary among five regions of the Golden State for members of about 1,100 local government agencies in 2007 to better reflect market costs. Premiums in the North would be higher than in the South, where there is more competition. But premiums would vary less for preferred provider networks (PPOs) than for HMOs.

The committee also recommended changes in premiums for the two PPO plans. PPO Basic plan premiums would increase by 12.5% for PERS Choice, 13.09% for PERSCare members and 6.77% for Medicare PPO members.