Human Capital & Careers

Calpers HMO Premiums Climb 11.4 Percent

The rate hike is far less than in 2003 and 2004, but it still extends a string of double-digit increases to four years.
Stephen TaubJune 17, 2004

The California Public Employees’ Retirement System announced that its average rate increase for 2005 HMO plans is 11.4 percent, according to the Contra Costa Times.

This is a big blow to the many employers for whom Calpers is a benchmark. The nation’s largest pension plan is also the third-largest purchaser of health insurance in the United States and the largest in California.

The rate hike is far less than the whopping 26 percent increase in 2003 and the 18 percent increase in 2004 — but it still extends a string of double-digit increases to four years.

“It’s always very difficult for this body to take action to adopt rate increases,” Calpers board president Sean Harrigan reportedly said at a Tuesday meeting of the pension fund’s health benefits committee. “I just want to say that where we’re at today is significantly better than where I thought we’d be.”

The story is much different for Calpers’ PPO plans, which face an average increase of 6.4 percent for 2005 — partly because of Calpers’ decision to apply reserves to keep premiums down, according to the Times.

Among the HMO plans offered by Calpers, premiums will increase by 12.6 percent for Blue Shield, 9.9 percent for Kaiser Permanente, and 15 percent for Western Health Advantage, the paper reported. Among the PPO plans, rates will increase by 4.8 percent for PERS Choice and 12.7 percent for PERSCare.

Medicare HMO rates will decrease by 7.4 percent, while Medicare PPO rates will rise by 2.8 percent.

Calpers continued to alter its benefits to mitigate many of its cost increases. In recent years, it hiked co-payments for doctor visits and pharmaceuticals and reduced the number of health plans offered to members. This year, its board voted to eliminate 38 of the most expensive hospitals from its Blue Shield network, which will save Calpers $45 million per year.

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