CalPERS Premium Hikes Send ‘Red Flag’ to Employers Nationwide

As CalPERS, California's public employees system, considers raising premiums by 15% to 18%, USA Today reports that the potential hike is "an ominous sign for employers nationally." CalPERS -- often considered a "bellwether" for health care costs nationally -- is still negotiating premiums, but the rate hikes that have been proposed indicate that "managed care is no longer able to contain health care costs," USA Today reports. Ken Jacobsen, a benefits analyst at Segal Co., said, "This raises a red flag for all employers and is particularly ominous for small employers who don't have the clout to negotiate strong deals." To cover costs, USA Today reports that employers will "likely" increase copayments workers' share of the premiums. A recent survey by Watson Wyatt of 360 employers found that half would increase copayments and 70% intend to raise the employees' share of premiums (Appleby, USA Today, 3/22).