CalPERS Approves Premium Rate Increase for HMO Plans

The California Public Employees' Retirement System on Thursday approved new health insurance contracts for 2009 that include premium increases of up to 8%, although the overall average premium hike is the lowest in more than a decade, the Sacramento Bee reports (Ortiz, Sacramento Bee, 6/20). The San Francisco Chronicle reports that CalPERS' "premium increases are closely watched because the giant state pension fund is considered a bellwether for overall trends in the health insurance market" (Colliver, San Francisco Chronicle, 6/19).

Under the new contracts, monthly premiums for families covered by Blue Shield of California's "NetValue" program will increase by 3.7% to $1,161, and monthly premiums for CalPERS most costly plan, Blue Shield Access +, will increase by 5.3% to $1,313. Monthly premiums for families covered by Kaiser Permanente's HMO will increase by 8.2% to $1,227 (Sacramento Bee, 6/20).

According to the Chronicle, Blue Shield's premium increases were "relatively low" because of a rollover credit from the insurer for lower-than-expected use of physicians and hospitals in the past two years. Priya Mathur, chair of CalPERS' health benefits committee, in a statement said, "We are approving the Kaiser rate under protest," adding, "We need to get to a new day where Kaiser truly partners with us, taking our size and our claims experience as the barometer for rates instead of general cost trends."

Kathleen McKenna, a spokesperson for Kaiser, said the HMO sets its rates based on considerations of how much CalPERS uses its services. CalPERS' board of trustees was scheduled to vote on the recommendation on Thursday.

The CalPERS board of trustees in May voted to reduce premium rates for PPO plans by 3%, affecting 4,300 of the group's 1.2 million members. An additional 315,000 members will see no premium increases for their PPO plans (Colliver, San Francisco Chronicle, 6/19). According to CalPERS officials, premium rate increases for all plans averaged 4.3%, the smallest increase in more than a decade (Sacramento Bee, 6/20).

Please note: The Kaiser Family Foundation is not associated with the Kaiser Foundation Health Plan, Kaiser Permanente or Kaiser Industries.