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CalPERS health insurance will cost more next year, but not as much more as insurers wanted


Health insurance premiums for CalPERS members are going up next year, but rates will be lower than insurers initially requested, according to 2020 rates published Tuesday.

Premiums will go up 4.65 percent on average next year. Last month, insurers submitted requests for increases to CalPERS that would have raised rates by an average of 7.2 percent.

At last month’s meeting, CalPERS staffers said some insurers likely would reduce premiums for competitive reasons after seeing one another’s published rates. Board members strongly encouraged staff to do all they could to tamp down rate hikes.

The California Public Employees’ Retirement System provides health insurance to about 1.5 million people, including current and retired state workers and their dependent family members. The fund also provides health insurance to workers and families of some other public agencies and schools around the state.

The most popular plan CalPERS offers, a Kaiser HMO that had about 630,000 members in January, will go up 3 percent; not the 6 percent announced last month.

CalPERS’ most popular PPO, called PERS Choice, will go up 2.9 percent. Last month, it was projected to increase by 5 percent. The plan had about 221,000 members in January.

Overall, HMO plans are going up an average of about 6 percent, while PPO plans are going up an average of about 3.3 percent.

Premiums for CalPERS’ PPO-style Medicare Advantage plans are decreasing an average 2.5 percent, while the fund’s HMO-style Medicare Advantage plans are increasing by an average of about 6 percent.

The plan with the biggest increase last month, a Health Net Smart Care HMO, reduced its rate hike to about 18 percent, from last month’s 24 percent. Premiums for the plan, which had about 26,000 members in January, are going up partly due to the unexpected addition of about 10,000 new Bay Area policyholders after Blue Shield left the area.

A health care subcommittee of the CalPERS Board of Administration approved the final rates Tuesday. The full board is scheduled on Wednesday to vote on them.

“We negotiate aggressively because we know that many of our members must pay the entire cost of any premium increase entirely out of their own pocket,” said Rob Feckner, the committee’s chairman. “While these rates reflect the current state of the health care market, we expect the health plans that do business with us to also take strong actions to keep costs down. We’ll continue to hold them accountable and to be more transparent as we work on behalf of our 1.5 million members in our program.”

CalPERS staff told the board in May that the premium increases generally stem from the costs of medical care exceeding premium revenue. Radiology tests, walk-in surgeries and office visits all increased among policyholders in 2018, the last full year of data, according to a CalPERS analysis. Prices also increased for prescription drugs, lab tests and emergency room visits.

Policyholders will be able to switch plans during an open enrollment period from Sept. 9 through Oct. 4.

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