CalPERS Board Approves Average Health Premium Rate Increase of 2.9 Percent - Lowest increase in 14 years

SACRAMENTO, CA – The CalPERS Board of Administration today approved an overall 2.9 percent increase in health care premiums for its members – the lowest increase achieved in its health care program in 14 years.

“These rates were the result of better health care practices by our members and hard work by our Board and staff,” said Rob Feckner, President of the CalPERS Board. “This is good news for our members who are facing furloughs, pay cuts and difficult economic times.”

CalPERS basic HMO plans will increase by 3.4 percent, basic PPO plans by 3.3 percent and a 1 percent increase for the pension fund’s association plans serving highway patrol, correctional and peace officers. Members in Medicare plans will see an average increase of 1.1 percent.

Decisions and actions by the CalPERS Board and staff saved the program more than $600 million and fended off rate increases that would have been near 9 percent.  The final rates reflect:

• Lower use of health care services and more extensive use of generic drugs by members and their families compared to previous years.
• Tougher negotiations by CalPERS staff and proactive healthcare management by the health plans and their providers.
• The results of many years of the Board’s strategic decisions which resulted in cost reductions and better health outcomes, including the removal of high cost hospitals, emphasis on health and disease management programs, the addition of NetValue and PERS Select low cost “high performance” health plans, a new lower cost pilot program between Blue Shield, Catholic Healthcare West, and Hill Physicians Medical Group that will be available to CalPERS members in the greater Sacramento region, and stronger medical and pharmacy management.

Today’s action introduces a new Blue Shield Medicare Advantage Part D plan in nine counties including Fresno, Kern, Los Angeles, Madera, Orange, San Bernardino, San Luis Obispo, Ventura and parts of Riverside; and brings the successful Blue Shield’s NetValue plan to four more counties including Imperial, San Francisco, San Luis Obispo, and parts of San Mateo.  It also follows on the heels of months of negotiations with health plan partners and research into new plan options that carried lower premiums but higher co-payments for office visits, prescriptions and deductibles.

“We looked at a number of plan options in an effort to provide more choices to our members, “said Priya Mathur, Chair of the Health Benefits Committee.  “While these options have merit, we need more time to find choices that will be cost effective over the long-term and ensure we meet the health care needs of our members.”

Rates and more information can be found on CalPERS Web site at www.calpers.ca.gov.

CalPERS is the nation’s largest public pension fund with more than $183 billion in assets. It provides retirement benefits to more than 1.6 million State, school and local public employees, retirees and their families, and health benefits to nearly 1.3 million members.