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Associated Press State & Local Wire
May 19, 1999
by DOUG WILLIS
HMO Rates Going Up 9.7 Percent in 2000 for 1 Million CALPERS membersHealth care premiums for more than 1 million state and local government employees and retirees will increase next year by an average of 9.7 percent, the California Public Employees' Retirement System says.
That could signal big health care cost increases for other Californians.
"This is the worst news we could possibly receive. CalPERS sets a benchmark that means the rest of us are going to see double-digit increases in our premiums," said Jamie Court of the Foundation for Taxpayer and Consumer Rights after the CalPERS announcement on Tuesday.
CalPERS contracts often have an impact that extends far beyond the 700,000 government employees and 300,000 retirees served by the system because CalPERS is the nation's second largest buyer of health insurance, behind only the federal government. Also, it is one of the earliest in the nation each year to negotiate rates for the next year.
That is the biggest increase in CalPERS premiums since 1991, when they rose an average of 12 percent. Since then, premiums have dropped in five of the past eight years. The latest increase will return most premiums to approximately 1991 levels.
The new monthly rates will range from a high of $ 195.31 for a single-person premium in the Lifeguard plan to a low of $ 161.49 for the Universal Care plan.
CalPERS officials said the employee share of the rate increase varies among the 1,250 government agencies in CalPERS, depending on local contracts with employee unions.
"Some employees would be fully covered, and others would not be," said Fred Steinmetz, chief of CalPERS' health benefit services division.
Margaret Stanley, CalPERS' health benefits manager, said the increases were necessary after several years of belt-tightening in the industry.
Stanley added that she was confident that "HMOs are still our best bet for controlling health care costs."
But Stanley said she was disappointed with Kaiser Foundation, which has the biggest CalPERS contract with 350,000 members, for raising its rates by 11.7 percent on top of a 10.75 percent increase at the start of this year.
"Last year Kaiser was our most inexpensive plan. This year it moved to mid-range. In 2000, Kaiser will ... become our third most expensive plan," she said.
"We raised our rates reluctantly in the face of increasing health care costs," said Kaiser spokeswoman Kathleen McKenna. "It's no secret that we lost money the past two years and we are working hard to improve our performance."
Other new contracts for the year 2000 announced by CalPERS provided increases of 3.9 percent for Maxicare, 5.6 percent for Cigna, 6.0 percent for PacifiCare, 6.5 percent for Aetna US Healthcare, 8.5 percent for Blue Shield HMO, 9.9 percent for Health Plan of the Redwoods and 10.9 percent for Lifeguard.
There was no percentage comparison for Universal Care since it is signing its first CalPERS contract.
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