CalPERS cost increase for 2011

The California Public Employees Retirement System will be raising its health-care contribution rates by a total of 9.1 percent for its 1.3 million program members. These increases will be enacted by 2011.

“This increase mainly reflects higher costs that plans anticipate for hospital, medical and prescription drug use next year – not from members using more services or the new federal health care law,” CalPERS Board President Rob Feckner said in a prepared statement. “These are the best rates we could negotiate in the current market, where similar increases are forecast next year for other employer purchasers.”

While the federal health care reform program will reduce rates for HMO (Health Maintenance Organization) and PPO (Preferred Provider Organization) plans by approximately 2.2 percent to 5.5 percent in 2011, the CalPERS Board approved a plan from its Health Benefits Committee increasing rates. Basic HMOs will be raised 10.6 percent, Basic PPOs will be raised 8.6 percent and Medicare plans will be raised 3.4 percent.

The changes also affect state law enforcement’s health care. The California Correctional Peace Officers Association’s Basic plan premium rates will increase 13.4 percent and their Medicare plan premium 9.9 percent. The Peace Officer Research Association of California Basic plan premium rates will increase 8.9 percent and their Medicare plan premium rates will increase 15.2 percent. California Association of Highway Patrol’s rates will remain unchanged.

Changes for pharmacies include increases in the partial co-pay waiver for non-preferred brand retail drugs from $30 to $40, or $45 to $75 by mail order, an exclusion of coverage for prescribed drugs if an over-the-counter alternative is available, and a 50 percent co-insurance for discretionary drugs.

Other changes include a $250 per-admission co-pay for bariatric (pertaining to obesity) surgeries when a PPO member doesn’t use a center of expertise, and a value-based purchasing program for hip and knee replacements at PPO designated hospitals.   

Additionally, Blue Shield is offering its NetValue plan in Santa Cruz and Santa Clara counties, and will expand into San Mateo County, allowing a low-cost option for 22,000 more members. A two-year contract with Blue Shield is projected to save $48 million.

Changes for individual plans include a 5.6 percent increase for Kaiser, 16.4 percent for Blue Shield Access Plus and 15.6 percent for Blue Shield NetValue, and a 9.9 percent for PERS Choice, 2.9 percent for PERS Select, and 2.2 percent for PERSCare.

Starting in 2011, CalPERs will lift lifetime limits on the value and benefits for participants and beneficiaries, as part of the Federal Health Reform law, which also expends coverage to 23-, 24-, and 25-year-old dependents of CalPERs program members. They will be covered regardless of whether they are married, in school, or live with their parents.

CalPERs and the Health Benefits Committee have also announced concern over the rates of hospitals in Monterey County, the Salinas Valley Memorial Hospital and the Community Hospital of the Monterey Peninsula, which are 70 percent higher than average rates of Bay Area facilities.