Open enrollment: An annual ritual for state employees

As the summer begins to wind down and the kids head back to school, California state employees are preparing for their own open enrollment.

Starting on September 17, the health-care open-enrollment season will begin. During this period, which lasts until October 12, state employees and retirees will have the opportunity to change health plans and add, modify or delete dependents from their coverage.

State and retired employees’ health insurance is administered by CalPERS. The health-insurance plans offer a variety of options that are available to covered employees. The majority of these fees are paid by the state employer.

This year the program has some changes in store for participants.

“This 2008 benefits program costs are substantially lower than what consultants are anticipating for U.S. employers next year,” Rob Feckner, chairman of CalPERS Board of Administration, said in a press release. “More importantly, it is strategically aligned to deliver high standards of efficient health care and disease prevention, and achieve rate increases well below the average in today’s marketplace.”

Among the many changes expected to be made, the 2008 health-care program will include an increase in HMO co-pays by $5 for office visits. Further, there will be a $15 increase in the HMO co-pays for standardized urgent care and an annual out-of-pocket maximum for Blue Shield.

According to CalPERS, there will also be free office visits for many preventative-care services, as well as the addition of two new high performance health plans that will be less expensive in premium than the standard plans for Blue Shield and PERS Choice.

In June, the CalPERS Board of Administration approved the lowest health-benefit rate increase in a decade. The 2008 premiums will increase by only 6.3 percent.
In the last five years, Basic HMO plan premiums have increased by 101 percent and Basic PPO plan premiums have gone up by 78 percent.

“We recognize that in this tough health-care marketplace, a combination of approaches is necessary to keep rate hikes low and quality high,” George Diehr, chairman of the Health Benefits Committee, said in a written statement. “We will continue to pursue innovative, aggressive approaches with our health plans to get a better value for our dollars, and provide our members with opportunities and incentives to obtain the highest quality of care at the most affordable price.”

The tough marketplace has led CalPERS to eliminate a health-care plan, as well. Earlier in the year, the decision was made to eliminate Western Health Advantage as a plan option.

WHA had been providing HMO benefits in six counties in the greater Sacramento region since 2002. Last year, it surpassed PERS Care as the plan with the fourth largest number of enrolled subscribers using the state Basic plan.

CalPERS cites the inability of WHA to offer many of the services that larger HMO carriers do. Although CalPERS had hoped for WHA to expand its services beyond its coverage region, the provider did not do so. The CalPERS decision also reflected its frustration with WHA, which had chosen to continue a community rating approach to develop CAlPERS rates, instead of the method familiar to the CalPERS population.

While the change won’t go into effect until January 1, the decision will affect 24,000 CalPERS members who currently belong to WHA. The members will have to transfer to other plans during the open enrollment period.

Last year, approximately 10,328 subscribers transferred their plans. However, there were no significant changes in benefit designs or plan offerings.

In 2006, Blue Shield experienced the greatest amount of members switching plans with nearly half its subscribers who transferred switching to Kaiser Permanente and roughly a quarter going to PERS choice.

While CalPERS has eliminated WHA, the Board of Administration decided on May 16 to add a new HMO and PPO option. These “high performance networks” will allow members to use the most efficient providers at a smaller cost than the full networks.

Meanwhile, in April, the state introduced the Retiree Vision Program. Retired state employees were able to enroll in the new program, which became effective on July 1. In the upcoming open enrollment period, retirees can again elect to add this coverage.

The third largest purchaser of health benefits in the nation, CalPERS only trails behind the federal government and General Motors. CalPERS provides health benefits to over 1.2 million public and state employees, retirees, and their dependents.