Press Release

May 15, 2008

Office of Public Affairs
(916) 795-3991
Pat Macht, Assistant Executive Officer
pressroom@calpers.ca.gov

Members See Relief in PPO Health Rates - Some Will See No Increase in Premiums; Others Will See Decrease of Three Percent

SACRAMENTO, CA – For the first time in a decade, up to 315,000 members of the California Public Employees’ Retirement System’s preferred provider organization (PPO) health plans will see their premiums stay the same next year, while premiums for another 4,300 will be slightly lower.

That’s the effect of an action taken today by the CalPERS Board of Administration. Based on a recommendation by its Health Benefits Committee to set premiums for State workers and retirees, the Board signaled that the change will affect all CalPERS members in PPOs.

The action paves the way for no increase for members who are in two of CalPERS traditional self-funded health plans – PERS Choice and PERSCare. Members in CalPERS newest self-funded PPO plan, PERS Select, will see a three percent decrease in premiums next year. (PERS Select is a plan in which members choose from a smaller network of doctors in exchange for a lower premium than the traditional PPO plans.)

The action was made possible because of news that the PPO fund’s surplus reserves stand at $333 million. The reserves are a result of lower-than-expected costs in medical and pharmacy claims for the last year, in part due to an increase in availability of generics, and members’ increasing use of those generics and their fewer hospital admissions.

“We are pleased to have the opportunity to pass back some of the surplus reserves to our PPO members,” said Board President Rob Feckner. “It’s great to see what can happen when our members choose to use less expensive generic drugs where appropriate, and embrace strategies they can use themselves to stay well and help keep the increasing cost of health care at bay.”

CalPERS used about 18 percent of its surplus reserves – or about $60 million – to avert premium increases for PPO members.

“Keeping health care cost increases in check must continue to be a partnership between CalPERS and our members,” said Priya Mathur, Chair of the Health Benefits Committee. “While we are glad we can pass on the savings next year, our future health care costs will depend very much on members being actively engaged. This means making healthy lifestyle choices, practicing preventive care, using generic drugs when available and using urgent care instead of emergency care facilities when appropriate. CalPERS will do its part in holding the health care industry’s feet to the fire on issues of access, quality of care and affordability. We will keep pursuing innovative, aggressive approaches with our health plans to deliver high quality health and disease management programs, and encourage our members to take advantage of those programs.”

In June, the Board will approve premiums for all CalPERS health maintenance organization (HMO) health plans.

CalPERS is the nation’s third largest purchaser of health benefits after the federal government and General Motors, providing health benefits to 1.2 million State and public agency employees, retirees, and their dependents. For more information, please visit www.calpers.ca.gov.

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Dated: 05-15-2008