Press Release
June 12, 2012
External Affairs Branch
(916) 795-3991
Robert Udall Glazier, Deputy Executive Officer
Brad Pacheco, Chief, Office of Public Affairs
pressroom@calpers.ca.gov
CalPERS Committee Recommends 2013 Health Benefits Rate Package
SACRAMENTO, CA – Reflecting growing health care costs nationwide, the California Public Employees’ Retirement System’s (CalPERS) Pension and Health Benefits Committee (PHBC) today recommended a 2013 health care package that would raise overall premiums next year by an average 9.6 percent for the Pension Fund’s nearly 1.3 million health program members. The rate is higher than the 2012 increase of 4.1 percent and translates, on average, to an additional $30 a month per CalPERS member."We introduced a number of initiatives over the past three years to help stabilize rates, but today’s rates reflect the overall continuing upswing of healthcare costs," said Priya Mathur, Chair of the PHBC. "We tried as much as possible to keep the overall increases close to the national health care cost inflation rate of more than 7 percent projected for next year."
One of the factors affecting the 2013 rate increases was the end of the federal Early Retiree Reinsurance Program (ERRP) reimbursements under the Affordable Care Act. CalPERS has used more than $200 million in ERRP funds to offset increases in premiums in past years.
CalPERS has also implemented initiatives over the years that helped improve member health and wellness while lowering the costs of member healthcare. In 2010, the CalPERS health benefits program generated about $600 million in savings by removing high-cost hospitals, emphasizing health and disease management and expanding the Blue Shield Net Value and self-funded PERS Select health plans. Other initiatives included a nationally recognized integrated healthcare program that help produce $20 million in cost savings; the use of lower-cost, high-quality ambulatory surgical centers for colonoscopy, knee and hip replacement, arthroscopic, and cataract surgeries; and improved pharmacy benefit changes that emphasize the use of less expensive generic drugs for members.
The recommended rate package includes coverage increases of 8.7 percent for Basic Health Maintenance Organizations (HMOs, non-Medicare) and 13.9 percent for Basic Preferred Provider Organizations (PPOs, non-Medicare). Medicare plans will see an overall decrease of 10.5 percent.
One benefit change in the package will save nearly $40 million for Medicare enrollees, and an expansion of Blue Shield’s Integrated Health Care programs into Santa Cruz and Los Angeles will generate savings for Basic Members, while maintaining a focus on quality, patient safety, engaging members in their care and providing diverse benefits.
"As we negotiate with our health plan partners, our objective continues to be initiatives that will help us improve our members’ health while reducing their health care costs," said Ann Boynton, Deputy Executive Officer for Benefit Programs Policy and Planning. "We are focused on increased member compliance with chronic condition management programs that get members more engaged in making health care decisions."
The 2013 health plan design changes include converting Supplement to Medicare plans from the Medicare Part D Retiree Drug Subsidy (RDS) program to the Employer Group Waiver Plans (EGWP), a move expected to save CalPERS $39 to $44 million.
Blue Shield will expand its NetValue plan into Marin, Sonoma, Humboldt and Stanislaus counties, and add its 65+ Managed Medicare Plan to some zip codes in Contra Costa County. Blue Shield also plans to add providers to NetValue programs in Ventura, San Bernardino, San Diego and Santa Clara Counties. The rate projections for 2013 include PPO plan rate increases. They do not include application of a portion of the PPO plans’ excess reserves to mitigate 2013 rate increases. The Blue Shield rates include the company’s pledged 2 percent premium refunds for 2011 and 2012.
Kaiser Permanente will implement an Alternative Access pilot program for CalPERS that will focus on increasing member awareness about clinical services options and get them more engaged in managing their own healthcare.
The 2013 HMO Basic member plan rates will rise by 9 percent for Kaiser, 8.7 percent for Blue Shield Access+ and 7.9 percent for Blue Shield NetValue. For PPO Basic plans, rates will rise by 16.2 percent for PERS Choice and 5.3 percent for PERSCare, but there will be no increase for PERS Select. Medicare HMO rates will rise by 3.8 percent for Kaiser, and decrease by 15.1 percent each for PERS Choice and Select and by 14.3 percent for PERSCare. The Blue Shield Access+ and NetValue Medicare plans will decrease by 22.6 percent each.
Basic and Medicare plan rates for the California Association of Highway Patrol (CAHP) had no increase. Rates for the California Correctional Peace Officers Association (CCPOA) and the Peace Officers Research Association of California (PORAC) increased by 6.4 percent for Basic plans and decreased 1.8 percent for Medicare plans.
If approved by the full Board of Administration at its June 13 meeting, the program’s new rates and benefit provisions will take effect January 1, 2013. Please see the chart below for premium changes by plan type:
CalPERS 2013 Health Plan Premium Increases
| Plan Product & Type | 2012* | 2013* |
|---|---|---|
| Overall | 4.6% | 9.6% |
| HMOs | 5.3% | 8.7% |
| PPOs | 3.0% | 13.9% |
| Associations | 2.7% | 3.7% |
*Premium changes for public agencies vary depending on geographic location.
| Plan Product & Type | 2012* | 2013* |
|---|---|---|
| Overall | 0.0% | -10.5% |
| HMOs | -0.9% | -5.5% |
| PPOs | 0.7% | -14.7% |
| Associations | 0.9% | -0.15% |
*Premium changes for public agencies vary depending on geographic location.
CalPERS is the nation’s largest public pension fund with approximately $225 billion in assets, providing retirement benefits to more than 1.6 million State, public school, and local public agency employees, retirees, and their families, and health benefits to more than 1.3 million members. The average CalPERS pension is $2,332 per month. The average benefit for those who retired in the most recent fiscal year that ended June 30, 2011, is $3,065 per month. For more information about CalPERS, visit www.calpers.ca.gov.
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Dated: 06-12-2012
