How CalPERS Sets Health Rates
We set health rates, also known as health premiums, by way of our annual rates development process. We negotiate confidentially and methodically with health carriers to achieve the most competitive rates possible for our members and employers.
We compare carrier data against actual cost and utilizations trends using data from our Health Care Decision Support System (data warehouse), plus consult with external actuaries to validate the proposed health rates. Cost and quality conscious board actions have also helped moderate increases for more than 20 years.
Rates Development Timeline
Carriers submit initial health rates to the CalPERS rates team.
March through May
Carriers refresh claims data from the prior year for CalPERS to update and improve the rates submitted in February.
CalPERS presents initial rates to the PHBC during closed session.
CalPERS presents preliminary health rates during the PHBC open session, but negotiations continue into June.
CalPERS final rates are approved by the board during open session.
CalPERS and its carriers examine the following when negotiating health rates:
- Utilization trends, such as emergency room visits versus urgent care visits
- Cost trends, such as pharmaceutical price fluctuation
- Benefit design changes, such as new wellness program opportunities
Ultimately, health premiums must be affordable and sustainable for members and employers as stated in the CalPERS Health Beliefs.
Furthermore, the CalPERS Health Program is governed by the Public Employees' Medical and Hospital Care Act (PEMHCA), which requires that health premiums reasonably reflect the cost of the benefits provided. PEMHCA also establishes contracting agencies' minimum health premium contributions based on annual adjustments in the Consumer Price Index-Urban. These unique protections benefit employers as well as members.
Health Plan Evaluation
The sustainability of the health program is the foremost consideration when reviewing proposed changes to benefits, coverage areas, and costs.
If a new plan requests to join or leave the program, we meticulously study the impact on members and their access to care.
We prioritize comprehensive care options, cost containment, and program sustainability for the long term. We ensure the largest possible group of California public employees receives best in class health benefits.