June 15, 2016

Communications & Stakeholder Relations
(916) 795-3991
Brad W. Pacheco, Deputy Executive Officer
Wayne Davis, Chief, Office of Public Affairs
Contact: Bill Madison, Information Officer

SACRAMENTO, CA - The California Public Employees' Retirement System's (CalPERS) Board of Administration today approved health care rate and plan changes for 2017 that include an average 3.24 percent overall premium increase. Medicare plan premiums will go down in 2017, and benefit changes will include some health plans expanding their services while one major plan eliminates one of its health plan offerings.

Members enrolled in CalPERS' Basic (non-Medicare) Health Maintenance Organization (HMO) health plans will have a 4.14 percent average premium increase, and there will be a 3.76 percent increase for Preferred Provider Organization (PPO) plans. CalPERS Medicare plan enrollees will see their premiums reduced by an average 1.63 percent.

The rates for 2017 are the first-year result of a multi-year revision of the rate development process for CalPERS.

"The process we are using now helps us to better identify and isolate the factors that increase health care costs," said Board chair, Rob Feckner. "We will now be able to leverage our resources to ensure better accountability and transparency by our health plan partners and negotiate the best rates possible."

CalPERS uses a risk adjustment calculation to ensure that the financial risk of covering both healthier and sicker members is spread evenly among the health plans. An improvement in the risk calculation process this year will ensure the adjusted premium rates represent more equitable risk sharing among CalPERS' health plans. However, the change did result in a double-digit increase for the Anthem HMO Traditional plan.

"Our staff did an excellent job during this year's negotiations," said Priya Mathur, chair of the Pension and Health Benefits Committee. "Their process kept the premium increase low and laid the groundwork for us to continue our efforts toward cost containment in the future."

CalPERS offers HMO Basic coverage plans through Anthem Blue Cross, Blue Shield of California, Kaiser Permanente, Health Net, Sharp, and UnitedHealthcare; three self-funded PPO Basic plans administered by Anthem Blue Cross; and three association health plans.

CalPERS Medicare plans are available through UnitedHealthcare, Kaiser Permanente, and CalPERS' three self-funded PPO plans: PERS Choice, PERS Select, and PERSCare.

Among the health plan benefit changes for 2017:

  • Blue Shield will close its NetValue health plan offering
  • The Pension Fund will require all health plans to implement a diabetes prevention program to complement diabetes management efforts
  • Kaiser Permanente will offer dental coverage for non-state public agency retirees in California who aren't provided the coverage as part of their benefits. Kaiser will also offer a health and wellness program called "Silver & Fit" for CalPERS members enrolled in its Medicare plan.

View the CalPERS Board Meeting Highlights video, in which Doug McKeever, CalPERS Deputy Executive Officer for Benefits Programs Policy and Planning, comments on the annual increase for 2017 health plan rates and the effort to restrain health care costs.

CalPERS is projected to spend an estimated $8.9 billion in 2017 to purchase health benefits for 1.4 million active and retired state, local government, and school employees and their families. View detailed rate information by plan type for active and retired members.

CalPERS members can make changes to their health plans during the annual Open Enrollment period, September 12 to October 7, 2016. Open Enrollment materials and information on health plan options will also be available online through members' my|CalPERS accounts beginning August 22, 2016.

For more than eight decades, CalPERS has built retirement and health security for state, school, and public agency members who invest their lifework in public service. Our Pension Fund serves more than 1.8 million members in the CalPERS retirement system and administers benefits for more than 1.4 million members and their families in our health program, making us the largest defined-benefit public pension in the U.S. CalPERS' total fund market value currently stands at approximately $291 billion. For more information, visit www.calpers.ca.gov.

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