A system out of whack. A new program that promises lower benefits. Higher payments from government workers.

Arguments for pension reform redux? So soon?

Nope, this time it's CalPERS' long-term care benefit program. But it's a proxy for the larger issue of public pension reform, illustrating what happens when workers feel the real bite of their benefits.

CalPERS counts about 150,000 state and local government workers in its long-term care insurance program, which pays for nursing and convalescent home stays.

Like other providers in the business, CalPERS underestimated its costs in the 1990s, was hit by higher-than-anticipated claims and was hammered by weak investment returns. It closed enrollments and has hiked premiums for the program several times, hoping to right the ship.

Now CalPERS' staff has recommended a whopping rate hike of up to 85 percent and a lower-benefit, lower-cost alternative care plan.

Susan Sears, president of California State Retirees, said Wednesday that her members are "distressed. They feel like they've paid in so much money already. ... (CalPERS) can't just pass this on to us. The program is broken. It needs to be fixed."

That sounded a lot like what pension reformers for years have said about government retirement benefits. Unlike pensions, however, the long-term care program isn't guarded by government (i.e., taxpayer) money. When it falls short, it's solely the beneficiaries' problem.

That difference aside, the long-term care story shows that when a benefit system gets out of whack, the only ways to restore balance are to increase money into the system, cut benefits, or both.

Granted, CalPERS' insurance changes seek to head off looming unfunded liabilities, so it's more aggressive than the pension reform enacted by the Legislature last month.

But the new pension law, like the long-term care proposal, does eventually boost what employees pay into the system. It requires they ante up at least half the benefit's normal cost.

While most state workers now pay that or more, many local employees pay little or nothing. The upshot could mean hundreds of dollars per month out of employees' pockets, which, like the long-term care hike, will be a big-time sticker shock.

Which leads to a second parallel: Many employees choose a cheaper benefit if they have to pay more for the expensive option.

CalPERS' staff figures at least 10 percent of covered members will switch to a cheaper long-term care plan.

When it comes to pensions, retirement benefit increases and employee contributions haven't been so closely tied. Members haven't felt the full impact of pension enhancements.

The new pension law means future upgrades would automatically hike employer and employee contributions – and temper many workers' enthusiasm for future pension increases.

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