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CalPERS health premiums for 2015 a mix of hikes, cuts

CalPERS’ health care premiums are going up again for hundreds of thousands of public employees and their families, although 40 percent of CalPERS members will see their rates decline.

The 2015 CalPERS premiums, closely watched in the health care industry because of the pension fund’s size and clout, will be a decidedly mixed bag. Blue Shield of California HMO subscribers will be hit with rate hikes of 9.6 percent to 16.4 percent, depending on the specific plan. But Kaiser HMO members’ rates will fall 4.3 percent.

“Some are cutting, some are increasing. That’s really interesting,” said Joanne Spetz, a health care economist at the University of California, San Francisco. She said the wide variations could reflect different experiences the insurers have had with the CalPERS patient population.

CalPERS’ Pension and Health Benefits Committee approved the new rates Tuesday; the full board of administration will vote on the issue Wednesday. The rates are scheduled to take effect Jan. 1.

The California Public Employees’ Retirement System spends about $7.7 billion a year on health care for 1.38 million public employees, retirees and relatives. It is the nation’s second-largest health care purchaser, after the federal government. As such, it is widely viewed as a harbinger of how health care prices are trending. When CalPERS approved rate hikes averaging 9.5 percent two years ago, it sent a jolt through the insurance industry.

Unlike previous years, CalPERS didn’t provide an overall average number for its latest rate design. The reason was that the Blue Shield increases “threw off the whole average,” said CalPERS spokesman Bill Madison.

More than a year ago, CalPERS decided to break up the quasi-monopoly Blue Shield had on CalPERS’ HMO business and bring other carriers into the mix, including Anthem Blue Cross, Health Net, Sharp and UnitedHealthcare.

The CalPERS board believes adding the other plans has “helped make the program more competitive and will continue to do so,” Madison said. Blue Shield still has about 400,000 CalPERS HMO customers.

In a prepared statement, Blue Shield said its rates are “based on health care cost trend and utilization of services among other factors. We continue to work with CalPERS to control health care costs so that we can continue to offer affordable, high-quality products and services to our members at a competitive price.” The 2015 rates were affected in part by new rating criteria established by CalPERS , involving such factors as a member’s health status and place of residence, the insurer added.

Overall, the CalPERS basic HMO plans will see a 3.9 percent increase, while its HMO Medicare members will see rates go up 5.9 percent. PPO rates will go up less than 1 percent, but Medicare PPO rates will rise 11.5 percent.

CalPERS said more than 570,000 members of CalPERS will see rate cuts averaging 3 percent. Another 175,000 members will see their rates go up, but by less than 3 percent. Together, those groups represent about half of the CalPERS membership pool.

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