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CalPERS Health Insurance Prices Will Rise Next Year

The California Public Employees Retirement System, or CalPERS, headquarters buildings are pictured Thursday, Sept. 16, 2021, in downtown Sacramento.

The California Public Employees Retirement System, or CalPERS, headquarters buildings are pictured Thursday, Sept. 16, 2021, in downtown Sacramento.

Premiums are expected to rise an average of about 7% for CalPERS health insurance policyholders next year, with two popular PPOs rising more than 14%, according to preliminary rates posted online Tuesday by the pension system.

The California Public Employees Retirement System provides health insurance to approximately 1.5 million people, including approximately 750,000 local and state public employees and retirees and approximately 770,000 dependents.

The system introduced changes two years ago that increased PPO premiums while lowering costs for two expensive plans with the richest benefits. The changes are aimed at preserving top-tier plans and stabilizing prices over the long term.

The plans that will increase in price are PPO PERS Gold and PPO Platinum. Together they cover approximately 278,000 people.

PERS Gold, covering around 124,000, is expected to increase its price by 17.8%, reaching $766 per month for an individual from January 1, according to preliminary figures.

PERS Platinum, covering about 153,000, is expected to rise 14.5% to $1,084 per month next year, the figures show.

By far the most popular plan offered by CalPERS is a Kaiser Permanente HMO that covers approximately 556,000 people. The Kaiser HMO is expected to grow about 6% next year, to about $853 per month.

Preliminary rates posted online are subject to further negotiation and may change slightly before being approved by the CalPERS Board of Directors next month. California pays about $650 a month for individual state worker plans and provides an additional $260 health insurance allowance to SEIU Local 1000 members.

Two years ago, CalPERS’ board approved a new pricing methodology on the recommendation of its health insurance experts, who said the system needed to make changes to save three of its top plans.

These plans – Anthem Traditional HMO, Blue Shield Access+ and a plan formerly known as PERS Care – attract the highest spenders on medical care. Insurers continue to raise their premiums to cover big bills, driving away healthy people and causing further price hikes.

This pattern, known as the “death spiral”, would have made the plans unsustainable, experts told the council two years ago.

So the board adopted a structure that, in simplified terms, essentially shifts money from low health risk plans to higher risk ones. As a result, prices for the Anthem and Blue Shield plans are expected to drop nearly 7% next year, in a second year of falling prices.

The plans formerly known as PERS Select, PERS Choice and PERS Care have been combined into two plans, the Gold and Platinum plans, which according to the new methodology are expected to stabilize from 2024.

CalPERS also offers Medicare Advantage policies and Medicare Supplemental Plans for those who are eligible.

The offerings include Medicare supplement plans called PERS Gold and PERS Platinum that cover about 150,000 seniors. Gold plan premiums increase by 4% and Platinum premiums by approximately 10%.

Other popular health insurance plans will increase by a few percentage points or be reduced. A Kaiser Permanente Senior Advantage policy covering around 111,000 seniors will see its price drop by around 6.4%.

Open enrollment, during which policyholders can switch plans, will run from September 19 to October 14.

This story was originally published June 16, 2022 5:00 a.m.

CORRECTION: A previous version of this story misidentified the PERS Gold and PERS Platinum Medicare offerings. The story has been updated to clarify that these are supplemental plans, not Medicare Advantage plans.

Corrected June 16, 2022

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Wes Venteicher anchors The Bee’s popular State Worker coverage in the newspaper’s Capitol Bureau. It covers taxes, pensions, unions, state expenses, and the California government. A native of Montana, he reported on health care and politics in Chicago and Pittsburgh before joining The Bee in 2018.

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