HealthLeaders-InterStudy, a leading provider of managed care industry intelligence, reports that the California Public Employees Retirement System raised basic HMO premiums by an average 11.6 percent for 2007. According to the latest issue of California Health Plan Analysis, this is a significant setback for the state's largest purchaser of healthcare.
"Last year the increase was nine percent," said Jane DuBose, HealthLeaders-InterStudy analyst. "CalPERS announced that its various cost-control efforts were finally paying off. The state employees unions preferred a richer benefits package to lower premiums, and were able to make their influence felt. CalPERS also deferred several other difficult cost-cutting proposals. The question is, of course, 'if CalPERS doesn't have the will and power to exert downward pressure on health insurance premiums, who does?'"
By choosing to keep the rich benefits package for members, CalPERS will spend an estimated $4.9 billion for healthcare in 2007, up from $4.3 billion in 2006. In 2006, CalPERS kept average HMO rate increases to 8.7 percent by cutting 21 high-cost hospitals from its Blue Shield network for $31 million in savings and setting regional rates for public agencies that saved another $45 million, but those savings have now been accounted for.
CalPERS is the nation's third-largest purchaser of health benefits after the federal government and General Motors, providing benefits to state and public-agency employees, retirees and their dependents.
Other health plan news in California:
Kaiser Permanente is trying to maintain its top position in California by launching new products designed to appeal to small businesses, while rolling out a new pricing system in the state
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