Price hikes continue for CalPERS health insurance in plan to avoid ‘death spiral’

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

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

The plans that will go up in price are the PERS Gold and PERS Platinum PPOs. Together they cover about 278,000 people.

PERS Gold, covering about 124,000, is projected to increase in price by 17.8%, reaching $766 per month for an individual starting Jan. 1, according to preliminary figures.

PERS Platinum, covering about 153,000, is projected to go up 14.5%, to $1,084 per month next year, according to the figures.

The most popular plan by far that CalPERS offers is a Kaiser Permanente HMO that covers about 556,000 people. The Kaiser HMO is slated to go up about 6% next year, reaching about $853 per month.

The preliminary rates posted online are subject to further negotiation, and could change slightly before they are approved by the CalPERS Board of Administration next month. California pays about $650 per month toward individual state workers’ plans, and offers an additional $260 health insurance stipend to members of SEIU Local 1000.

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

Those plans — Anthem Traditional HMO, Blue Shield Access+ and a plan formerly known as PERS Care — attract people who spend the most on medical treatment. Insurers kept raising their premiums to cover large bills, driving healthy people away and prompting more price hikes.

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

So the board adopted a structure that, in oversimplified terms, essentially shifts money from plans with lower health risk to those with higher risk. As a result, the prices for the Anthem and Blue Shield plans are projected to go down by nearly 7% each next year, in a second year of price drops.

Plans formerly known as PERS Select, PERS Choice and PERS Care were combined into two plans, the Gold and Platinum plans, which under the new methodology are supposed to level off in price starting in 2024.

CalPERS also offers Medicare Advantage policies for those who qualify.

Included in the Medicare Advantage plans are PERS Gold and PERS Silver plans that cover about 150,000 seniors. The Gold plan premiums are going up 4% and the Platinum premiums are going up about 10%.

Other popular Medicare plans will go up by a couple percentage points or be reduced. A Kaiser Permanente Senior Advantage policy covering about 111,000 seniors will drop in price by about 6.4%.

Open enrollment, during which policyholders may switch plans, will run from Sept. 19 to Oct. 14.

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