CalPERS 7.2% HMO plan premium rate increase in line with historical utilization cost trend

Citing higher drug prices, the California Public Employees’ Retirement System said its HMO premiums are rising by 7.2% next year. Rates for PPO, or preferred provider organization, plans are going up even more at 10.8%, on average, for 2016.This marks a departure from two years of more modest increases of about 3% at the giant pension fund. The agency’s rate hikes are a key barometer since it’s one of the largest healthcare buyers nationwide after the federal government.

Source: CalPERS approves 7.2% increase in HMO rates as drug costs climb – LA Times

The 7.2 percent average premium rate increase for 2016 HMO plans — which cover two out of three CalPERS members — aligns with the underlying medical utilization cost growth trend of recent years of about seven percent. As the story notes, CalPERS health plan rates are viewed as a harbinger of the cost of health coverage in the coming calendar year given the large size of its pool of 1.4 million active and retired state and local government workers.


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Frederick Pilot

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