CalPERS approved steep rate hikes for its cheapest health insurance plans Tuesday in an effort to save its most expensive plans from collapse.
California state workers who are enrolled in the cheaper plans face estimated price increases of up to $270 per month starting in 2022 under the plan, according to CalPERS projections.
The PERS Select and Anthem Select plans would see the biggest increases. Prices for Blue Shield Trio would also go up. The plans have narrower networks of doctors and hospitals and, with the exception of Trio, less generous benefits than more expensive plans. The three plans together cover about 153,000 people.
PERS Select, the cheapest option with the exception of a cross-border plan marketed to Latinos, would increase in price from $527 per month next year to an estimated $797 per month in 2023, according to CalPERS projections, an increase of 51%.
Currently the state pays about $600 per month toward workers’ plans, and offers an additional $260 stipend to members of SEIU Local 1000 and state attorneys under contract agreements.
The California Public Employees’ Retirement System’s board approved the rate increases to save plans that offer bigger networks and better benefits. Three of those plans have entered patterns known as “death spirals,” in which price increases are driving people out of the plans and making them even more expensive.
Prices will go down in 2022 for the “death spiral” plans — Anthem Traditional HMO, Blue Shield Access+ and PERS Care — as a result of the change. The plans cover about 199,000 people.
The changes will be implemented over two years.
Health Plan Research and Administration Division Chief Marta Green has said the high quality plans started to enter death spirals after CalPERS ended a complicated risk adjustment program.
The new proposal uses a simpler, more transparent form of risk adjustment, Green has said. The program essentially shifts money from plans with lower health risk to those with higher risk.
Projections show it will align the plans’ prices more closely with their quality, producing smaller price increases each year after the two-year introduction.
The plan includes consolidating the system’s three PPO plans — PERS Care, PERS Choice and PERS Select — into two plans, PERS Platinum and PERS Gold. Green recommended introducing that change in 2023.