If you’re wondering why your PERS Platinum or PERS Gold Medicare Supplement premium is set to increase in 2025, there are two main causes — the changes in reimbursement brought about by Medicare Part D through the Inflation Reduction Act (IRA), and high-cost pharmaceuticals.
Fewer Federal Dollars for CalPERS
A significant portion of the premium increase for the CalPERS Medicare Supplement plans is due to a change by the Centers for Medicare & Medicaid Services (CMS) in how employer plans are reimbursed for Medicare Part D through the IRA.
The change lowers costs for Medicare beneficiaries, particularly those who depend on high-cost specialty drugs, but it adds significant new costs for plan sponsors like CalPERS.
Tell Me More About Pharmacy Costs
While our pharmacy contractor OptumRx has competitive pricing, the increased use of costly brand and specialty drugs contributed to a sharp increase in total pharmacy spending. This increase is driven by changing guidelines that have expanded access to the drugs for common diseases such as diabetes and other chronic conditions.
What Is Being Done to Contain Health Care Costs?
“CalPERS recognizes the PPO premium increases are unsustainable and we’re working on strategies to curb future costs, which includes discussions with Blue Shield (PERS Gold and PERS Platinum plan administrator) and OptumRx to identify ways to curb costs and align the PPO plans with our strategic plan,” said CalPERS Chief Health Director Don Moulds.
The CalPERS Health Benefits Program is governed by the state’s Public Employees’ Medical & Hospital Care Act (PEMHCA), which requires that health premiums reasonably reflect the cost of the benefits provided. Each year, CalPERS negotiates with the health plans to establish a premium that covers the projected cost of providing services to our members.
The health plans negotiate directly with hospitals and provider networks throughout the year for how much a hospital or provider charges for services. CalPERS does not negotiate directly with hospital groups or provider networks.
“CalPERS, like many purchasers of health benefits, continues to face the challenge of adequately covering the cost of health care while remaining competitive,” said Moulds.
“CalPERS aggressively works to keep costs and premiums as low as possible and continues to pursue innovations that help to make high-quality health care affordable to our members and employers.”
What Can I Do?
With Open Enrollment for 2025 plans going on through October 11, we encourage you to research plans to see if there is a more affordable option for you and your family.
We also hold quarterly Pension and Health Benefits Committee (PHBC) meetings and welcome member participation. Find more information on PHBC on our CalPERS Board Meetings page.