How does CalPERS determine health premiums each year?
We use the size and strength of our 1.4 million total covered lives to negotiate the lowest rates possible. My team begins by reviewing the data, including claims cost and trend information, and factor in any changes to benefit design when we go to the bargaining table with the health plans. Our strong negotiation strategies deliver competitive premiums that are supported by data and align to the needs of our members and employers.
How is CalPERS working to keep premium increases low?
Through innovation, leadership, and partnerships. We led the industry in value-based purchasing design where we set a fixed price for hip and knee replacements. The program resulted in a 26 percent savings to members’ health care costs and $3 million in annual savings for CalPERS. And our new pharmacy benefit manager contract saved $68 million last year. I want to assure our members that every dollar saved goes back into the program to lower future premiums. These innovations and strong negotiations contributed to record low rate increases for 2018 and 2019 at 2.3 and 1.16 percent, respectively.
Why did some plans have large rate increases this year?
There are multiple factors that go into setting premiums each year. Plans experience claims volatility and increased costs depending on their membership levels, providers, and hospital networks. This year, those plans that provide broad access to doctors, higher cost provider networks, and top-tier hospitals experienced larger-than-average rate increases.
Any tips for members with new health plans this year?
I can suggest a few good practices to help you smooth the transition to a new health plan:
- Make sure you have your new health insurance and pharmacy cards (if applicable) and they are correct.
- Have the contact information for your new doctor or select one if you don’t have one.
- Educate yourself about your new coverage such as the co-pays, deductibles, co-insurance, and network.
- Read the new member guide or quick start resources available on most plans’ websites.
- Know where to go for care in an emergency, including the hospital and urgent care sites that are in your network.
- Prepare or update your health history and list of medications to share with your new doctors and pharmacies.
What does CalPERS offer for wellness and prevention?
I hope that our members take a proactive approach to preventive care and wellness to reduce disease, improve their health, and save money in the long run. For example, our Basic plan benefits include acupuncture, biofeedback, chiropractic services, hearing-aid services, and non-cosmetic reconstructive surgery. Medicare members enjoy Silver Sneakers, a community fitness program for building strength and flexibility. And we require all health plans to offer diabetes prevention programs at no cost to members.