CalPERS committee moves to recommend 2016 health rates; New Medicare Advantage plan is proposed

CalPERS Committee Moves to Recommend 2016 Health Plan Premium Rates

Medicare Advantage PPO Plan Also Proposed

CalPERS -- The California Public Employees' Retirement System's (CalPERS) Pension and Health Benefits Committee (PHBC) today recommended the Pension Fund's Board of Administration adopt health care premium rate and plan changes for 2016. The recommendations include adopting a Medicare plan alternative - UnitedHealthcare's (UHC) Medicare Advantage Preferred Provider Organization (PPO) plan - and eliminating Medicare Advantage plans currently offered by Anthem Blue Cross, Blue Shield of California, Health Net and Sharp. Kaiser Permanente will continue to offer its Medicare Advantage plan and the CalPERS PPO Medicare Supplement plans will remain in place.

CalPERS' decision to adopt UHC's PPO could save a minimum of $24 million if at least 40,000 members move into this new Medicare plan option.

"The UnitedHealthcare plan is a very good option for our members," said PHBC chair Priya Mathur. "The primary benefit is that the UHC plan is a Medicare Advantage plan - rather than a Medicare Supplemental Plan - so members are relieved of co-insurances and can receive care from any provider who accepts Medicare. This proposal also includes Silver Sneakers, an exercise program specifically targeted at older adults to help keep our members healthy." Mathur added that retired members have been requesting wellness programs like Silver Sneakers, which can lead to lower health care costs in the long run.

The UHC Medicare plan will provide coverage for Medicare Parts A, B and D. Members enrolled in the UHC plan will be able to use it in all 58 California counties and in all U.S. states and territories. In addition, for Medicare retirees from contracting agencies who do not have vision and dental benefits, the UHC plan includes an optional dental and vision benefit paid directly to UHC by the retiree.

As many retirees assess the impact of the Medicare changes on their 2016 health plan choices, members enrolled in Basic health plans will be considering their options based on the recommended premium rate changes for 2016. On average, the premiums increased a little under $45 per month, for a single individual premium. CalPERS endeavors to keep increases as low as possible for members while still providing quality health care, but pharmacy pricing presented a high hurdle to get over, according to Ann Boynton, CalPERS' Deputy Executive Officer for Benefit Programs Policy and Planning.

"Pharmacy costs accounted for nearly 45 percent of the overall rate increases for both the HMO and PPO 2016 premiums," said Boynton. "Additionally, some of the increase is due to the high cost of health care in California, and we continue to seek solutions that will help us keep member premiums affordable while offering them quality health care options."

Boynton noted that CalPERS members' premiums are still competitive with comparable plans issued under the Covered California Exchange.

CalPERS offers six Health Maintenance Organization (HMO) Basic coverage plans throughout California, three Preferred Provider Organization (PPO) Basic plans and three association health plans. Anthem Blue Cross, Blue Shield of California, Kaiser Permanente, Health Net and UnitedHealthcare provide HMO coverage in most of California. Sharp Health provides coverage in San Diego County. Anthem will also continue serving as the Third Party Administrator for CalPERS' self-funded PPO health plans. All of the CalPERS health plan provider contracts expire December 31, 2018.

CalPERS is projected to spend $8.0 billion in 2015 to purchase health benefits for 1.4 million active and retired state, local government, and school employees and their families. View detailed rate information and out-of-pocket premium estimates.

CalPERS members can make changes to their health plans during the annual Open Enrollment period, September 14 to October 9, 2015. Information on health plan options will be available in Open Enrollment packets that will be delivered to members in August, or online at www.calpers.ca.gov.

CalPERS is the nation's largest public pension fund with approximately $301 billion in assets, providing retirement benefits to more than 1.6 million state, public school, and local public agency employees, retirees, and their families on behalf of more than 3,000 employers in the state, and health benefits to more than 1.4 million members. For more information about CalPERS, visit www.calpers.ca.gov.