CalPERS Panel Delays Vote on Fee Increase

Under fire for a plan to make its sickest members bear up to $100 million in increased health care costs, the board of the California Public Employees’ Retirement System on Wednesday postponed a vote to double the co-payment required of members when they go to the doctor or order brand-name prescription drugs.

Unions representing many of the 1.1 million CalPERS members said they were surprised by the proposal--reported in Wednesday’s Times--to shift onto patients about half of the $195-million increase demanded by health maintenance organizations and other health plans for coverage in 2001. The proposal was also opposed by Kaiser Health Plans, which said it was unfair.

If the board backs away from the idea when it comes up again at its meeting next month, it will mean that CalPERS and its members will have to absorb the entire $195 million in the form of a premium increase. The increase, when combined with an additional two-year fee charged only to Kaiser members, will amount to an average increase of 9.2% over this year’s premium for health maintenance organizations, and a 23% increase for the least restrictive preferred provider organization, or PPO, plan.

By comparison, shifting about half of the increase to patients in the form of co-payments would mean that premiums--the monthly fees that must be paid to keep the insurance current--would go up an average of just 4.9% for HMOs and 18% for the least restrictive preferred provider organization.

Because state legislators, who fund the CalPERS plans, have limited the amount that the state will pay for its portion of the premium, the higher premium would be spread among CalPERS members.

CalPERS said that it agreed to the increase to improve the quality of care provided by the state’s financially squeezed health plans, doctors and hospitals. The bulk of the money, said state Treasurer Phil Angelides, who heads the agency’s health benefits committee, would go to pay doctors and hospitals, who are struggling after years of reduced fees under managed care.

CalPERS staff and the health benefits committee, which passed the co-payment measure Tuesday, said shifting the cost would prompt patients to eliminate unnecessary visits to the doctor and switch to generic drugs.

Rather than spread a higher premium over all members, the reasoning went, the system would charge more to those who use it more.

But Perry Kenny, president of the California State Employees Assn., whose 140,000 members receive their benefits through CalPERS, said it was unfair to penalize people for being ill.

The basic premise of shifting the costs--that patients are over-utilizing doctor appointments and intentionally ordering expensive medicine--is unsound, Kenny said. “Who goes to the doctor just to be going to the doctor?” Kenny said. “Who wants to sit in that waiting room with sick people?”

Encouraging patients to be more efficient in their use of medical resources is a good idea in principle, said Terry Brennand, lobbyist for the Service Employees International Union. But unless CalPERS imposes a cap on the amount that each family is required to pay out of pocket each year, unions are unlikely to sign off on the plan.

“If you’ve got someone with a chronic condition who has to get their blood pressure checked or their sugar levels monitored on a regular basis, this is going to really hit them,” Brennand said.