CalPERS to Raise Health Rates to Avoid Future Losses

The California Public Employees’ Retirement System, whose self-funded insurance plans were projected to run $96 million into the red for 2000, has implemented a series of dramatic rate increases designed to stave off future losses.

Under the plan, approved Wednesday by the organization’s board of trustees, deductibles will double for the 220,000 retired and active state employees who are not covered by health maintenance organizations.

Starting Feb. 1, members who are in less-restrictive preferred provider organizations will pay $500 per person for their deductible--up from $250--with a maximum family limit of $1,000. They will pay $20 for doctor visits and, except in certain circumstances, $250 every time they go to a hospital.

Members of PPOs will also pay significantly more for prescription drugs. Starting next year, generic drugs will cost $5 for a 30-day supply, the same as in 2000, but brand name drugs will cost $15 or $30, depending on whether they are on the organization’s formulary.

Even mail-order drugs, which used to cost $5 for a 90-day supply, will cost more, with the most expensive going for $45.

CalPERS has also decided not to offer improved mental health benefits to PPO participants; although exempt from California’s new mental health parity law, CalPERS had initially intended to comply with it.

The changes do not affect members in CalPERS’ HMO plans, which were not subject to losses this year.

Altogether, the measures are expected to save $77.5 million, CalPERS said.