CalPERS Will Hike Health-Care Premiums

The board of the California Public Employees Retirement System, the largest U.S. public pension fund, agreed Wednesday to raise health-care premiums for its members by an average of 9.2% and said it will double the co-payment for brand-name drugs. The premium increase, which is scheduled to take effect in 2001, is a slight compromise of a proposal by CalPERS’ health benefits committee, which sought rate hikes averaging 11.5%. The action is generally seen as a harbinger of health-care increases for other large institutional purchasers of insurance. CalPERS, with 1.1 million members, is one of the largest buyers of health care. The increase in co-payments to $10 from $5 for brand-name drugs applies only when generic versions also are available. The move is intended to encourage members to use less-expensive generic drugs and to boost the use of mail-order prescriptions. “We want to keep health care affordable to members and at the same time involve our members in helping to moderate runaway prescription costs,” said William Crist, president of the CalPERS Board of Administration. Members will continue to pay a $5 co-payment for office visits and a $5 co-payment for generic drugs.