Insight, analysis & opinion from Joe Paduda

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California HMO costs

CalPERS has managed to hold HMO rate increases for 2006 to 8.7%, while PPO increases are up 9.5%. CalPERS is widely recognized as one of, if not the most, effective negotiators with managed care plans, so their achievement will set the standard for other employers/unions/etc as they begin their negotiations with their health plans. According to their website,
California Public Employees’ Retirement System … provides retirement and health benefits to more than 1.4 million public employees, retirees, and their families and more than 2,500 employers…”
The 8.7% is the lowest increase since 1999; with 2005 rates up 10%, 2004 16.4%, and 2003 a mind-numbing 24.1%. Of particular note is that benefit design was essentially unchanged as were copayments and prescription drug coverage.
When health plan rate increases negotiated by a very savvy, and very large, payer are more than three times the overall rate of inflation, and when that is trumpeted as good news, you know we are in trouble.
What does this mean for you?
Hold on to your wallet – if you can keep your rate increase below 11% without significant damage to your benefit design, congratulations.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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