NU Online News Service, June 18, 2003, 4:28 p.m. EDT – The California Public Employees’ Retirement System board voted 7-5 today to approve a health plan design proposal that will lead to a 16.68% average increase in health maintenance organization premiums for 2004.

Although costs are still going up, the rate of increase is somewhat lower than in recent years, and rates for 2005 coverage should be noticeably better for all buyers, according to CalPERS health benefits experts.

The 2004 HMO increase is about half the size of the average increase that bidding carriers had requested, CalPERS says.

The cost of basic preferred provider network coverage may go down as much as 0.88%, but the cost of the PERS Choice basic plan will go up about 18%.

CalPERS lists the cost of new technology, the aging of CalPERS members, and an increase in the number of CalPERS members who have chronic conditions as three of the key factors driving the 2004 increase.

Drug costs and hospital costs continue to go up, but the increases are moderating, CalPERS says.

CalPERS will be buying HMO coverage in 2004 from Blue Shield of California, San Francisco; Kaiser-Permanente, Oakland, Calif.; and Western Health Advantage, Sacramento, Calif.

CalPERS self-funds its preferred provider plans.

In 2004, CalPERS plans will set emergency room co-payments at $50. Co-payments for prescriptions off the plans’ lists of covered drugs will range from $45 to $75.