NU Online News Service, June 17, 2004, 6:11 p.m. EDT

The California Public Employees’ Retirement System says it will hold the average 2005 health premium increase for active workers to 9.9%.[@@]

CalPERS, which has 1.2 million benefit plan members, buys or organizes self-funded health coverage for most California state employees and retirees. The state’s local and regional government employers can join the program on a voluntary basis.

CalPERS members had to accept a 16.4% average premium increase in 2004. The 2005 increase is the lowest CalPERS has negotiated since 2002.

The average increase for active workers in health maintenance organizations will fall to 11.4%, from 18% in 2004, and the average increase for active workers in preferred provider plans will fall to 6.4%, from 13.2%, CalPERS says.

CalPERS held down rates partly by cutting 38 high-cost hospitals from its provider networks but mainly by agreeing to let carriers in the CalPERS program charge higher rates for local government agencies in expensive Northern California markets.

In some Northern California counties, HMO rates will go up more than 25%, CalPERS says.