This week, the California Public Employees’ Retirement System’s
(CalPERS) Pension and Health Benefits Committee received an
update on the Rate Development Process and the 2024 proposed
premiums for the CalPERS health plans.
Last year, the CalPERS Board of Administration approved health
plan premiums for calendar year 2023 that represented a 6.75
percent increase from the prior year. The 2024 preliminary
premiums reflect an average increase of 11.78 percent but vary
widely by plan with two popular Preferred Provider Organization
(PPO) plans increasing substantially more. In an effort to smooth
out the cost increases for PPOs, CalPERS is contemplating a range
of options that would include a one risk pool phase-in over
either two or three years that would increase the 2024 premiums
by either 11.27 percent or 10.99 percent, respectively.
The proposed increases for the 2024 premiums are largely due to
rising medical costs and continued high pharmacy costs, but also
include other factors such as an additional surcharge and
decreased Federal Medicare Reserves. CalPERS participates in the
Rate Development Process each year, during which the Board
considers new health plans, expansions of existing health plans,
and benefit design changes. Health carriers submitted their
initial premiums to CalPERS earlier this year and met with the
CalPERS rates team to discuss data, assumptions, and models used
to calculate the proposed premiums. The final 2024
premiums, which will go into effect January 1, 2024, may change
slightly before final adoption by the Board (during an offsite
meeting in July 2023).
While employees and employers will see increased premiums on
average, the actual increase or decrease will vary based on
plans. The impact on counties and other agencies that contract
with CalPERS for health plans will be determined by the
negotiated health premium contribution amount of each agency.
