Huge public employee system to raise health premiums 3.2%

Premiums for health insurance coverage offered through the California Public Employees’ Retirement System will increase an average of 3.2% in 2017 under a package that has received final approval from the system’s board of administration.

By plan design, premiums will increase next year an average of 4.1% for health maintenance organizations and 3.8% for preferred provider organizations. Premium rates for plans offered to Medicare-eligible retirees and their dependents will drop by an average of 1.6%.

“Our staff did an excellent job during this year’s negotiations. Their process kept the premium increase low and laid the ground for us to continue our efforts toward cost containment in the future,” Priya Mathur, chair of CalPERS’ Pension and Health Benefits Committee, said Wednesday in a statement.

The 3.2% increase is sharply less than the 7.7% rise in premiums in 2016. Big increases in prescription drug costs were a key factor in the high 2016 premium hike, a spokesman for Sacramento, California-based CalPERS said. In 2015, premiums increased an average of 3.3%.

CalPERS, with 1.4 million program members, is the second-largest group purchaser of health care services in the United States after the federal government.