CalPERS gives OK to HMO increase
By Victoria Colliver
San Francisco Chronicle
June 16, 2005
It’s a sign of the times when the state pension fund approves HMO rate increases roughly three times the rate of inflation and that’s considered a victory.
As expected, the California Public Employees’ Retirement System on Wednesday approved 2006 HMO rate increases averaging 8.7 percent (and 9.5% increase for PPOs, Los Angeles Times).
The single-digit increase for 2006 was the lowest rate increase since 1999, except for 2002, when there were major increases in co-payments and other out-of-pocket costs.
CalPERS is the nation’s third-largest purchaser of health care and is considered a leading indicator of future coverage trends.
Larry Levitt, a vice president with the Kaiser Family Foundation, said smaller employers are likely to be hit significantly harder than giant CalPERS.
“If I were a small employer with little bargaining leverage, I think I would have hoped CalPERS premiums would have come down even more,” he said. “It’s always good to be moving in the right direction, but I don’t think anyone believes an 8.7 percent increase is good news or even sustainable.”
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/06/16/BUGMDD97Q01.DTL
Comment: Think of it. The third largest purchaser of health care has increased patient cost sharing in order to slow the rate of premium increases, and this slowing still results in premium increases that are three times the rate of inflation!
All nations with universal insurance programs have been more successful in moderating cost increases than has the United States.
The tradeoff is not necessarily the formation of excessive queues since many nations have prevented such queues by attending to capacity needs.
The other common counter-argument advanced is that slowing costs would stifle technological innovation. Yet Great Britain, spending half as much of its GDP on health care, shared in the Nobel prizes for both CT imaging and MRI imaging. Their level of health care spending did not stop innovation.
Besides, what technological or pharmaceutical firm would walk away from trying to get their share of the $1.9 trillion that we are already spending on health care?
Much of the increase in spending is feeding administrative waste and non-beneficial technological excesses. Private plans already have proven their inability to control these excesses, and actually contribute to them.
By establishing our own monopsonistic, universal insurance program, we would be in a position to reduce this waste while being certain that new spending is providing us with value. If new advances are worth it, we can pay for them.