(Bloomberg) -- The California Public Employees’ Retirement System on Tuesday approved an increase in health care costs for state and local government employees as the economic slowdown caused by the coronavirus pandemic batters tax collections.
Depending on the plan, the increased health maintenance organization premiums for state workers from the previous year will range from 1.62% to 9.37%, or an average of 4.44%. For participating public agencies and schools, the HMO increase ranges from 0.82% to 11.96% depending on the region and plan.
The preferred provider organization costs have jumped more, with the average increase for state employees 8.54%. For localities, the spike ranges from 5.55% to 14.29% depending on plan and region.
The new rates will start in January after employees pick their health care plans in the fall. That will hit the state workforce hard especially should additional federal aid fail to materialize. California lawmakers balanced the budget for the year that began in July in part by cutting state workers’ compensation by 10%, with the promise of making up for it if $14 billion from Washington comes through by October.
“Our health care premiums keep going up while pay cuts to our salary just started this month,” Deborah Hollan, a prison nurse, told Calpers board members at their virtual meeting Tuesday. “It has placed a huge burden on my shoulders just thinking that the premium might go up even more.”
Calpers staff negotiated the rates with Anthem Blue Cross, Blue Shield of California, Health Net of California, Kaiser Permanente, Sharp Health Plan, UnitedHealthcare, and Western Health Advantage. The state shares the health care costs with its employees, and public agencies may do the same depending on their contracts.
“Cities in California face at least a $7 billion shortfall in revenues over the next couple of years as a result of the pandemic, with little state or federal aid to address those shortfalls,” said League of California Cities legislative representative Bijan Mehryar in an emailed statement. “Any cost increases, whether that be pension or insurance rates, will be a challenge for cities and will throw yet another obstacle in the way of their ability to deliver core services to their residents.”
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