The California Public Employees' Retirement System, often considered a bellwether for national healthcare cost trends, approved its smallest annual increase in HMO premiums since 1999, an average of 8.7% for 2006. That compares with an average of 11.4% for 2005, 18% for 2004 and 25.9% for 2003. The downward trend jibes with a recent study by Hewitt Associates, which found that HMOs nationwide were requesting smaller rate increases -- an average of 12.4% for 2006 so far, versus an average of 13.7% for 2005 the same time last year. CalPERS expects to spend $4.3 billion on healthcare in 2006. The pension fund is the nation's third-largest purchaser of healthcare, covering 1.2 million public employees, retirees and dependents. Among other factors, the lower HMO rate increase reflects $45 million in savings expected in 2006 from a more restricted provider network implemented last year for CalPERS' Blue Shield of California members. -- by Laura B. Benko
CalPERS' 2006 HMO premium increase smallest in years
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