CSR President Tim Behrens testifies against governor's proposal for a high-deductible health plan
California State Retirees President Tim Behrens testified at a joint informational hearing on March 18 that the governor's plan to introduce a high-deductible health plan for CalPERS members is "the wrong path to take in addressing high health care costs."
"Such plans shift costs to workers, discourage people from accessing needed health care and would divide [CalPERS] health plans into those for the young and those for the old," Behrens testified before the joint Informational hearinig of the Senate Public Employment and Retirement Committee and the Assembly Public Employees, Retirement and Social Security Committee.
A high-deductible health plan (HDHP) is a health insurance plan with lower premiums and higher deductibles than a traditional health plan. It is considered a form of catastrophic coverage, intended to cover for catastrophic illnesses.
In February, the California Department of Finance released a proposed trailer bill to Brown's fiscal year 2015-2016 budget proposal that would require CalPERS starting on Jan. 1, 2016, to offer a high-deductible health plan, as well as a low-cost Medicare supplement plan for retirees
Supporters of the plan say members of high-deductible plans would think twice before visiting a doctor. Brown said his administration would bargain with unions over the concept when their contracts expire.
"But perhaps the bigger concern for state retirees is that the high-deductible plan is a backdoor way to reduce the health care reimbursements promised to current retirees," Behrens said.
Current retiree reimbursement levels are based on the averaging of the premiums of the four most utilized plans at CalPERS. If one or more high-deductible plan becomes among the most utilized plans, there is the potential that the state's reimbursement rates for state retirees would be reduced.
"State retirees live on fixed incomes and have little ability to adjust to increased health care costs," Behrens told the committee members. "As such, we view any attempt to shift to high-deductible plans as a threat to our health care and retirement security."
Others who opposed the plan at the hearing included representatives from the Legislative Analyst's Office, CalPERS and labor.
Ann Boynton, deputy executive officer of CalPERS Benefits Programs Policy and Planning, said high-deductible plans could force some people to delay seeking care, resulting in higher costs later.
CalPERS members who are covered by the fund's lowest-premium plan report being the most dissatisfied with their coverage because of high copayments and pricing among hospitals in preferred networks, Boynton noted..
Other witnesses at the hearing said there have not been enough studies done to determine whether high-deductible plans ultimately save money for the employer.
Nick Schroeder, senior fiscal and policy analyst for the Legislative Analyst's Office, said the Legislature should be an active and informed participant in the development of any high-deductible plan.
He said his office recommends that the Legislature not approve a funding plan until it has had an opportunity to review the plan and a written evaluative report is prepared by a professional actuary.