State and Local Governments Are Employing Tougher Tactics to Counter Health Insurance Cost Hikes

Like most employers, many state governments are working on strategies to keep rising health coverage costs under control.

The California Public Employees' Retirement System (CalPERS) said June 19 that its overall premiums for 2009 will increase a mere 4.3 percent for 2009 - the lowest rate hike in more than a decade.

CalPERS is the nation's third largest purchaser of employee health benefits with nearly 1.3 million state and public agency employees, retirees and dependents. Spokesperson Karen Perkins attributes the low rate increase to "aggressive" negotiating on the part of the board and Blue Shield of California's willingness to partner with the organization to reduce coverage costs.

Despite declining revenues and a likely 8 percent trend rate, the state of Tennessee hasn't substantially increased the rate for family health benefits for eligible state employees. The state covers about 80 percent of the cost of health coverage for both single and family coverage.The state also hasn't increased copayments in five years, says Brian Haile, deputy director of benefits administration at the State Dept. of Finance and Administration.

About 270,000 lives are covered under the state plan. Haile says the state is "taking a hard look" at the drivers of rate increases, such as a large population of diabetic enrollees. Most health plans that offer coverage to state employees include a disease management module. "We are trying to single out promising initiatives that we can elevate to a statewide level," he says