Editorial: Pension fund hikes your taxes

Tough luck, California taxpayers — another $55 million has just been added to your 2006-07 state budget obligation, an expense that benefits only state and local government employees. This additional tax obligation was not arrived at via open legislative debate. Instead it was imposed Wednesday by vote of the California Public Employees Retirement System board.

The CalPERS board rejected increasing co-payments or cutting benefits for government workers and retirees. Instead it chose to accept double-digit raises in health insurance premiums, of which the taxpayers who fund public agencies ultimately pay some 80 percent. These 2007 rate boosts will average11.6 percent for health maintenance organizations, 12.6 percent for preferred provider networks and 25 percent for Medicare HMOs.

CalPERS, the nation’s largest public pension fund and third-largest insurance purchaser, also voted a one-year delay for considering a Blue Cross offer to start a new lower-priced plan using only the doctors shown to be most cost-efficient. This new option would have been approximately 7.5 percent less expensive than existing CalPERS PPO choices.

It is difficult to avoid concluding that CalPERS bowed to pressure from labor leaders by holding the line on employee co-payments and passing along the fast-rising healthcare costs to the public. By contrast, many private sector companies that must stay profitable in order to remain in business have had little choice but to increase employee co-payments and reduce benefits.

Ironically, many public employees might actually be worse off because of the freeze on co-payments, according to a spokesperson for the state Personnel Administration. Workers in generally good health who don’t need to make a lot of co-payments during the year would probably lose money from paying their 20 percent share of higher premiums.

CalPERS staff members have projected that a small co-payment increase plus a cost-cutting discontinuation of services in five isolated rural counties would reduce state health insurance expenses by $100 million a year. Meanwhile, CalPERS board President Rob Feckner was promising that his organization would continue to push hard for major health care reforms at the national and local level, which would benefit all Americans.

If CalPERS really thinks it could reform the U.S. health care mess, we can’t help wondering why the agency — with its 1.4 million insurance clients and more than $30 billion in income last year —

doesn’t just organize a fairer and more efficient health insurance plan that would be open to all Californians.

CalPERS could take a significant role in reversing the frighteningly rapid climb of health care costs, rather than burdening the public with more taxes.

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