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Kaiser Plans to Raise Rates

April 1, 1998

LOS ANGELES (AP) _ Kaiser Permanente, recovering from a $270 million deficit last year and expecting another rough year this year, intends to raise health insurance premiums to employers as much as 10 percent.

For 1999, Kaiser will ask for premium increases from its employer groups in California, its largest market, in the ``high single-digits and low double-digits,″ company vice president Jack Hudes said Tuesday. The HMO has just ended a dispute with nurses that resulted in one- and two-day strikes that cost the company tens of millions of dollars.

Kaiser, the nation’s largest health maintenance organization, isn’t the only such company seeking increases, but its price hikes would be its largest since the late 1980s.

Hudes said Kaiser is insisting on the rate hikes.

``It’s not a question of asking,″ he said. ``We need this level of increase to adequately take care of our members. ... We must have rates in place to cover the costs of medical care.″

Rates for some small businesses will rise 11 percent this year, an increase that could force some to stop offering health benefits, said Betty Jo Toccoli, president of the California Small Business Association.

``Our people will begin looking at whether this is a benefit they can afford to provide,″ she said.

The California Public Employees’ Retirement System, which buys health coverage on behalf of more than 1 million Californians, said HMOs were under pressure from investors to boost profits and to prepare for federal and state HMO reform legislation that could increase their costs.

CalPERS spokeswoman Pat Macht declined to comment about Kaiser but called any large increase in rates ``a backward step″ because employers and pensioners cannot afford them.

Kaiser’s loss last year was blamed in part on the HMO’s lowered rates, which prompted a surge in membership. When its clinics and hospitals were unable to accommodate all the growth, the Oakland-based HMO was forced to send thousands of patients to costlier non-Kaiser hospitals and clinics.

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