Reasons for Difference in Premium Rates of Kaiser Plans of Northern and Southern California for the Federal Employees Health Benefits Program

HRD-77-151: Published: Sep 30, 1977. Publicly Released: Sep 30, 1977.

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The Kaiser Foundation Health Plan for Southern California is one of six plans whose rates are used to determine the government's contribution to the Federal Employees Health Benefits program. Under proposed legislation, the Southern California plan could be one of two plans whose premium rates would be used to compute the government's contribution. The Kaiser Foundation's 1976 biweekly family premium rate was $7.87 higher for their Southern California plan than for their Northern California plan.

Discussions with Kaiser officials and a review of the assumptions and methodology used in arriving at the premium rates for the two plans indicated that the higher rate for the Southern California plan could be attributed primarily to the following factors: higher property costs, greater benefits, higher inpatient hospital use, higher cost of physician services and nonphysician payroll, higher prescription drug use, and different composition of enrolled families.

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