Clark McKinley, a spokesman for CalPERS, says the increase is needed to curb rising medical costs.
"Everybody is facing difficulty with stagnant wages," McKinley says. "Inflation is running two to three percent a year, and this [rate increase] is basically reflecting what's happening in the market place."
CalPERS negotiates rates with several healthcare providers, including Blue Shield. State employees will be paying as much as 16 percent more for that coverage. Several state employee unions negotiated with CalPERS to determine the rate increase.
The rates CalPERS negotiates are often a benchmark for large companies and organizations that provide health insurance in California.