27 California Agencies To Leave CalPERS Health Plan
Twenty-seven public agencies last week announced that they would discontinue health insurance coverage through CalPERS and would instead find their own coverage, citing the fund's 2004 health insurance rate increases, the San Francisco Chronicle reports (Colliver, San Francisco Chronicle, 8/27). The CalPERS board in June,approved an increase in health insurance premiums of 16.7% to 18.4% for those enrolled in HMO and preferred provider organization plans. Medicare plans' premium increases will range from 23.4% to 27.8% (California Healthline, 6/19). The withdrawal of the 27 agencies and the partial withdrawal of eight other agencies will affect about 47,000 members and dependents who are insured through CalPERS, or about 4% of the fund's total health program enrollment of 1.2 million.
Twenty of the agencies that withdrew from CalPERS are located in Southern California, where health care costs are lower and there is more hospital competition than in Northern California (San Francisco Chronicle, 8/27). CalPERS board members in May did not approve a regional pricing plan that would have required members in Northern California to pay higher premiums than members in Southern California. CalPERS staff had said that without also lowering rates in southern California, where beneficiaries are the youngest and healthiest, some public agency and school employees would leave the plan (California Healthline, 5/15).
The withdrawals -- particularly by groups with younger, healthier workers -- will start to reduce CalPERS' pool of healthy members, which offsets the high number of retirees who frequently need more health care, according to Dr. Mark Smith, president of the California HealthCare Foundation. In addition, the withdrawal of the agencies "marks the continuing erosion of CalPERS' status as the 800-pound gorilla of health benefits, on both a state and a national level," the Chronicle reports. CalPERS is the third-largest purchaser of health benefits in the nation (San Francisco Chronicle, 8/27).