CalPERS Announces Decision to Drop Contract with Health Plan of the Redwoods at End of 2002
CalPERS yesterday announced plans to drop Health Plan of the Redwoods, which filed for federal bankruptcy protection last month, from the health system's managed care offerings at the end of the year, a move that will force about 11,000 state employees in the North Coast area to find a new health insurer, the Santa Rosa Press Democrat reports. CalPERs had planned to phase out regional HMOs, including HPR, by 2004, but decided to accelerate the process "because it considers the bankrupt insurer too much of a risk for its members," despite HPR's "low rates." Allen Feezor, CalPERS assistant executive officer, said, "We can understand" that HPR's decision to file for bankruptcy protection "is an appropriate business decision, but in this particular case the uncertainty of that working out made them a risk" (Allday, Santa Rosa Press Democrat, 6/20). The CalPERS announcement "shocked" state employees in the North Coast area, who will have to select a new health plan in the open enrollment period in September (Wolfe, Santa Rosa Press Democrat, 6/20). The 10,700 CalPERS members in the North Coast area will have to decide between Kaiser Permanente and Blue Shield of California -- both charge higher premiums than HPR. Many doctors and patients criticized CalPERS' decision as "one more knock against the struggling insurer." However, HPR CEO John Baxter said that the health plan's contract with CalPERS "barely covered medical costs" and that he "wasn't worried about operating" without the CalPERS members (Allday, Santa Rosa Press Democrat, 6/20).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.