CalPERS Discloses Dropped, Added Health Plan Contracts
Seventeen cities, counties, schools and special districts across the state have notified CalPERS that they are dropping their contracts with the public pension fund, but 14 local governments have signed new contracts to purchase health benefits through CalPERS, according to figures the fund released Tuesday, the Sacramento Bee reports. The decisions follow CalPERS' announcement of premium increases of up to 24% in some areas of the state and a cost-cutting plan that eliminates HMO coverage at a number of hospitals.
According to the Bee, the "mounting discontent" with CalPERS among some public entities "could signal trouble ahead" for the pension fund, which needs to "retain local governments ... if it wants to keep getting price concessions based on its size."
CalPERS officials gave public entities 60 days after its June 16 rate announcement to decide whether they intended to renew their contracts with the fund. According to CalPERS, the 17 groups dropping coverage represented 8,324 members. A number of other public entities considered leaving the fund but did not notify CalPERS of their decision to withdraw by Monday's deadline. According to the Bee, the 60-day time limit for notification was inadequate for some local officials to receive needed approvals from unions, city councils and other governing bodies. In addition, some local officials said they were hesitant to leave CalPERS because of a rule that would prevent them from rejoining the fund for five years after leaving the system.
Jarvio Grevious, director of CalPERS' health program, said that the 14 local governments joining the fund represent a combined 8,317 members and that the added members balance out those lost from governments that dropped their contracts. "These figures represent a powerful endorsement of recent actions to stabilize our program and restrain costs," Grevious said (Rapaport, Sacramento Bee, 8/18).