CalPERS May Drop 3 Health Plans After Second Round of Bidding
Hoping to control rising health care costs, the California Public Employees' Retirement System Board of Trustees is poised today to approve a proposal to drop Aetna, Cigna and Lifeguard from the program, the Sacramento Bee reports. Last month, CalPERS rejected all bids from its 10 participating health plans because the proposed premium increases were too high, ranging up to 41% (Rapaport, Sacramento Bee, 3/21). CalPERS asked the health plans to resubmit their proposals, adding that only the seven lowest bids would be accepted. Based on the resubmitted bids, CalPERS' health benefits committee yesterday recommended that the program continue negotiations with Blue Shield of California, Health Plan of the Redwoods, Kaiser Permanente, Maxicare, PacifiCare, Universal Care and Western Health Advantage. CalPERS also rejected a bid from Health Net, which currently covers 240,000 CalPERS members, because it "failed to comply" with bidding rules. However, CalPERS gave Health Net 48 hours to resubmit a proposal.
According to CalPERS spokesperson Pat Match, the average premium increase health plans offered in the second round of bidding was between 15% and 18%, compared to 25% in the first round. Although the resubmitted bids resulted in a $148.5 million total reduction in premium increases compared to the first round, Match said that the group hopes further negotiations with the health plans will reduce the premium increases to "single digits." If the trustees approve the benefits committee recommendation, 95,000 of the 1.1 million CalPERS' members currently covered by Aetna, Cigna and Lifeguard would have to find a new health plan. However, CalPERS said that 92.5% of those affected would be able to remain with their current doctors because most "belong to more than one CalPERS-approved plan" (Weston, Los Angeles Times, 3/21). CalPERs also is considering increasing cost-sharing among plan members in order to control costs. Under the proposal, which would save the program $143 million a year, copayments on physician visits would be doubled to $10 and copayments on prescription drugs would range from $5-$45 instead of the current $5 flat fee (Yi, San Francisco Chronicle, 3/21). A similar proposal was rejected last year after union leaders "protested ... that the increases would force the sickest workers to bear the brunt of increased costs" (Los Angeles Times, 3/21).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.