PENSION FUNDS: CalPERS and CalSTRS Talk Alliance
Motivated by rising health care costs and a swiftly changing health care environment, California pension funds CalPERS and CalSTRS are considering joining forces to offer health coverage to their combined 1.7 million members, the Sacramento Bee reports. CalSTRS Chief Executive James Mosman said, "This would be a milestone if we were able to develop a joint program." Officials from both pension plans indicated their readiness to discuss the notion of an alliance at a CalPERS meeting last week. A teaming of the funds might assist CalSTRS' efforts to develop a systemwide health benefits program for active and retired teachers. The alliance also may expand the significant purchasing clout of CalPERS, aiding the program in preventing premium hikes. Already, CalPERS maintains $168 billion in assets, making it the largest health care purchaser after the federal government. A dwindling number of health care providers, however, is leaving CalPERS with less negotiating power. The teaming also may result in "blazing a new trail" in California health care by directly contracting with doctors groups and hospitals rather than HMOs (LePage, 12/20). A key task force advising CalSTRS recommended on Monday that the pension plan bypass managed care in favor of direct contracting agreements, the Los Angeles Times reports. The task force is expected to present the recommendations to the CalSTRS health benefits committee on Jan. 6; if the proposal is accepted, a direct contracting pilot program "could begin soon after" (Bernstein, 12/21).
More Per Co-Pay?
Meanwhile, in the wake of climbing health care costs after four years of zero growth, CalPERS administrators are considering a proposal to double member rates for doctor visits and brand-name prescription drugs. The plan calls for an increase from $5 to $10 for visits to the doctor and for charging $5 more for brand-name medicines -- CalPERS members currently pay $5 for both generics and brand-names. The increases could save CalPERS $15.8 million over four years, which also may keep premiums from rising. Should CalPERS -- previously offering its members "one of the best public health insurance deals in the nation" -- go ahead and raise the co-pays, it would push them in line with what 58% of employer-sponsored plans currently charge, according to a recent national survey conducted by New York-based research firm William M. Mercer. Not everyone sees the proposal as a fair move. Charles Valdes, an attorney and member-elected representative to CalPERS' board said during Tuesday's board meeting, "This is nothing more than a cost shift from those who are well to those who are ill" (Fisher, Sacramento Bee, 12/20).