CalPERS Considers Health Program Changes

February 25, 2002 ( - The California Public Employees' Retirement System (CalPERS) is revamping its healthcare program for its 1.2 million participants.

At present, the pension system – one of the nation’s largest – offers seven HMOs and two self-funded preferred provider organizations (PPOs). Law enforcement employees have additional PPO plan options through their associations.

Two models are currently under evaluation. The first involves two to three insurers offering at least one HMO-type benefit plan and other coverage choices for CalPERS participants in all counties.

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Coverage would be uniform for the same type of plan, statewide. CalPERS would negotiate with vendors on behalf of its members, but would reimburse them on a risk-adjusted basis.

Second Thought

The other model proposes a single risk pool that would offer HMO-like coverages, PPOs and other products statewide. Premiums would vary, depending on the type of plan or coverage selected. CalPERS would have a single entity to administer the program under this approach.

CalPERS eliminated four HMOs last year, leading to 85,000 members switching health plans in 2002. According to staff, there were almost seven times more changes during the open enrolment period than in the previous year.

Enrollment in CalPERS PPOs increased by 19%, much of it coming from the eliminated HMOs.