Big Majority of CalPERS Public Agencies to Stay in 2005 Health Program.

SACRAMENTO, Calif. -- A vast majority of public agencies with the California Public Employees' Retirement System will remain in the CalPERS Health Program in 2005 - and many others are joining.

In a report to the CalPERS Board, Jarvio Grevious, Assistant Executive Officer for Health Benefits, said today that 25 agencies and school districts with 9,155 enrollees have joined since January, while 17 agencies with 8,324 total enrollees will leave the program in 2005.

"These figures represent a powerful endorsement of recent actions to stabilize our program and restrain costs," Grevious said. "We averted the steady erosion of our risk pool that would have eventually driven costs even higher for everyone in the program - north and south."

CalPERS provides health benefits to some 1,100 contracting public agencies. They have 462,000 enrollees, comprising 38 percent of the program's total enrollment.

Fourteen of the agencies that have joined the program this year contracted with CalPERS after the Board of Administration adopted the 2005 premium package on June 16. Other new contracts are likely before the new coverage year begins January 1, 2005.

The 2005 premium package included a plan that aligns Basic plan premiums more closely with actual market costs in five regions. Presently, single statewide rates mask cost disparities across the state.

Under the regional pricing plan, agencies and enrollees in Southern California, where costs are lower, will pay as much as 19 percent less than the State premiums for Basic plans (Medicare and State members excluded). Northern California agencies will not pay more than 11 percent above State rates. Many will pay less.

Without regional pricing in 2005, Blue Shield of California estimated the potential loss of as many as 65,000 members. Total costs would have increased by up to $41 million. Blue Shield premiums would have increased by up to 3 percent.

In 2004, CalPERS Health Program costs rose by $26 million after all or parts of 35 mostly southern agencies left the program with 37,000 enrollees.

Only seven of the agencies that submitted termination letters for 2005 are in Southern California, while 10 are in the north, where CalPERS rates will remain still competitive with those offered in local markets.

Several new Northern California agencies said CalPERS rates were better than what they were offered by other programs. Six local school districts in the north, including Napa Valley Unified and Monterey Peninsula school districts, accounted for about 7,500 new enrollees.

Agencies that leave in 2005 will be unable to return to the program for five years under a regulation that was adopted this year. The intent is to stabilize the risk pool and encourage contracting health plan partners to invest in long-term care management programs for enrollees.

CalPERS is the nation's third largest purchaser of employee health benefits, with 1.2 million enrollees. For more information about CalPERS, please visit www.calpers.ca.gov.