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CalPERS Considers Changes to Health Plan Regions, Winners and Losers Expected

Cities in Northern California Counties Can Participate in March 5 Meeting

February 28, 2014
During its Feb. 19 meeting, the CalPERS Pension and Health Benefits Committee considered staff recommendations for new health plan regions for contracting agencies effective Jan. 1, 2015.
CalPERS states that these changes will “better reflect variation in health care costs,” however, the reorganization’s impact may create winners and losers.

The current five regions are Sacramento, Bay Area, Los Angeles Area, Other Northern, and Other Southern, plus an additional Out-of-State “region” to allow pricing of non-California premiums. In resetting boundaries, CalPERS proposes four regions: Northern, Central Coast, Southern, and Southern Coast with a fifth Out-of-State “region.”
Premiums will change as counties merge into new regions. For some counties premiums will decrease, while for others, premiums will rise. There is no information currently available about the specific rate impacts. Counties are simply identified as having premiums that will be "moderately higher," "moderately lower," etc. 
A map attached to the agenda item on the CalPERS website shows the rate impacts of the proposed change, by county. CalPERS notes that "carriers price region premiums according to their own individual cost experience not CalPERS weighted average cost experience, so there is no guarantee that the indicated impacts will occur for any given health plan/region combination."
No vote was taken on the staff’s recommendation and it appears that discussions will continue. Staff was directed to incorporate the regional discussion into the CalPERS Public Agency Flexibility for Growth project, which is designed to recruit and retain public agencies in the CalPERS health benefits program. The League will continue to monitor and report updates to members.
The committee chair also directed staff to bring back to the committee’s March meeting a recommendation on moving some of the counties currently in the Bay Area Region into the Sacramento Region. CalPERS staff will be meeting with employers and employee representatives to discuss this option on March 5 in Sacramento.
Additional details will be sent once CalPERS finalizes the agenda. A member of the League’s CalPERS Working Group will participate and continue to monitor progress on this item.  
The CalPERS staff report and maps of the new regions are available online. The League will continue to monitor this issue and work to obtain information on rate impacts as quickly as possible so that cities can respond to and plan for these changes as they develop their FY 2014–15
Cities in the Bay Area and Sacramento Regions Encouraged to Participate in March 5 Meeting
During the February Pension and Health Benefits Committee meeting, staff was directed to bring back a recommendation in March whether a realignment of the counties in the Bay Area and Sacramento regions should be implemented for 2015. The premise is to focus on those counties that are contiguous to Sacramento but in the Bay Area region and assess the potential impacts to all impacted counties if a move were adopted.
In order to ensure awareness of the approach and impacts and solicit feedback, a meeting has been scheduled on March 5 from 9:00–10:00 a.m. in Sacramento. City officials who are unable to travel to Sacramento can participate via the web or listen in by phone.
Meeting Details
March 5, 9:00 a.m.–10:00 a.m.
CalPERS Auditorium, 400 Q Street, Lincoln Plaza North, Sacramento
Phone to listen only: (916) 796-1345

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