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CalPERS considers scrapping health plans to lower its medical tab – latimes.com

California’s biggest healthcare buyer isn’t happy about its $7-billion annual medical bill climbing almost 10% next year, and the state’s big insurers may be feeling the heat.

The California Public Employees’ Retirement System is preparing to rebid its health insurance business this fall for 1.3 million members, and two of its current plans, Anthem Blue Cross and Blue Shield of California, are likely to face intense competition as the giant pension fund considers its options.

Perhaps the boldest move under consideration for 2014 would be to bypass insurers altogether in some areas of the state and begin contracting for medical services directly with large physician groups.

via CalPERS considers scrapping health plans to lower its medical tab – latimes.com.

The Los Angeles Times notes the move could put large medical groups in direct competition with their contracted insurers.  A key motivation for the CalPERS strategy is to better manage its risk pool and control costs associated with chronic conditions such as diabetes and congestive heart failure.

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CalPERS cites Medicare/Medicaid cost shift for 9.5 percent 2013 health premium increase

The Sacramento Bee reports today the California Public Employees’ Retirement System will boost health insurance premiums next year for its 1.3 million public workers and retirees that pencils out at 9.5 percent and represents “one of the biggest increases in years for CalPERS,” which is one of the largest purchasers of the health care in the nation.  As such, CalPERS health insurance costs serve as a closely watched barometer of where health coverage costs are headed.

According to the Bee story, CalPERS board member Howard Schwartz said CalPERS is fighting to keep health care premiums in check, but is up against powerful market forces. “We like all health care purchasers are wrestling with the problem,” he told the newspaper, noting a source of cost pressure is under funding of Medicare and Medi-Cal.  That prompts health care providers to shift costs “to large purchasers like us,” Schwartz is quoted as saying.

 

Nearly one third of California state worker health care costs attributable to preventable chronic conditions

An Urban Institute Health Policy Center study released this week commissioned by the California State Controller’s Office found nearly 30 percent of health care expenditures for California state workers in 2008 were attributable to lifestyle-related chronic conditions such as diabetes, heart disease and hypertension. Ironically, the study determined, state entities with the highest percentages of employees with these preventable conditions staffed health-related departments including the Department of Health Care Services and the Department of Public Health.  According to this Sacramento Bee story, the latter department will pilot a workplace wellness program that was kicked off in a ceremony emceed by television personality Dr. Mehmet Oz.  Later in the week, Gov. Jerry Brown, noting preventable and chronic health conditions account for 80 percent of the Golden State’s healthcare expenditures, ordered the state’s Health and Human Services Agency to create a task force to develop a 10-year plan for improving the health of Californians.

California is to be commended in recognizing that some form of intervention is required to bring down medical utilization costs among its workers where a degree of choice and control can be exercised.  The California Public Employees Retirement System (CalPERS), is one of the nation’s biggest purchasers of health benefits, so whatever the state does to demonstrably bend the cost curve is likely to serve as a national model for public and private employers as well as payers and providers as an emerging accountable care paradigm begins to take root.

However, state officials should give thoughtful consideration to how this intervention is framed and executed if it is to have more than symbolic value and actually reduce medical expenditures.  “Workplace wellness” is a misnomer insofar as the lifestyle choices that can exacerbate — and prevent — chronic conditions are made mostly outside of the workplace and involve personal decisions concerning exercise, meals and sleep.  Moreover, a 2011 survey of employers found mixed results among those that adopted workplace wellness programs in terms of tangibly improving the health status of employees.

Instead of “workplace wellness,” the focus should be simply on wellness.  It should treat employees like adults and give them the freedom to make the personal lifestyle choices they and their medical providers believe can best improve and preserve their health and fitness.  Confining employees to a cubicle for set work hours 40 hours a week and adding on more sedentary time spent commuting to and from that cubicle is hardly a health promoting activity.  It robs workers of valuable time that could be spent on activities that enhance health, particularly sustained exercise.  Nor is it necessary since Information and Communications Technology (ICT) has matured to the point state employees who are mostly knowledge and information workers can do their jobs from a home office or wherever else they can concentrate and be productive.

On this point, California’s pilot employee wellness program should incorporate a Results Only Work Environment (ROWE).  A ROWE values getting the work done over daily office attendance.  Early indications are that workplaces that adopt ROWE can achieve better health status.  A University of Minnesota study issued in December 2011 found workers in a ROWE realized increased health-related behaviors of more sleep and exercise — behaviors that can go a long way toward maintaining health and reducing medical utilization.

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