In recent years, group purchasing and business alliances have grown increasingly popular among California employers looking for health care coverage, and with good reason. By pooling resources, businesses can wring lower premiums out of managed care plans.
One business segment large public retirement plans has been employing this strength-through-numbers approach for years.
The nation's largest public retirement system the million-member California Public Employees' Retirement System recently closed its health plan open enrollment period, during which members can switch among the various plans offered without penalty.
And switch they did, much to the rue of a couple of Los Angeles County managed care companies.
First the victors. The biggest winner among HMOs was Northern California's Lifeguard HMO, which gained 1,455 members for an increase of 19.8 percent of its CalPERS membership. Blue Shield of California likewise gained 1,300, or 9 percent.
But topping the losers list were two L.A. companies. Foundation Health of Pasadena lost 3,146 members, or 10 percent of its CalPERS membership, while CIGNA HealthCare of California in Glendale lost 1,192 members, a reduction of 8.5 percent.
"Cost and disruptions in medical service providers appear to be the key factors in members changing health plans," said Kurato Shimada, chairman of the CalPERS health benefits committee.
Although Foundation won a plumb account when the California Correctional Peace Officers Association made it the group's plan administrator (winning that job away from Blue Cross of California), contract disputes with medical centers in Sacramento and Fresno apparently shook CalPERS members' confidence in the plan's reliability of service, according to Shimada.
Foundation spokeswoman Lisa Haines said that price Foundation is slightly more expensive than many other plans also contributed to the company's loss.
CIGNA spokesman Jim Harris said the losses came primarily from San Luis Obispo County, where CIGNA recently contracted with a new physician network. This required many CIGNA members there to switch their primary care physician, he said.
"A number of people decided they'd rather keep their primary care physicians and change their health plan. That's unfortunate but we understand it," Harris said.
While the losses themselves are relatively small CIGNA has nearly 700,000 members statewide, Foundation 621,000 they are of concern because of the threat that more members may desert for rival plans.
CalPERS is the second largest purchaser of health plans after the federal government, with a whopping $108 billion in assets. As such it represents a potential goldmine to those plans its members value.
First in state with MSA
Glendale Federal Bank earlier this month became the first California bank to offer consumers a medical savings account.
MSAs come out of the Health Insurance Portability and Accountability Act of 1996, which sanctioned the creation of an MSA pilot program of 750,000 accounts nationally to help small companies, self-employed and uninsured individuals attain affordable health care coverage.
The plans let people set aside money in tax-exempt, interest-earning bank accounts for the exclusive purpose of covering health care expenses. The holders do not pay taxes on the interest earned, and they can deduct the amount deposited in a given year from their taxable income.
However, to qualify for an MSA, consumers must purchase a high-deductible catastrophic health insurance policy. When a medical cost arises, account holders pay the first several thousand dollars of expense out of the account, after which insurance picks up the rest.
Glendale Federal has not partnered with any insurance companies, however, leaving that to account holders themselves.
"We're letting people arrange the insurance themselves," said Ken Preston, a spokesman for Glendale Federal. "So far we've been getting calls mostly from attorneys and accountants, as
this also is tax season."
Preston said the bank expects to hear from small businesses and sole proprietors about the MSAs as news of the accounts spreads.
Blue Shield of California has since January offered an MSA product, and Blue Cross of California has one in the works. Neither, however, has so far partnered with a California bank.
Spreading the gospel
HCM Benefits Inc. of Torrance is one of three companies to sign on recently as a general agent for California Advantage, the un-HMO run by the California Medical Association.
HCM, like the other firms sited in northern and central California, will provide quotes and marketing services on behalf of the physician-driven managed care company.
California Advantage became operational last year and is the medical association's attempt to lead by example in the managed care industry. The company has had difficulty attracting members, however, and the three contracts are an attempt to increase consumer awareness and market share.
"We know (the agents) will be excellent representatives in introducing employers to our (plan) ... which is based on an enhanced physician-patient relationship," said California Advantage President John Gray.
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