NU Online News Service, May 20, 2004, 5:18 p.m. EDT – The California Public Employees’ Retirement System may charge more for health coverage in Northern California in 2005 than in Southern California.[@@]

CalPERS, which has 1.2 million benefit plan members, buys or organizes self-funded health coverage for most California state employees and retirees. The state’s local and regional government employers can join the program on a voluntary basis.

CalPERS once could use its size to bargain for the same low rates for all its member employers, but the typical cost of commercial health coverage is now about 40% higher in Northern California. Trying to maintain uniform premiums throughout the state means that Southern California government employers would have to pay more for CalPERS coverage than they would pay for comparable commercial coverage, CalPERS says.

If CalPERS tried to maintain the current, uniform pricing system, Southern California employers would leave and Northern California government employers would end up paying higher prices anyway, CalPERS says.

CalPERS estimates that premiums for plan members in the most expensive region could be about 11% higher than rates for the average CalPERS member.

In related news, CalPERS says it will try to cut claims costs by dropping 38 high-cost hospitals from its provider network.