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COPYRIGHT 2001 The Dallas Morning News
Byline: Charles Ornstein
Mar. 26--SACRAMENTO, Calif.--California's powerful pension system has long been the envy of companies and consultants for its ability to control medical costs.
Health insurers compete hotly for a share of the massive prize: 1.2 million consumers and more than $2 billion in premiums.
But the pension fund's size won't be enough to protect it from the latest jolt of medical inflation. Last month, health maintenance organizations demanded rate increases for 2002 that averaged about 23 percent higher than this year's premiums. At least one bid came in 40 percent higher.
For two years now, large and small employers alike have bowed under the weight of health care inflation. Now, in an ominous sign for next year, even the formidable California Public Employees' Retirement System will be hard put to maintain its history of success.
"Given today's environment, being a big gorilla doesn't mean what it used to mean," said Ron Meyer, head of Missouri's health plan for state workers.
Known informally as CalPERS, the retirement system has launched its most aggressive effort yet to minimize premium increases. Instead of negotiating with the HMOs, the pension fund board rejected all of their bids in February and ordered companies to try again.
"The rates being requested are not justified by the services being delivered," said California Treasurer Phil Angelides, who chairs...
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