HomeMy WebLinkAbout0431.094l
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City of Palo Alto
City Manager's Report
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TO: HONOIt .. BLE CITY COUNCIL
AlTE~'TION: FiNANCL CO!lIMTITEE
AtOM:
AGENDA DATE: Sq>cnnber 13.1994 Cl'oiR: 431:94
SUBJECT: l'se or AB 702 Reserves: In,onnation regarding Emplo~'''''
Organization Input and Cltbl'r Related Matten;
P-EQI'IH
TI-Ji~ rer~"\l' f'i",y,~j0 r-3.I;k-'..!? IPJ,':r;m:'i,";\ \~"4i..i~'~I.(J ,,-t th(' April 12., 199~ Fina.nce
Cumn:illee rT',t"r..·:in~ r,::'prdint. U;" AB 702 PFRS credil,
RI; (,0\l;\lli1'lJ) AD m;~
This is an info rmatl on..::l rr:p..1rt. ~o action i-:. required. 3t rrlls Lirnl'.
ro!J£Y !MPLlCATIQ~'ii
CMR:207:94 provj.dt's policy impliC:itioilS 3.!1J nxommendatioH .. '..
EXEctlTlVE SUMMARY
On April 12. J994, me Finane<: Committee ,,,,,,,1 to rerain the 'tatl recommendation for the
u;e of 1M AB 702 credillCMR:207:94) in Committee fOT. period of at 1ea;! two months,
during which time employee groups would be invit:<i w communicate thoughts and ideas
about !he US< of AB 702 fond.. "
'!'his memo reports or. 3 m«ting beld with empioy"" gn"'l' represeruatives on July 27, 1994,
It also lr..nsmns inforrtl3tion requested by the Finance Committee.
M.~""Ut Emplm''''' Grouos. R<?res.mati,.",f SEnl-Local 715, IAFF-LQca\ 1319
and PAPOA were ID\'ite<l (0 an All 702 feedback meeting with staff on Jut)' 27, 1994,
Repr=ntatives of lAFF and PAPOA ancnd."L SEIU did not attend, but iodicated that !hey
might be sending written comments. At the meeting. staff distributed an update of the
Mer",r ,emaria! ,rudy regarding the Cil)"S retiree bealth care unfunded liability,
ill'; Ln..FF rep!"es.entati\'t's re::.tatcd li'1,.cir pt::)s,ition lhal dispos.ition of the AB 702 credit is
subject to Lhe meet and conier process, and lhaL they will submit a propo..:al in negotiations.
Page I of 4
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'fhe letter expressing the opirjoD of tt.tCir attornC'Y is attached, The City t'\ftomcy will
transmit his opin;cn on this matter under separate ~(I"eL
No fu.r'Lhcr specific feedback regarding the U5e of AS '02 fuI>'!s ('If the :s.taff recorr.mendation
was received at the meeting. Howeycr, L\)e emp~oyee groups \n~Te rrminderl that this item
would be on ilie Finance Committee agenda for the Sepu:mber !3 """'ling.
Impact of Hn!1tb J:~EmP!Oye< and Rrtirn-II~b flam.Ir", Finance
Committee requested informaLion regarding the imp-a::! of Heaith CaR" Refonn on the hl'alth
plans for City employees and retirees.
f.'ederal Refonn-When Congi.es.s '.ctllrn.~ ;rr rni.JS"r:cmr.....'f. :[ '),1H .:!f:J:n J.dJrc~,:>.
Fedtral Heaill-j Care Reform. Prior ir.I ;.hr 1.30<)[ D.;!~ rt:,.c;':-,. r:,l[~~~ oi till.: biH~ l"X'ln~
considered had sufficient suppe..m ,() r,3S:" ii.:: bilJ i~ .,ip~;;,J H1!n !;l';" tJ-i~" ) (',;if, it ',;,'il]
probahly cDI1t4in only ~jncrt'm~n121~ ch.ln~c', t1f P\~ur..i;:i.-.r.;' rr:j'.)rn1 Tr,~:;": ..:.it_in.;""
include a rtohibit~on on ((Wi.:iage IImll:;.l;""1 II'1T pt t-~ ':" :~; In!~ (\);-rjiU(,n_" ,-,r J i~ ;;.h\t\ti::.:s
and provisions for portability and t,:re-3tc{ ::lL'(,.'e'~;, r\) ii1:-'JrJ.fi':I:. Tr;~ l'(l,ll-CPl<" ~If
employer mandates and universal col"t'rage r.a'.~ b-:cn droppe-J fr':llll 'erto~s
considtration_ The coocepts of rns-"Jr1i[k:c refonn llndC'i ~'()midl':'r,Hkm ,-,0uld 'roe
assimilated into the City\ PEMHCA health pi2.fl. with ~ornc: ,;ns{ increas.-: lu..'\.t.'d on
specific provisions. Staff will keep Council ad\'is.eJ lit" ut'\t'ic'lriT'.ent.') in this. 3TC4.
State Reform-The Califomia Heallh Stturity Ac!, Prvp')siliL'ln 186, ha.1 qualified for
the November 8. J994 ballo!. This act, i(pa'S«!. ",III dramaLiC<1lly ch.ange ,he health
care delivery system in California and r",uil in the pmbable elimiruHion of the PERS
Hea1U! Benefit Program (pEMHCA). wh"h is c-orreuliy u....a to co'~r CIty employees
and rt:tirees. While Ibe HulU! Se>.."'Urit)" Act would CO,·" employ""" aW retirees
living wilhin the SlAte of California. the Cit)' woukl need to arr.ng(: co,,-erage for
retirees and eligible depeodents of employees living out5ide of the stale. PERS
memoranda dated Mluch 15 and August 16 pro,\de an analysis of tbe lln?"ct of the
Act on LI]e PEMHCA program. These memos are attache<!.
Medicare Risk-8~ At. the Apri112 Finance Committee mee"ting, Coumjj Members
had questions regarding Supplomem to Medica", H~th Plan; under PEMHCA.
Specifically. ilie questions relate 10 ilie cost spread among supplemenlal plaru. Some plans.
including locally offered plans. are significantly less .. pens;,-. !han oiliers. v,'hy the
difference in cost?
CMl<:43I~ Par;t :2 01 "
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The less expensive plans are Medicare risk-sharing plans. The Social Security AmendmenL'
of 1972 allowed health maintenance organizations (HMOs) to enter into Medicare com",cts
on a reasonable cos! or risk-sharing reimbursement basis. The Tax Equirj alld Fiscal
R"'ponsibility Act oi 1982 and the 1990 Omnibus Budget Reconciliarian Act further
expanded these provisions. PERS currently offen; 7 HMO risk-sharing Medicare plans.
Under a risk-sharing arrangement, an HMO is paid a monthly capitation fee in advance by
Medicare tl) provide aU health care services for each coyered pen;on. In order to obtain
benefits, an employee or depeodent must obtain all services throogll the plan's participating
providers. Tltis list of managed Medic;:J.re pro"vidclS is more restrictive than that offered to
active employees. A retired employee will be respo!1Sjble for the entire 'bill if services are
received from a nou-p1an provic.er. extept for emergenr,~cs.
Employees electing this type of coverage receive i\·itxlicare benefits, plus .3ddit:\'naJ bo;:'ndllS
Eol covered by Medicare, such as prescription drugs and optical coverage. Th~re ar!?
generalty no out-of-pocket expenses or claim forms to complete. Similar plar"i 3ft \.~fi"Cir;.j
on an lndivlducl basis. but have lesser benefits, Le, no prescriptic"lfl drug~, In selecting
Medicare risk-sharing plans, retirees must live withill the service area and he 'II.'ilHng to
acc.ept managed care from a small panel of providers,
The advantage to the City from Medicare risk-st"Lilring plans is that (h~ premiums are j~s.~
lhan the PERS Medicare Supplemental Plans offered by the -'"me HMO. The savings i;
approximately 50 percent of the cost of th, Medicare Supplemental Plans. PERS will be
eAp3llding the number of Medicare risk-sharing plans being offered in the near future. As
these plans 3re selected by more retirees, Cit)' costs and retiree costs will be reduced.
Staff will be av.ilahle at the Finance Committee meeting on September 13 to aruwe' any
additional questions.
lI£CAL IMPACT
The fisoal impacts dealing with this issue are discussed in CMR:207:94.
ENVIRONMENT AI. ASSESSMElI.'T
None
CMR:43J:94
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ATIACHMENTS
1. Lener from Tony Spita1eri, President JAFF Local 1319, dated April 12, 1994 with
attached 1euer from Duane Reno.
2. PERS Memorandum dated March 1 S, 1994 re Analy,is of the Califurnia Health
Security Act Initiative
3. PERS Agenda Item 4 dated August 16, 1994 re Single Payer Initiative
(Proposition 186)
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Prepared By: Leonard Zucker, Marujger of Employee Benefits
DEPARThfENT HEAD REVIEW: _. /X ./ ( // ._-) '"_
JAY e. ROUNDS
CITY MANAGER APPROVAL:
.Dii.1tor of Humafi R~u":es " U~/ ~~ I <Z.
UJliNE Pr:"EMltir \'4 c4 Manager J
CMR:43I:94 Paje 4 of-4
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PALO ALTO PROFESSIONAL FIRE FIGHTERS
Apil \2, 1994
ky R.ocmds
0>.=10< of H= R==e;;
150 f-l..azni!t.cn .. \·.'1!:"~oe
h.lo Alto, Calif(1rn..ia ~JOl
iJe:ii J~;y:
%0 N" SAN ANTONIO ROAD. SUITE 291
LOS Ai TOS.CALIFORNIA 94V22
APR 121S94
n ...... " .. ,',o:..
CE?AA'T,,,_ .• {
r urI req\.iI;:,STlIJ..g L'<a!' lb',;, CIty of Palo ,\..ito meet an.1 ':onfcT ~ith lo.:al 1319, regarding the use
0f:.~ (.-\..E) 702 Public E.!:npla)'~ Reti.rement system (PFRS) cr~it It is the opiniOll our lega!
coura:ll as \I,"T:ll a'3 local 1319. that this is-5'..le fu.U.s ...... itb.in the scope of me Meyers.to.'tilias~:aro'il"'D
·\ct O£ffiA), Go\'emmer.! Code 35 1)0, ~.t~ See attached letter.
Si.-==Iy.
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~"1 C. ~0J\"!l.
~'''',~.I''(l
Viner"I>.~,~,"
~s..,lor<!.lC~
C,..-.r;."y O'l-f¥.
Debor.J'r L. ~
8ruc:@ f. \r(~
~S, i"4eea1
~ L Scbclod
,~~
Anthony P. SpLt~l.ri
rresid~~t, Loe&l 1319
P&lo ~~to Profo.aional ?ir@tiqht~rs:
960 N. S4D AntoQio ROAd, Sui~~ 291
Loe Altos, CA 94022
Dear 'Tony:
Davis,. Reno
& Courtney
ATTORN~YS AT LAW
10 New ~om~ Srrte~
~ ... e 909, $.in mnc::sco. CA
o~ lOS :: so: Ii 15~ 5+1·5329
,'i :'I$U·! I'OCc laoJH3·i'7\."'(J
This J.ett~r i!!l .in re-:::'[>::n.s:e to yeLlr i..nq: ... ::' r.y regardi r,g \:he
City of. ?~lo A.lto's :::.eet ~i:d cC'':''.:el':" cblf,:.;.c-,r.i,.c!"';s itS ttl rhe
..:tili2ation of t;:he City's ~6.~ ::i.'::"'.c.:n }.5se:::.;:;ly Bill t)_Bj .'I.~~'
Public ~loyees Reti;-e1r.ent 5yste.::l (?::'?3! --..-:redi.t.,
!t is car understanding t.hat. th~ City of P3.1o Alto ha5
pr~p4Ied a recaa.Pnrlattoo to th~ City C~un~il for applic~tion of
the a.OOve r~f~renced. $6.1 :,.illi"r. to the uuf~n.d~d liability for
retlreaect :Dedica.l betletit,. It i,. also our unde.t'stan.d.ing that
the Union h-A. alt~ru.e.tive r-e-coZlmWcda.tion3 i.t · ... ould like to
propos~ fer the use of the AS 702 cr-edit ~nd wi~hes to mee~ ~nd
confer with t.a.~ City r.g&.rd.i~q tho.e I'.c:,,:r:m.encia..ti.;)n~.
AB 702, pa.8.ed a.. p.Lrt of the !991-92 S'tate budget, requires
cities and other a.ployers which accrue savinqs ~ce~ th~ Act to
give the hi~h~t priority co r~tainLnq O~ ~ehlring retlr~nt
SYdtea .ea.bers when e.xperutinq those :lAving.. The Act qive!!
.i91rifieaot discretion a,. to how th.e qO&.l of r-eta..ining o:c
rehiring-re:tir_nt .-y.te. aeMbers is to b. acca.pliahed.
eowever, it i. 0Qr view th4t ~eC&ining or re~inq repre~ented
employ ... nec ••• ~ily involve~ subjects over ~ch the City is
obliq.t~ to .eet &Dd cODier ~er the Keyer5-Kilias-Brown Ac~
(MHSA). Govertllllleot Cocioe SJ500, et seq .,
The -KMBA requires the 9c~ern.inq body of a public agency or
it~ designated representative to ~t ~ con~er in qood faith
regard..inq vages, hour. a.nd other t~ a..c.d conditions of
employment with representa~iv.s Qf recoqni~ed employee
orqanizatio~. Gov. C~ 53505. ·Wages, hours and other terms
and conditions of esplQi~ent,' ar~ ~nd3tar-/ 9ubjects of
negot.iation and b.ave been interpreted qu.< t:~ broadly under both
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•
A. p~ Spitaleri
April " 1994
Paqe :2
state and federal lav. I
oms. Reno
& Courtney
AfTOUlEn .... TLAW
lC ..... ~_OOi
.... :,-...:::::.,:~~;4lof
~-~~
Specifically, pension benefits have long been held 4S 4 ~
of employee ngea a.nd, therefore, rithin an ~loyer~s :Beet. .and
oonfer ohli'1.ation. See Bardin 1, The :C~'yelcpl.nq Labor U'o{, i2d
ed. 1992} p. 967 and oa.!'les cited tile1.-eic. 1'herl!for~, prCr.>C5al.:!l
by the city to spend the AB 702 PZRS z:efc.od on any foI."":O ci
pension iundin'3" or other aspl!'Cts of ~loy!!t" ~!C.~f'::'ts i.= ~u.b 5ec-:
to negotia-t:i':Jne: 'Iii th the uuiQIl.
In conclusioo, i"t is our opinico that-tbe Ci 1:-y ::: t ?'\1':J .~.:.. '::)
is :n~quired by the Meyers-Ki.lias-Src;."U Act t,,) :7.ee~ C\rd C(}t.I~!:
'",ith t.he Onion regarding AP..Y expenditnres of thee .~~~ 7~<:: ?S:::'.3
refund. wIlieh are, as t.hey ceces.3a.rily :!lust be, abed ,·~t rer-.!ini.:lg
or rehiring reprp.sen~ed ~loyees.
1.i yoa. ha.ve questions, please do Dot hesitate t.o call.
Sincerely,
DAVIS, RENO 06: COORTh"EY
Ou.a!:.e W. Retio
Andrean xaleai.s
• The MMBA mirrors the 14.C.qua.qe found in the Nacion.a.l I.a.bor
Relations Act (NLRA.l, in.clu.di.nq the language rega.:di..nq manda.to.ry
subjects of good faith bargai..n.inq. You may recall t:hal:. in
Firefighters uniog v. City 9f Vallejo, (1974) 12 c.3d 608, th~
California Su~reme Court beld that it was appropriate for the
C41ifornia courts to' look tc the fedezal precedent eSLablishect
Ilncier the NLP.A in determining a city's meet a.nd confer
responsibilities.
Memorandum Oat.: March 15, 1994
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Cd!omIo Public Employee' Roti",,"'''' System
To: Fred Steinmetz, Manager
Cost Containment/Policy Development Unit
Health Plan Administration Division
F"",,: Nancy J, Welsh
Cost Containment/Folicy Development Unit
Subject Analysis of the Califom.ia Health St.~}J.-ity Act 1n.itiative
The proposed Califorrda Health Security Act initiative v,'OuJd, by constinitio!1~1
and st.ltutory amendment.. establish a "'single-payer" system ...... hct£'hy thf2
CalHorrda Healt..~ Se..:-urity System, using v~rious funds, pays for hN1Hi ore
<2ov-erage for ev-er:-1 resident of California. A slUnmary of thz major provislons of
this Act; a discussion of its potential fiscal jmpact; and areas of conc~m aL"1d the[r
ramifications on the PERS Health Benefits PrClgram follows.
CALIFORNIA HEALTH SECURlTY ACf
BACKGROUND:
Goyemillce.arulAdmjnistratioD
The .initiati\~e establishes the California Health Security System as a single
parer system administered by a nev.'ly created constitutional officer, tile
Health Commissioner, who would be elected by statewide ballot. The
Commissioner would also assume many duties currently under the
responsibility of the Departments of Health Services and Mental Health and
the Office of Statewide Health Planning and Development,
For administrative and other purposes, the System would be divided. into
"System Regions" that would be compooed of geographically contiguous
OOWlties with common economi..: or demographic characteristics.
Eligibility
All residents of California are eligible for covered benefits, other than iong·
term care benefits, under this initiative. Until the Legi,siature L'5tlblishes
residency requirements, residency will be determined according to
f'EfIS.OSS. 73-HP (Rev. 11190)
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Govenunent Code Section 244. Eligibility for long-term care benefits requires
that minimum employment criteria and payments into the Health Security
Fund be met in addition to the residency requirements. Those not eligible for
long-term care benefits would still be eligible under programs (such as Medi
Cal and California ChiJdren's :)en-lees) exi5ting prior to tl,e effe-.:tive date of
the Ac'. All eligible California resIdents travelling out of state are covered for
up to ninety (90) days in each twelve (12) month period
knefits
The p"llrpose and intent of this initiative is to pro\r;de all medica.ily
appropriate care, including preventive, ment:al health and long· term care to
eligible benefidaries regardless of any pre-existing conditions. Prescription
drugs a~d rome dental care would also l1€' covert'ld. TIle focus wLU hE on
primary care and a Health Care Policy Advisory BDard appointed by the
Commissioner ';"'ill assist the Commi.ssione. in €stabli.<;hjng guidelines for
"medically appropri<itt''' services; and pwcedures. Services detef1Tlined to
have no medical indication by the Advisory Board \vill h' excluded from
("o\'era.g~ and elective servICes In,])' be re-stri.r.::ted or excluded from ("o·· ... erage
under t..he cost containment provisions of the Act.
Con.sunu~rs will be able to ~jec! their health care pro1,o'idel and there v,pili he
no ded.udib.ies or copayments for most beneiits beginning January 1 of t.~e
second year following passage of the Act. $t')me benefits will be phased~in
ove-r a four year period follmving passage of the Ad. If tiu; federal
go\'emment authorizes the incorporation of the fedeI.3.i Medic;)re Program,
Medicare Part R payments will be paid b}' the Health Security System for all
individuals eligibte for oo;)th the Healili Security System and the .Medicare
program beginni..:"1g in the se-.:ond year foUmving passage of the Act. Covered
ben-ents include'
• Inpatient and outpatient health facility or clinic: services (other than
rang-term care services)
• Professional provider .services, including eye care and home health
care
• Diagnostic and laboratory servkes
• Prer,atai, perinatal and mOlter!Uty (are
• Durable medical equipment and appliances as determined by the
Commissioner
• Podiatry
• Chiropra ... 'iic
• Dialysis
Eme'rgency transportation as detennined by the Cornmi.ssioner
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• ~ilibl: t:i l,;e c.are
• I....angu.agoe-mterpretahor. (or health C-d1'E' sen."ices
• BIoo<l
• Emergency care
Outreach, education and x"!'ee'Tli.n.g services
A copaym<nt of not mort' tl-.an five dolJar.; ($5) per prescription will be
""JUired f:or oo'Pabent prescripbOn drugs and only those dnlgs on the
Sy<trm's formular:-(composed of the rest-priced prescription drug> of
pm .... en efficacy for parti.:111ar conditioo.sl will be covered, except where
soec.ial ~tmdards and criti'ria art' met, The Commissioner will also
~ta.bbh and ma~' modify at rLS discretion, a ust of dJ1.!gs (such a.s drugs
t(' ':Cr:1t-.:!.t !.nfKl1G:..J.S ,JL-;.e',iX"'5) dVJ.llJ.bl.e without copapnents. The System
... "'!ll '-\ln~'r tr.~ full c()'S-L" ot" d:n..l~ pnwidM cturing hc-spitallzations and
ckLrin t t'!T':::rgO:;'rcy ('Ht:>.
\;e-,ii'_-atiy .::.ppr,-'prlJh-..' rJ1p3ti.;nt ,m,j OUtp3ti:eE1 mental hE.tJth (:arc
sen kl?S, ir.(ludmg: t:ri:?"at.ment f ... "lf substance abuse and diseas.es of the
bra i.n , are covered, A c('payment m~y apply to certain outpatient services
during ~h€ fi.~t year that benefits aff::" a'.'"Uable.
Long·term sen i(.?:i such as homt'-health care, hospice care and horn~and
<:omrrnmity.-ba.se-J services are ccvert'd to allow persons needir.g long
tenn s.ervke:s to remain safely in their homes to the maxi.'"llum extent
pos..~b~. Expenses for room and boo.;rd, in m~t circumstan~, are not
oo\'ered. These benefits would be available beginning .January J o( the
fourth Y"'" following passage of tl-.. Act.
Dental C.ue
To tnt:· extent r .. mding permIts, emergency and preve1' .. tiv€ de-no) ~r\'lces
nill be co .... ert"d beg' .• nrung ,Ta. .... ,u.ary 1 of the lhitd ~'t:'ar follo ..... ing pas.>agl' of
U", Act.
.-*i.ttam..'Tlent 1 pruvldes il comparison of the benefits pro~ under ~
Ca.1ifomia Health ~;urit)' System and those (""'Ummtiv ?IO\'ided under the
FE\IHCA progT.m
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Rci m hu'KD1C:ft t
The Co~ lS c:h.a.rged. ""'1th negotiating reimbu~ent rates .... ith
~tial manun.crul"'e"!'$ ArId hea..lth ca..re FroviderS. Altho ... gh t~e
practice of heaJ.th c;are will :'Pf!l.Im pr"i\"ate. the irUtiabye assumes en(lrmotiS
savings ""ill be adUt-.'N b:-' eiinunatir.g: wasteh.!.l administr.1h\·e CCSG,
batpining for tI>e be.! f'O"51bw p"""---,,ption drug pn(es, and pronding more
cost effe....'"'tive C3l'e, A Gktti.l Region.al 6ud.s;"'et for each 5)""Stem Region "'ill be
established and pro<.iders m.ly w~ fee...fQr-seniL'i', capitahon or sala~' as
their mode of reimb-~.t from. the t-uJget allocations. The irunative does
not e.'q>Wn in detail thr rat!' ~~ !"t'UT1.burs.emt?nt mechanisms
Fundi n ,
A ~ fund, the He-I:ltt-, St-c:ur.t .... F'.il'.'~ ",""C'illd 'roe e"$t.~c.!i:.'!-.ed m.!.he State
Tre~sury. TIle costot' r.e-aith (In: ~ :.:::e-; :. .... ,'L<~,j ~ f't.!',?lrt(;;-j tr .. ::om r-en~·J".Ie::;
raised by:
• A p.ayHlll t,l\: l.~t ur' ',J:;" ' .. F·~'hl;;",: l';l .l.i) ~';'l~lr;,:,'tlr=, T"r-':L':: jnJ F rl';ate'!
Au l.n(orrwt~'t ,If:;;· ~'r,.:t:,!t!. 'r :!~ :~~'~:'. :'~'-U1:;. ~c'-; J :'J.rrl'. 1:'(': ~
Deree-r': t (I n n,:, U. "'.1 ~ L., 1 ;"" '.' r-:-,,' t." ' •• ;'!: .~ L~ ·I.~ ';':'_~', '.:0 c ,::' r ';-:'.i r I, '5-..::-',,'" .! ,(\"',
fur rnanit'J l'.:lJP:<."', :-:i:t:,~ ',-:r:1
'\ one ddlar \$1) ~\.lrtol '. ; 'r-! li.~.!rt'~t-'-. .1 rd kb,,· (. I ~'H.'j '..!{ t.;,
• Federal, ::tat('. ('J'.JJ1ty J.n,~' :.-.: .. j l.)nmb\Jtj(ln~ h,-'m·<;."'-~h:-;g ]~t'J.lth CWe'
All necf'S.,s.1r)' \.\'aivers, €'~ern:pth')fl5, JP~rr,t>nts ,-Ir It-,}:::i.t;.t.lti;.)n w'YL.dJ b-~
oUt'Sued bv th-e Commis~iGnej Si,\ t.r!':H 3ii cl.mtnbut1{;ns (0. heJith (,Ut' frlJm
fl-deral, st~te, county and ILxal ~,-l\'emrrh'nt':' C0tdd l>e Fa;d lnh) tJ1t' HeJlth
5ec-uJ.-ity Fund, Tne Act d(~ not require the Lf.<gi.5;aru~ to shaft ft'dt'rally
funded program cost'; and funds to tilt:-SY5tFm; hO ..... ·e-"\'er. there i$.1 ti..'-(dl
jru.-entlve to do so.
TIle revenues to tilt! st4te ill'C ant'..cipated to be appro:u.-nat£>ly S40 bUllor.
annually, The Health Security FUild would b" part of tho eo,'ernor', budge<_
Although the Act promulgates increases in expenditures tied to increases in
gross domestic product, adjusted for populat1on. ~-,ther factors such as
additional expenditures for medially d.pprop-na~ !.Ilcre~ m utilization and
improved <lCCes3 for underser ... e-d v.)pulatiuns, ,"T.')), r~Uirt' i.ncre~sed
funding. The-Commissioner may re-qu~t the u--gisLHuLE' t(} in.:r£as.t:' ta:o-: rales
on the funding sowces if ex~ndltures exceed revenues.
AREAS Of CONCER.'1:
Although the purpose and intent of this initiative i..9 admirable, clearly there an'
issues that need to be seriously considered to ~ppredate t.1-.,€, furl impact the
passage of this initiative would have on the PE~OiCA program and (m the
deUvery of health care in generaJ.
The single-payer initiative promises to gent:'rate sufficient saYings from
reforming the current health care system to pro ..... ide LLt'\.Iversal c('!wpreht:"n,.';in·
health coverage, including additional coverage such as long-term C<lre, ~o llU
California residents. Some of the primary savings would b< den\'Od from;
, Administrative savi."1gs
• Managed. purc.h.asi..'1.g of of rr€Si.."liption drugs
• Use of primflr]' care physidans
Termination of payment for uMet:ess.Jry, m.ugiru.!1:t' dfe.~tl';~" (>l
inappropriate pw'Cedures
• RegionaJization of rugh techll01l\?Y C'J;nd expt'riment.,jj "1:'(\':«'-
Approximately 50 percent of C.aiiforrl)J..,1.5 '\."ho h~\'e heCllth. (<.)\-t"f ~bt' ou 'h"iJ to' I.' t
the ME'!'di-Cat Medicare or ' ... ·orkers' (,ompe:l.::>alion s;,,',r;tems, a ii' (la!ent!~'
enrolled in some form of ffiilnaged care delivery :::ystem These ma:la::;t'd (?!l~
systems have medical poliGes that work to eliminZite UJw.ecessa.ry S<'ITi(t.."S; u.::.€
primary ca..."'e physicians to manage the delivf'ry of services; hd.\'e stnteg1t"_" Lil
place to purcha...qe prescription drugs in a cost (>ft('(ti\'~ mattn'fr; ami are
reshaping their pro\'ider network.s to match O!\",]iklble technic<lt resouIC~ b.J th~
derrumru of the community.
The Medicare and Medi-Cal pwgrams have ,ocently implemented ''''t''8'''' to
move portions of their populations into managed car~ systems to ta.ke i\dvantage
of those strengths. It appears that savings ir1 man)' of these targeted Zirea5 may
depend on the success of moving new populations ifI.to managed care systems.
However, the construction of this initiative promotes the continuation of fee-for·
service delivery (similar to Medi-Cal) and reUes on regulatory oversIght to
ronbtin COllI>. This makes it exttemely difficult to evaluate the potential .. vings
"if any" and the impact 01 mlegrnting the Medi-Cal and the worke",'
compensatkm programs with employer sponsored pwsramf .. If cost savings
strategies fail to yield sufiident sa'lingS to fund ber.efits it is possible trut
copayments could 't:-e increased to reduce the shortfall; new revenues through
increased taxes could be generated; reintbur.iements to providers could De
red uced; or access to elective service-s could be restricted.
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If PEty{f-rcA Remains Outside Oi The System
• The promotion of fee-for-service delivery of services that is outlined in
the initiative could result Ln.l higher cost, less efficient dellvery system
in the out yeaIS. The initiative relies on the Commissioner to identify
and remove abuse from the system. Howev~r" the initiative's
definition of medically appropriatf! "means aU healt!l care services and
prC>Ct?dures chosen by the patient's health care professional provider
subject to the guidelines established b, the Commissioner based on
recommendations of the Advisory Boa.."Ci." As a ","ult, this definition
may make it very difficult to eliminate potential abuse. Historically,
t.'h.e practice of medicine has not been an e.xact science and a detln.ttion
that would aJ10w reasonably flexible treatment modalities may not be
suffident to contain costs in a fee-for-service driver, system. TI,is
reimbursement strategy could 510',"1 the r:urrent trend om California
toward integrated cost<:ontainment driven delivery r,ystems.
• The potential for significant cost shifting to the PE~ffiCA prograrf\
would exist, in the evenf that tite system Decomes underfunded .;:nd
Jrbitrarilr sets its reimbursement rat{;!s to providers b.;!ow the
prevailing reimbUTsement rat~, it would become highly probable tint
costs v.,'Ould be shifted to the PBM1-:!CA program, E;o.,ample.; of current
cost shifting occur with both t1e Medi·Cal and Medic?re program~.
Howeverf the cost shifting associated with providing coverage to tne
uninsured would decline or dis<Jppear, If C05t shifti."l.g occurred to a
suffident degree over i1 protracted period the atttactivene. ... s of (h,e
PEMHCA program may diminlsh.
• 'II/hat will happen to the state contribution level in the future? 'YV"hat
coverage and premiums would be applied to retirees if Mc-dicare is
in<:orporated into the System and PEMHCA is not?
If PWHCA Is Merged With The SysteDl
• li the PEMHCA program is ir.corporated into the Health Security
System, it appears lhat PERS active employees and retirees residing
out-of-state may not be covered or may have difficulty obtaining aCCe5S
to services with out-of-state providers ~Nho h~\'~ not contracted wit.~
the Health Security S),stem. \"'hat mechanism would be available to
this group to obtain out-of~state coverage?
" Under the same scenario, it PErvn-ICA is incorporated into the System
thus eliminating the statf~ contribUtion, how would premiums be
financed and where would coverage be Dbtained for those r€tirees who
did not pay into Social Se<urity?
•
• Freedom of cholee of providers, coupled with the lack of deductibles,
copayments, and benefit limitations encourage a iee-for-serv1ce
approach to health cane delivery. Whot mechanisms to control
utiliLation, not just costs, are available? Until recently Medi-Cal has not
employed managed care techniques to their delivery of health c:are,
Medi-Cal currently expends $15 billion annually and antiapates
further tncreases next year. Medi-C.I program expenditures have
historically increased at rates exceeding inflation. The PERS Health
Benefits Program has succeeded tn attaining a 6.4 percent thrre-year
premium trend compared to a 30.1 percent national trend. Much of the
!o"Uccess in suppressing our trends is tr.e resuJ f of managed care
techrjques ern.p lcyed' by our ffit10s and utilization review
management of our self-funded plans. The Health Security System
aFpears to be strl.lcture-d to Qi..~d\'antage managed care programs in
the long rurl, , ... ·hich would be a step backwards for our program and
the ddivt'ry of care in Cahiomia.
c..;on:'rn.ment Code 5ection 244 deals onh' .... ,'ith ph.ysical residencv of
pt"'rs-:m~," J.nd not emploYlTH?nt or legal. st,;tus. Unlike Canada, "
und'>:l.un2nted workers ((1i'1Stltute a large segment of Califomla's
poplil~tion. Under thE' eligibility requiremen.ts of the Act tf)ey ,'w'ouid
b£ covered. What mechillisms are in place to coJl~t revenues from this
y0pulation group? \Vhat disincentives <)rt' in place to discourage
€mplo)'eT'S of undOl'u,mente<.:i workers from paying cash to avoid or
mininlize u~eir employer payroll tax liability to the System?
• Thez-e may ~ reductions in benefit levels '-"Urrently available to our
membership dependi."lg on what the Advisory Board d(~termines as
"medicaily appropriate" services. The Advisory Board, Regional
Admirustrators, and Regional Consumer Advocates will all be
appointed by the Commissioner. Will there be any community
involvement in the development of the guidelines of "medicaliy
appropriate" services and procedures (similar to the public meetings
held in Oregon when they developed their list 01 co\'ered medical
services)? \'\"hat will be the economic ramifications of these de<"isioro..s?
CONCLUSlON:
Cost savings to stare and local governments may occur only if contributions are
IL.llited to the rate of increase determined by growth in the stare's domestic
product and population. Capped premiums may simpl)' result in cost shifting as
exists with the Medi-Cal and Medicare sysrern.s today. Costs to the System,
employer::. and individuals may be higher or lO~'ler than the anticipated $40
bilhon in revenues depending on severa! factors such as the costs to pro .. ide the
required benefit package; utilization trends; Legislative changes In funding
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le\-els; and cost control measures taken by the CorrunisslOner. At this time, the
fu;cal impact If this initiath'e is pas...c;e.d i.s wUowwn.
From the perspoctiw of I.'" CaWERS Hea!th Ben.fits Prognm there is a key
~ to ~ pl"Op'OSed initiative a. .... d llut i..s t.h.E:-g{lYf'mance of the program.
!he economic and political pres.,:;ure:s, that '.II.W be exerred on a ~J to $60 billion
health program, ,,>u; times the ,"'. of M<dl-Cal, will b-, intense.
The Health COIT'..miSiioner ~iil be 5ubl~j to prO\ider pressure related to
reimbursenleflt and covengt> i.ss.ues... He ""'ill be pressured. by the t.upayer and
thfo Le'gisiature over adequate fu.."':ding for trot' prograrrt, and he "",,'ill be lobbied
heavily br every' constin..-ent group af{e\."ted by ti-.€ deu\"ery of health care in
Ca.lifornia. Trot:' needs, concerns Uld currem benefit design of the P[}...1}-IC A
program cowd eas:il~' bedi:uted ~-; this highJv F'0liu..::-i..ll>O. envLronment.
o..u !!1.emc.ers s..h{,'.l~d wt:i . .::h ','er:-i (J;,"ctuU y' tht? propl1SeC ~ndits of this injti~ti\'t:
with the F",)~ential L"rv3t tJ1.i: -,'.:d1 .! pim IT>3,' nJ;;::;O t,~) the cunent comrrehpn.s.ive,
afi()~d",t<e r-,e<.jt.~ b-er.<:'iJ t p n ',;~ an: :c:.y'"""',f'i b)' the PER.S &)011"0 0 (
Adm L!l.i.:; ITa ti ('-.1"1.
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Ati.a;.:hment I
COMPARISON OF THE CALlFORNlA HEALTH SECURIH 51'S TEM AND
THE PEMHCA PROGRAM BENEFITS
I CALIFORNIA HEALTH SECURITY I PEMHCA PROGRAM (RASlC
SYSTEM PLANSi
Inj'atient health facility X
Outpatient health facility X I Professional provider services X
Home health care X I
Diagnustic & laboratorY sefyices X ,
Prenatal, perif'.atal & mat2min.' (a.re ---.x .. -l
\
.-. ·--1 DME I -~----~-~~-----
Podiatr'.' I · !
Chiropractic ==t= -. · i
Dial),slS -----. .\
------]
Emergarcy tI..u15p~rtation & (are __ ~_ ~-"---------.~ \ --J
Rehabilitative care .\
----,
I
Blood ---, X I
Mental heait.'l care (inpatit'flt & I
outDatient) .. I
Long-term care (phas-ed in 4th y;.:ar , ... 1 after passage) .,.
.. -______ 1
Dental care (phased ir13rd year after
passage)
Complementary medicine ·
Eye care E.um.s, r.o in.n1es OT lenses
Lartguage mterpretatiol\
Outreach, education & >cr..,rung
s.ervices
Prescription drugs
x = Services covered by PEMllCA plans
• = Covered by some PEMHCA plans
Some :k-l'H'ning SC!nrices pro\-"ide-d
X J
.... = Long-tenn rehabilitath'e care not covered. by PF.MHCA plar..s
n~ == Some services such as home health care, ~_k..iiled nursing fc:dhuo anti cafe,
and hospice care are pm\,ded under PEM1-iCA plans
NOTE: Some of the5€ services are covered, ii approved by .\fedl~.are, undeI
PE1.,[HCA Supplement to Medicare plans.
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Auruot 16, 1994
AGENDA ITEM •
TO:
SUBJECT:
MEMBERS OF THE HEALTH BENEFITS COMMITTEE
SINGLE PAYER INITIATIVE (PROPOSmON 186)
On June 20, 1994, the 5e<:relary of State v.Udated sufficient .igr>a~JJeS "' q\l.Ii~,' the
Califomio H.olth Security Act (aka the CalliorrJa Single Payer Act). ncw d"'igr-.ated
as; Proposition 186, for the November ballot. If pasRd., t.his measure '''''ill ;:ad~o.Hy
chang!' the health care delivery system in Califomil:.. r:,e sweeping TE"ionns cre.ated
by thi:,; Act have stimul;,ted much public debate and, to a great extent, hil\'e
polarized Californians. Ultimately, on November 8, 1994, votns will determi..ne
whethet universal cav.eragt-and a single payer reimbursement system ",,",ill replacE'
this state's current system in 1996 (the first year 01 implementation /olio"io,
p ...... ge 0/ the Act).
However. whether this measure puses, maintaining the status quo is dearly no
longer accepta~Je. The delivery 'Y'tetr. and ICCO$S 10 health QI1! "'" is;;ues that must
be addressed .... d resolved. Resolution 0/ this complex problem will, unfortunatel),.
be extremely difficull Change is neve, .asy but we must strive to ensure that
affordable, quaUty cue is delivered to our members in IS equitable. m;umer as
possible.
The mi5aion of the California Public Employees' Retirement System is to promote
and .d~ on equitable and finandaliy >O\UId prognm of earned netiremont,
clisabillty, death ane! heaJth benefils for participoting p~lic employees, mu-, and
beneficiaries. To ensure achievement 0/ this mission, one of the primuy goals of tl'.i.s
department is 10 provide efficient and accurate .dminlstration of member benefits.
With this mission and goal In mind, Health Plan Administration Division .Wf have
reviewed numerous artides and papers made avaUable to them ... !ated to the
CUfomilI Health Secwity Act.
In the pastl this Board has wholeheartedly s.upported several provisions ilia! are
contained in this Act. Specifically, litis Baud supports the provl.,jon a f high quality
C8lH~ PubPot:" Im~.· ~rnecd s~..."
i..!Mom ~. 400 P Street • s.e. .... nto. CA 85114
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health are to, aU Americans' and hu ronsutently oruured thlt members Ire offered
• wid .... Iemon of pWu (HMOs and fee-for-service), including two tNt pro'ide
worldwide «>venge and oJIow free choice of physicians, .t an affordable rosl
Those with no coverage (including some of our contracting pubUc agenci .. ' reti~)
or Umited pl.ul ... I«tion will benefit from passoge of this Act. Certainly, everyone
will enjoy th<o abtence of copoyments and deductibles; inclusion of benefits such as
ment.t! health services,ions-tmn are (excluding roo ... and board), and dental care;
and free of choice of physictans who will be able to pro>ide medicaUy appropriate
services without thin! put}' review intervention. Many, depending on income level,
moy aloe lind that their cost of health insurance will deere .... Unfortunately, due to
the regressive nature of the ind.ividual income tax provision in the Act, those in
lower income b~ may experience. drastic percenliige Iv< incre .... (Attachment
1)'
Staff belie ..... ~ that nQtwithstandhl.g th~ positive features, seriOU5 difficulties will be
encountered if the California Health Se<:unty Act is·voted in. Two bask areas of
concern th.a t would affect ~\'eryone covered und~r the new SY5 terrI are:
1) implemeIitation of th-e newly cl'E'ated system and 2) fin.ancial viability of the
system..
IMPLEMENTATION
Staff fore!eeS the followl." ... g as major difficulties that would impede succes.5ful
implemer.tation of the new system:
• Creation of a huge new state-..vide agency headed by an elected official, the
Health Commissioner, who would be exempt from L.egi5I.tive ,"view and
who could only be removed fro"" office by impe.chment. Ac~ by
consume,.. to .dministrltive .taff may be very difficult because of the
multiple regionalized layen 0/ staff required to support the S)"mt1.
• Exemption of empley ... having L'" employee benefit plan subject to
federal low (ERISA) from the payron tax ~uirement'> H an employer
elects to contin ... their own program, separate he~th care systems will
operate DUtsid. the new S}'IIem; how""",, employ.,.. could elect to ob lain
IHVices from the Health Security System. The .ystem would then seek
reimbursement from the employer. Other health e&re systems operating
outside 01 the Hulth Security System may cau ... confusion &mong
consumers IlId providers and may also perpetuate the inefliciendes and
1 Apnd.a ttem 6, :way 17, 199,(, Health Benefita CM:n.mittH ClH't:itlg, Anaheim, CA
2 Paci.6c Ttiais, SiAd' purr 1Hhu;etjo"" Picsc d.ratt, 1994,
, Cbap<or 6, _ 3, -... UiI36 (.)(11, CoW'anda H.alth Security Act
•
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"""Iy ~li""'Y of orrviceo that the provisioN of the Act Are attempting to
~.
• If ~c;>] w~ to incorporate the Me<!i-C4llJ1d Medicare programs"'"
_ granted, similAr openotioruol difficuJliH os described for ERISA
anpIc»oon would OIXW'.
• AntiOpaied .. vinp fnlm this system .~ar to derive hTm negotiated
~ pm> icier ~ts and from administroti"" and utilization
...view "vinp, Ur.dft provisions of the Act, it 'Pp"&I1 thot utilization
~,_ wC>Uld be oignlficantly reduce<! from CUm!l\t pf3cti~.. A
sorhisticate<! .Iotrwlde dalo collecti,," system and support .1>.If would
N"e to be dev.Joped IQ capture the needed data to ensWy the delivery of
ros1 .m.ctl,,< qu.o.lity <2re,
• E.!it;lb[ishm~"'nt Uld :!-taffing of thP, Hulth Seru..~ty S)'sre-m; negotiations
with providen; drvelopmrnt of the dati collection s),stem; and
e-O-I.lc.ational dforts may well tlI".e -"'-" ..... eral years before the system will
Op€'fil te effidert tl),.
lncorporation or other .systeC'l.5, such .u wClrk:ers' compensation and
lutomobLle insura.t'\Ct medical benefits, may prove difficult
• If puoed. the prOvisioN of the Act ,on only be amonded by p .... ge of a
""". initi.tiv.. or by • tw",third. vote of the Legislature.'
fllllA..'ICIAL VIAB!!.ITY
Ptrhaps the most debate<! issue COI\CftT\ing the Act is _er anticipated re\'enues
will be oufficient II> """"" expenditu ..... Scaff...viewed II\Ioteri.l1 from mony sou~,
including proponents, oppo"."ts and neutrals (the Legislative Analy>t', Offire).
Ittvm_ from tho employer, individual, and tobacco tax .. an .,tim.ted to be
betHftl\ kJ II> S50 billion annually. U fedftalJy funded programs are folde<! into
the S}'*DI _ S75 10 5100 bWion onmaIIy ill anticipate<!. On tho other hand,
there ill pat controversy over estimated expenditurn, Proponents atgIle that
adztunistraliw <cot arod provider "'ings will gmente • S3.5 billion swplUJ in the
first yur' Opponents ugue lI'.at deficits of $SO billion" or more will result in the
fint ye.u. ~ tepslativ. Analyst's Office belinc .. th.ll. over time, coot containment
IMuwes; tmprovemenl$ in rifici~cy in health care delivery and medical
~ and talc inauJes or redirection> of state funding will need to be
• ~ lL Attido ,. _ ~ ta) 1bJ. CoIm>nUa lIooIth Socurity Act.
! ~ n Scbnr, Attcruey At La". Ram?" tp=tcn1 Rmp afSinrh" Pow l"iti'nve" hy
the Pi'P"'lbtoc' W'b' Otfigt. JUAt' 17, i99-4, p. 2.
II !tIcbard C, c...rt..co. ?'m=c=je !mp.cu; li94 CaJ.i.(0f"!'ri.fI Health Initiative", Spectl'Um
F .... IK., ohtM 24. J.ieC, p. 1.
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implemented in orUe< to keep expenditures in I"", ... itt1 tt>'ef\ue5.' Afte7 ~ of
the provisions 01 the Act •• t>H ~\i"'"fl tNt !he~ is • ~1I~r liulihood !hOI
expenditures will ~ ."Iicipolrd ..,...." .... for !he /ollowir.g 1ft5ON'
• Tho CalPERS H .. 1!h 8endi .. Progrnn u~..". ..... h.&, deTncrutrated tNt
man&15"'l ~ in !he HMO il!"IN .,..d utiIiution ~ in !he PPO &nN,
ha ...... isted in ouppresing trmd5 tNt h.&v • ....wted in our ability to
hold do,..n promNm incToueo. The ~!iwry ry.tem ur.d07 Medf.C.t on
!he other hand. w been f!rUCtU!'Od oimiluIy to tN.t provided under !he
Act. Expe1ditura ha .. rontinu.lly inc"rnsod \U1dn the Medi-C.ol
program and they CUlHntly expend ~16 billion to pro,ide oervlce$ to
approxim&te!y 5.4 million ~
• If the %r'..ajority of ERISA ernployr:rs e1ect to retr-iin o ... t:!oi.d~ of the Huith
5e<urit)' S)'"Stt'm, t.t,j,s "",,',,uld c-nly ~"Sf: e!npto)'ff'5 5vch 15 CillPt'R5 Ind
pl,lbli, agmcie5 .,.,ithoul thtir c.,..,-n ~if·fur..d~ rot"I.1th ptU\(S} ,'\.ubJect to the
employer pl)'rol! tn AL~, if ft.d'!ul wAiver] for thE ,'.!e-di-C".ll a.nd
Medicare progrlJ'T'. Are f".ot gnnteJ., !"e" .. e-rt.,..,.es from tr-.,e,.e SOUJ'.ces ..... 111 r,ot
~ available-tc-tN SystetrL
• Toe abseT"lo:e of cc?~)ment5 ;..:d de-ductible:! (cupled w:th a ·'rr.dk~lly
ilppropriare" st.I .. !'\.d.J.fd rather th.ln A ""mt'd..i-catiy nt-:es..~ .... ry'" standard could
!el;d to increased fer...for·Sf'T\ice me-dkiJ'le. which in turn ..... ould (..~creils.e
costs lor ~'"'e5. "'1wledinHy I.FPropria~" is .. more Ub~Toll star.dard U".d
wClu1d l.iCiude ilny ~iCP5 that Ire liuitlb~. fit or proper. In i! f~(':Jr'
service environment, it would bot extreme-!y difficu.!t to limit ser":iCf!5 a.nd
ensure ~u.lity. From the C.ll'EXS H.alth Btmofil5 ProgroUl1 F~\'"
th.i:; \o\'ould be II maj-or c..h.ar.ge in cu.rre:nt cost conta.i.r>.ment philosophy.
• Cost control c-.e.uura are ii!llospe<tivt' (attn 5efViceI ~ pro ... ided) and if
expenditure. exoeod ... venues the tin!!h C~ ""'Y identify IIId
<'liminal< w....,ful and ~ri cuo and taU further cos. conlTOl
IM'nura that may include Ur.posing: copaYlI'\ents or restrictions on
eIe<ti ... ...-vices and I or ~ increued Wles. Emngmcy and
urpnt care _!he only guanmeod ..mc:e under !he Act
• TI>en! is nothing in !he Act to prt"VeI\' uninsured and undmn.ured
individuals from ot:heT stites and/or cou.!"\trles from rece-h·ing servi~
~ the Hulth 5eoJril)' Sysrem.
Staff concludes thaI from a &JoNl perspe<ti ... the diEtkuIties in impieJnenUtion ond
financial viability 01 the HWIh s.au;ty System would ~ detrimental to !he
delivery of .tfcrdab1e, quUity hdIth CUI! to aU Cillom4ns. SW/ further ~lieves
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that as liduciJries, the C.lPERS Board of Administration must cue!ully consid.,.lh<
lmpoct the Act has on the PEMHC A prognm. The two pl'01/uions thaI dranutically
adversely affect our INmbers ue:
• Elimination 01 the CalPERS Health Benefits Program. Although the Act
doa not IIWld _Ie inoorpora!ion of our prognm ;"to the ~ .. ,..mn.
given the economy, it is unliJ<ely the Stile would poy the ""'ployor po)"":1
tu in addition to the Stlt.. contr-Jlution to allow tIW PrognID to <ootin""
10 JeDWn outoide the Hulth Security System.
• Lad< 01 out-of .. tlte provide". As of Augwl ~. 1994, ~ .'" 32.6t5
ICtive and IO'Iired memben who ,..ide outside tJ-.. $!.Ito of Ca!ilomi.t. The
Health Security Act ~ no provision [or covenS" of m.mbor> out-of·
state for periods exceeding 90 days peT c.alendar )InT. R£ti;~ h.l,,'e
vestee! heolth benefits, and proponents "Tg'"' th.t C.WERS wn:ld tu,·. to
continue to providi: co'iE1'lIge, Howe'\.'er, with prC'bable-elimiNhon of our
Health Benefits Program, a mE'thanism would have to ~ decvfs.t-d :0
pw"'ide coverage for-out'"'Of-state memb-ers. Haw out-of·s!ilIte cCAt:"rllge
wouJd b€ 2ccomplished Al,id t},e premium cost for !\\Jc.h cO'\.'er.:ge is ur,.::lEiH
• t this tim •.
Staff belil"Ves that th~ two provisions in the Caiifor.Ja Health Se0..lrit)' Act i.n il . .nd
of themselves should be seriously considered by mem),.ers of the Committee and
Board. Furthermore, the difficulties L., implementation and nZ'l.ancill viability th.at
would aife<"t the entire population and not only o'Ur memDe!'5, should illSD be
weighed heavily.
The follOwing attachments are scmt: ofthE' materiClls referI"e'd. to in this agenda item
a) Colifomi.l Health Security Act (Attachment 21; bl legal opinion prop,red by
Diepenbrock, WWff, PUn! and Hannegan (Atta_t 31; c) rebuttal P"'Pored by
Stephen D. Schear to the Oiepenbrock et aJ legal opinion (Attad\Jnm, ~); ~d d) the
Legislative Analyst'. Office anal}'5is excerpted from the sample 01 the Novem""r
California eaUot PaJI'.phlet (Attachment 5). Dee to the bulk 01 the nut.rials
reviewed by aWf, all 01 th= Ire not .!tIched to this agenda item. The)' 're,
however, available upon ~t by any Board member.
RECOMMENDATION: Staff ""lieves that the global and PEMHCA 'P"<ihc
negative feaiurcs of the' Act outweigh the positive feitures. Staff, therl!'fore,
""ommend. that the H .. lth Benefits Committee take. position to oppose the
CaJiIomia He.tJth Security Nt.
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o
Staff iJJ avaiW>ie to ,apond to any questions.
Asoimnt Executi e Officer
He.lth Benefit SeN;"",
."tt.J<!unents
Tom Fischer, Chief
Health Plan Administr.tion Division