The California Public Employees Retirement System said last week it has negotiated a 1.1% decrease in the cost of health insurance for its 920,000 enrollees.
Industry observers said the successful rate rollback could prompt private payers of healthcare, such as employers, to seek similar cuts in premiums for their workers. In turn, that could force providers to also cut their rates for medical services.
The rate reduction, which goes into effect Aug. 1, is the first such rollback achieved by the giant public employee pension fund program. CalPERS negotiates managed healthcare contracts with 18 health maintenance organizations on behalf of 910 public employers.
Anticipating California's continued budgetary woes and weakened economy, pension plan executives last year requested premium rate price cuts for 1994 contracts (Oct. 18, 1993, p. 6).