The California Public Employees’ Retirement System is making a drastic change to one of its major health insurance plans for the state’s employees and retirees: It’s switching health insurance carriers, and forcing its new partners to earn their fees instead of automatically getting them.
The new contract could serve as a model for other large employers that are fully on the hook for their workers’ health care costs and want their insurance companies to do more to keep prices in check and steer people toward high-quality providers.
The group, known as CalPERS, is ditching Elevance Health for its preferred provider organization health plans, also known as PPOs. Instead, CalPERS signed a five-year contract with Blue Shield of California, starting in 2025. It also is contracting with Included Health to help its members find doctors and hospitals that have higher quality scores and are less expensive.
