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CalPERS Looks at Junking Its Healthcare Plans

CalPERS Looks at Junking Its Healthcare Plans

With its $7-billion annual medical bill going up by nearly 10% next year, The California Public Employees’ Retirement System (CalPERS) looks at junking healthcare plans. With CalPERS being the third largest purchaser of health insurance in the country, California’s big insurers aren’t too happy about it.

In an article written for, author Dave Chase quoted a news excerpt from

“The California Public Employees’ Retirement System is preparing to rebid its health insurance business this fall for 1.3 million members, and two of its current plans, Anthem Blue Cross and Blue Shield of California, are likely to face intense competition as the giant pension fund considers its options.

Perhaps the boldest move under consideration for 2014 would be to bypass insurers altogether in some areas of the state and begin contracting for medical services directly with large physician groups.”

The Need for a Better Healthcare Version?

Other healthcare companies and employers are taking a close look to see which direction CalPERS is heading. Because of its sheer size, CalPERS is virtually a bellwether and people will follow wherever it goes.

“There is no mistaking they want a new version of healthcare,” Donald Crane, chief executive of the California Assn. of Physician Groups said.

Dave Chase wrote:

“They don’t have to look far. One of the pioneers (MedLion) of the most promising rethink of healthcare delivery called Direct Primary Care is based in California. MedLion is so affordable that roughly one-third of their members are uninsured. The slides below outline the history of Direct Primary Care, its little-noticed inclusion in Obamacare and the impressive cost savings and patient satisfaction they have achieved. While the health insurance has the lowest average satisfaction rating of any industry, Qliance has a consumer satisfaction rating higher than Google or Apple.”

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direct primary healthcare model

Dave Chase also mentions another healthcare leader who applies the Direct Primary Care model.

“Another Direct Primary Care leader has previously been featured in the famous “Hot Spotters” article from the New Yorker. As highlighted in that article, Dr. Rushika Fernandopulle’s Iora Health has worked with unions to identify the most expensive, high risk members and apply a more intensive primary care model. While CalPERS is experiencing continued healthcare hyperinflation, Iora Health’s union clientele have actually seen their healthcare costs lowered across the board.”

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How MedLion, Qliance, and Iora Health do it as well as their cost outcomes are in complete contrast to the “get less for more” packages employers and CalPERS members have been used to.

“Continuing down this path, CalPERS would be the living embodiment of the definition of insanity — i.e., doing the same thing and expecting a different outcome. The only surprise is it has taken them this long to force the issue. I could imagine any number of physician groups would be happy to deploy a Direct Primary Care model that cut out the massive insurance bureaucracy that burdens the equivalent of taking one’s car to the Jiffy Lube.”

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Since it is not insurance, Direct Primary Care  can improve patient care because it will:

  • allow more people to access healthcare at a much lower cost
  • enable employers to provide medical benefits to their workers
  • allow primary care doctors to spend more time on their patients and not on insurance payments processing.

For more information on direct primary healthcare, visit



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