Other Post Employment Benefits
State Active and Retiree Health Benefits

In addition to considering how best to fund these obligations, the state must implement strategies to achieve efficiencies, including economic, within its health benefits program.

The Administration contracts with the California Public Employees Retirement System (CalPERS) to provide health benefits for state employees. Under this arrangement, CalPERS negotiates health premiums with the providers, designs the benefit package, and otherwise controls the overall policies of the health program. The CalPERS health program provides coverage to approximately 1.2 million active and retired state and local government public employees and their family members. In the past 6 years, the average premium increase has exceeded 12 percent annually. The employer pays the bulk of these premiums.

In recent years, CalPERS has attempted to control these rising health costs by eliminating high-cost hospitals, reducing the number of providers, and adding high performance health plans. While effective to a degree, CalPERS' cost-containment strategies represent a "one-size-fits all" approach for all the public employer groups with whom it contracts (the state and 1,100 local agencies).

The Administration prefers an approach that allows greater program flexibility so that health benefits and the plan design can be customized to better serve the needs of the state employer, employees, annuitants, and covered family members. Included in this approach should be discussions with the employee organizations on the feasibility of the employer and the employee unions meeting and conferring in good faith directly over the design of the benefit programs and other ways to customize the delivery of health benefits to state employees.
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CHAPTER HIGHLIGHTS for Statewide Issues Back to Top

 Other Post Employment Benefits
  Liabilities for the State's Other Post Employment Benefits
  Budget Considerations
 image of black pointing arrowState Active and Retiree Health Benefits
 State Civil Service Human Resources Reform
PRINTABLE BUDGET DOCUMENTS Back to Top
Budget Summary - Statewide Issues (pdf * - 132K) -
Provides this entire Statewide Issues Chapter in pdf format.