PacTel to Halve Medical Plans for Employees

Pacific Telesis Group said Monday that it will eliminate half of the health maintenance organizations it offers workers and retirees of the parent company and its Pacific Bell Telephone subsidiary in an effort to reduce health-care costs and provide more cost-effective health benefits.

The move, effective on Jan. 1, follows the utility’s earlier announcement that it would revamp its overall health-care plan in response to settlement of the August, 1989, strike by the Communications Workers of America. The union struck Pac Bell for two weeks over proposed changes in Pac Bell’s health-care plan. The new plan, which was also part of negotiations with other Pac Bell unions, affects some 100,000 employees of the parent company, Pac Bell, Nevada Bell and the Pacific Bell Directory unit.

The announcement also follows predictions from health-care consultants that more and more large corporations would drastically reduce the number of HMO alternatives they offer employees. The result, they say, could be the elimination of some weak HMOs from the marketplace as companies apply more stringent tests in the selection process.

Reducing the number of HMOs next year will allow the company “to better manage and control our HMO costs by building strong business partnerships with a few plans,” said Jim Beck, Pac Bell director of health plans.

Workers may choose to participate in one of five HMOs--instead of the current 10--or the new Pacific Bell Health Care Network, which will operate like an HMO.