The biggest HMO scramble in recent memory has begun at the California Public Employees Retirement System, with nearly 150,000 of its 1.2 million enrollees forced to find new health plans for 2002.
"It's just a real bummer," said state worker Jennifer Barton, 40, whose health plan of more than four years, Aetna, has been dropped. "I have no idea what I'm going to do next or who I'm going to go with."
Petrea Moyle, a co-worker of Barton in the office of Assemblywoman Helen Thomson (D-Davis), is in a similar fix.
"I consider myself to be a reasonably intelligent person, and I couldn't believe how confused I was just choosing a plan" in the first place, she said. "I would gladly pay money not to have to go through all the paperwork and decision making" again.
The employees' woes signal tremendous turbulence in California's managed-care marketplace as employers limit health plan choices and shift more costs to workers, some experts said.
CalPERS, the insurance system for many public employees and retirees, is considered a national bellwether because of its size. This year, it dropped four of its 10 HMOs--Aetna, Cigna, Lifeguard and Maxicare--affecting 121,000 people, citing cost and quality as the main factors.
In addition, several insurers--including Blue Shield, PacifiCare and Health Net--are leaving rural areas of the state, displacing 25,000 others.
And there are up to 25,000 state workers who will voluntarily switch plans for personal reasons.
The typical health plan turnover within CalPERS is 20,000 to 30,000 people per year. This fall, the rate will be at least five times that amount.
"Any time we make changes from what we're used to having, it causes a lot of anxiety," said Allen Feezor, who heads CalPERS' health division. "I think there will be a lot of initial discomfort and irritation."
Feezor said this year marks the beginning of what he sees as a prolonged transitional period. As insurers continue to withdraw from unprofitable regions in the state, the CalPERS board may want to reevaluate its dependence on HMOs, Feezor said.
"The health plans need me a hell of a lot more than I need them," Feezor said. "If HMOs are not able to serve our people, we need to find other meaningful choices for them."
Some health insurers said most employers are not limiting employees' choices. Rather, they are shifting more costs to employees.
Health benefits consultants, however, said CalPERS represents the beginning of a trend: Companies are starting to drop plans that steeply hike prices or offer what employers consider inferior service.
"Last year, given the tight employment market that we were facing, very few companies were interested in making changes," said Johan DeKeyzer, a health care consultant with Hewitt Associates in Newport Beach. "Now, a lot of people are saying, 'We can't take this anymore.' "
Within CalPERS, all employees, regardless of whether they make changes, will pay premium rate increases of 6% to 24%, on average. And members will be required to dole out higher co-payments for drugs and doctor visits.
The activity this year has required CalPERS to divide its enrollment process into two periods. Retirees and employees of non-state public agencies have until Sept. 28 to make their choices. Active state workers and participating university workers have through Oct. 15.
CalPERS is processing some enrollment changes online and on its automated telephone system.
Because most HMOs offer broad physician and hospital networks, the odds are high that remaining health plans will offer the same doctors as the dropped HMOs, Feezor said. As a result, members should see relatively little upheaval.
Still, terminated HMOs say they are receiving phone calls from many upset members who want guidance in picking a new plan.
"There's not too much we can do," said James Harris, a Cigna spokesman. "We wanted to stay in. We made what we thought was a good, competitive offer. We even appealed it. But we were turned down."
This is the first time since the 1980s that CalPERS has dropped an HMO. (It has previously lost HMOs that went bankrupt or left the market.) To partly offset the four terminated plans in 2002, CalPERS is adding one new option--Western Health Advantage--in Northern California.
Despite its size, CalPERS has been hit hard by the same medical-cost increases that have hit all employers. When the state first sought bids from health insurers for 2002, HMOs proposed rate increases that averaged about 23% higher than this year's premiums for non-Medicare enrollees. At least one bid came in 41% higher.
Rather than negotiating, CalPERS rejected all of the bids and ordered all insurers to try again. On the second go-round, the average bid came down to a 16% increase. After negotiations, the average increase hit 13.2%
The latest news from CalPERS is unsettling for Don Zeigenfuss, 71, who retired in 1990.
Beginning next year, he won't have any HMO options. His current HMO, Health Net, is leaving Humboldt County, forcing him to enroll in one of two less restrictive programs that will cost $220 per month.
"We have two choices, but they're slim and none," he said.