Public employees' health benefits: premiums.

The Public Employees' Medical and Hospital Care Act (PEMHCA) , which is administered by the Board of Administration of the Public Employees' Retirement System (PERS) , authorizes the board to contract with carriers offering health benefit plans. Existing law also authorizes the board to contract for, or approve, health benefit plans that charge a contracting agency and its employees and annuitants rates based on regional variations in the costs of health care services and to contract for, or approve, health benefit plans exclusively for the employees and annuitants of contracting agencies, as specified. This bill would authorize the board to implement and administer risk adjustment procedures that require health benefit plans to adjust premiums and would authorize PERS to redistribute premiums based on rules and regulations established by the board. PEMHCA requires premiums charged for enrollment in a health benefit plan to reasonably reflect the cost of the benefits provided. Existing law permits the board to enter into contracts with carriers based on carrier performance, and to credit premiums to an employer for expenditures that are likely to improve the health status of employees and annuitants. Contributions and premiums paid under PEMHCA are deposited in the Public Employees' Health Care Fund and the Public Employees' Contingency Reserve Fund, both of which are continuously appropriated special funds. This bill would specify that the board has the authority to adjust premiums as part of programs for health promotion and disease prevention and develop procedures for risk adjustment of premiums across plans that encourage plans to offer benefits based upon medical and administrative efficiency and quality of care rather than on the employee's or annuitant's health status or service areas with low-risk populations. The bill would also specify that the Public Employees' Health Care Fund would include any moneys from health benefit plans for that risk adjustment. The bill would also authorize the board to use reserves generated by one or more self-funded health benefit plans for risk adjustment programs and procedures. By authorizing moneys in those funds to be used for a new purpose, the bill would make an appropriation.