Thread: CalPERS warns Congress: Cost of benefits unsustainable

Just some background on CalPERS:

The California Public Employees' Retirement System (CalPERS) is an agency in the California executive branch that "manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families".

In fiscal year 2007-2008, $10.88 billion was paid in retirement benefits, and in calendar year 2009 it is estimated that over $5.7 billion will be paid in health benefits.

As of December 2008, CalPERS managed the largest public pension fund in the United States with $179.2 billion in assets; however, that represented a 31% decrease from the peak value of its assets of $260.6 billion in October 2007.

CalPERS is known for its shareholder activism; stocks placed on its "Focus List" may perform better than other stocks, which has given rise to the term "CalPERS effect".

Outside the U.S., CalPERS has been called "a recognized global leader in the investment industry", "one of America's most powerful shareholder bodies", and "the most important public pension fund in the United States".

CalPERS warns Congress: Cost of benefits unsustainable

Sacramento Bee
By Bobby Caina Calvan
bcalvan@sacbee.com
Wednesday, Aug. 19, 2009 - 12:00 am | Page 4A

CalPERS, the country's second-biggest buyer of health care services, urged Congress on Tuesday to act quickly to overhaul the nation's much-maligned health care system, saying there would be "a huge cost to inaction."

In a letter sent to California's congressional delegation, whose ranks include some of the most influential voices in the national debate, the nation's largest pension fund called inaction "an untenable policy choice."

"Without reform this year, we will not be able to sustain our health care system," said the letter, signed by CalPERS President Rob Feckner and the pension fund's chief executive officer.

The California Public Employees' Retirement System is expected to spend $5.7 billion this year on health benefits for more than 1.3 million public employees, retirees and their families. Only the federal government buys more health care services than CalPERS.

"We hope our voice will be heard. Being silent would be irresponsible on our part," Feckner said in an interview. "We want to be sure that health care becomes affordable for every American.

The pension fund has dispatched its lobbyists and other officials to Capitol Hill to influence the debate.

"It's important that we weigh in, as the health care debate goes on," he said. "We want to have a seat at the table."

The CalPERS letter underscores the high stakes involved in health care legislation, a high priority for the Obama administration. Some industry groups and a chorus of conservative voices have expressed concern about potential government intrusion into medical decisions. They've also raised alarms about the cost, which by some estimates could exceed $1 trillion.

The price tag has put pressure on the Obama administration to respond. Health care advocates are increasingly worried the administration may drop its support for a public insurance plan to compete with private insurers.

"Obviously, he's getting pressure. We hope he doesn't give up on the public plan option. We think that's the right way to go," Feckner said. He noted, however, that he was expressing his personal opinion, and CalPERS has not yet issued a formal position on the controversial public plan option. The public plan is fiercely opposed by the insurance industry.

CalPERS has used its considerable clout to gain favorable deals with its stable of insurers, but it has been unable to contain costs entirely on its own terms.

Since 2003, insurance premiums paid to cover its members have risen by 60 percent.

In recent years, containing health care costs has become an increasing focus of the pension fund.

Of particular concern is the cost of pharmaceuticals. Each year, CalPERS and its members spend about $1.15 billion on prescriptions – nearly a fifth of the pension fund's health care spending.

"They clearly have a lot at stake, but the same kind of issues could apply to any kind of employer," many of whom are concerned about rising health care premiums and medical costs, said Joanne Spetz, a health care economist at the University of California, San Francisco.

CalPERS has a history of activism and has not been shy about using its influence in many progressive causes. Because of its massive investments, it wields considerable influence on some of the nation's largest corporations.

The agency has also wielded its clout as a massive consumer of health care services, with the letter being the latest example.

"That allows them significant leverage," said James Hawley, a business professor at St. Mary's College, who closely monitors CalPERS.

Earlier this year, CalPERS announced a pilot program aimed at reducing health-care costs. It joined Blue Shield of California, Catholic Healthcare West and Hill Physicians Medical Group to launch a yearlong experiment to better coordinate care. As part of the program, Blue Shield, with the cooperation of its medical partners, has agreed not to increase its premiums.

"We're trying every angle we can, trying to find a way at cost containment," Feckner said. "There's been a continuous spiraling of health care costs. It's out of control."

http://www.sacbee.com/topstories/story/2120908.html

SO, IN OTHER WORDS, CalPERS IS TELLING OBAMA IT NEEDS OBAMACARE AND THIS EXTRA MONEY TO CONTINUE GIVING BILLIONS OF DOLLARS IN RETIREMENT PENSIONS (MOST CAL STATE EMPLOYEES RETIRE WITH OVER $100,000.00 IN RETIREMENT BENEFITS -- FULLY VESTED)

IN SHORT, WE NEED NATIONAL HEALTH CARE (OBAMACARE) REFORM TO CONTINUE PAYING FOR CALIFORNIA EMPLOYEES RETIREMENT BENEFITS!!!!

Sounds like they are defending their financial future so that would make Obamacare another bailout.

Dixie