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Insurer Calls for Hospital Cost Cuts

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SACRAMENTO, May 20, 2004 (United Press International via COMTEX) -- The third largest purchaser of health insurer in the United States has warned hospitals to cut costs or face losing business, USA Today reported Thursday.

The California Public Employees Retirement System, known as Calpers, cut 38 of the state's costliest hospitals from its HMO offerings to save $36 million next year.

"If we continue to be held hostage to high-priced hospitals, many more people will be priced out of our program and forced into the growing ranks of the uninsured," said a written statement by Sid Abrams, chairman of Calpers' Health Benefits Committee.

Nationally, outpatient hospital care is the fastest-growing category of health care spending, outpacing prescription drugs.

Calpers spends $3.9 billion a year on health care for 1.2 million state and local employees, retirees and dependants. Hospitals account for 35 percent of the tab. In the past three years, Calpers' HMO premiums rose 57 percent, and hospitals accounted for almost half the rise.

The change means 53,000 patients may have to switch doctors or hospitals. Patients who don't want to switch can enroll in a plan that includes all hospitals, but they will pay more.

The federal government and General Motors are the top two employers for spending on health benefits.

Copyright 2004 by United Press International.


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