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Saving Taxpayer Dollars Through Better Health

The costs to California of heart disease, cancer and diabetes resulting from unhealthy eating habits and physical inactivity have doubled in the past six years to $44.1 billion and are expected to rise to more than $52 billion this year. Prevention isn’t just about improving the physical health of individuals -- it also is about improving the State’s fiscal health.

Since taking office in 2007, Controller Chiang has served as the lead proponent of making prevention and wellness efforts a top priority of CalPERS. Keeping members healthy and helping them effectively manage chronic conditions is the most effective way to lower CalPERS’ health care costs, saving taxpayer dollars.

Among his achievements, the Controller has:

  • Worked with the CalPERS Health Benefits Committee to successfully negotiate premium rates with health plans that have been consistently lower than the national average. In 2010, the Controller supported benefit changes that helped save CalPERS more than $46 million annually. These changes are designed to encourage CalPERS' members to use benefits that lead to better, and more cost-effective, outcomes.
  • Commissioned a study to determine the cost savings to CalPERS of a prevention effort. The Controller promoted a diabetes pilot project that is engaging pharmacists in educating customers about diabetes and monitoring their conditions. Studies have found this approach can save up to $3,200 per person.
  • Advocated for a review of recent claims data from CalPERS' self-funded plans to identify avoidable costs, such as hospital-acquired infections. The Institute of Medicine of the National Academies reports that 40% of health care spending is on ineffective or unsafe care.
  • Advocated for CalPERS to become a leader in changing the provider payment system from the traditional fee-for-service model, which encourages costly and unnecessary care, to one that rewards coordinated care and services that result in improved quality of heatlh care and reduced health care costs.