in 2007, calpers sponsor of legislation to require our health plans to submit data to calpers. ashley was passed and signed by governor schwarzenegger and of limited as article 6, section 2285 4.5 in the public employees hospital and medical care act. we did get full claims data from all of our plans. in 2005, when we remove some of our high cost hospitals from our system, we also set regional prices for our contract agencies so that those premiums actually reflected the geographic cost of the region. if you look at blue shield's single party premium, or access

calpers saw its premiums expand, rise from $3.4 billion in 2003 to over $6.7 billion in 2011. historically, calpers, like other purchasers, will spend anywhere from 45% to 50% of their health costs of hospital services, and that is both the in the space station that it facilities as well as outpatient less than 24 hours services -- that is both the inpatient bedded facilities as well as outpatient less than 24 hours services. in examining hospital cost, specifically, we have seen various in price, quality, and care practice throughout california. the numbers that you saw, risk adjusted in the commercial market, the differences you saw in southern california and northern california are real. i just wanted to reassure you that we have seen the same thing. when we look at our kaiser data and to our kaiser rate renewals, those costs are divided between northern california costs and southern california costs, and you see the same variation. there is no coherent rationale for why costs vary between facilities or side of service. as you pointed out in your remarks this morning, you c

we also have the chief office of health office administration for calpers. the focus of this last set of presentations are options for action to protect payers, consumers, the public interest from the actual and potential negative impacts of increasing costs, specifically, a market consolidation. >> thank you very much, mr. chairman, members of the committee. i am grateful for this chance to talk to you, and to hillary, for making it easy for me to do. i have been listening with a great deal of interest and pleasure, realizing you have been told a great many things that i will not have to repeat. so i will focus on a very wide but singular aspect of the question of system performance and the role of view, as legislators, that will involve. there are some major issues. we just talked about some of them but it repairs being -- bears repeating. this is a market that is almost worthless as quality assurance or price protector. it is so shrouded in secrecy, and in many cases, blatant dishonesty on the part of some of the parties, that it is very difficult, if not

calpers has been doing this for a year its insurer, blue shield hmo, and in the northern part of hmo, and in the northern part of san francisco, with 41,000

calpers has been doing this for a year its insurer, blue shield hmo, and in the northern part of san francisco, with 41,000 members, and already they have seen $51 million in savings. just by having things work more like a system. i assume this relates partly to the question about health care information technology. if you can make in interoperable, you can make it better. i think you have an opportunity to do this, and i believe you may be to some planning for that. finally, we just need more transparency. as you were suggesting, mr. chairman, we need to know more about quality and in terms of what we want to know. is there harm in going to its hospital -- this hospital because it's infection rates are too high? are people having trouble after their hip surgery? i am sorry you cannot read this, but if you live in pennsylvania, you can go to a web site sponsored by the state. for hip surgery in this case, you can see the outcomes. over to the right, that is how much it costs at each of those facilities. we cannot have that data today but we desperately need them. happy to answer any

. $60 million of that t, $57 milln to the local organizations, $3 million to calpers. there are significant increases, driven by the costs and projected continued increases in pension contributions. supervisor chu: just a quick question. he mentioned that -- you mentioned in the fiscal year 2013 budget, the number is driven to expire from labor, so the furlough days and other things that would be done with, that is going back to what it was before? >> exactly. supervisor chu: okay, and the $61.5 million in fiscal years 2013-2014 it is open contracts? >> and at that time, pretty much every labor contract in the city will be open. isupervisor chu: if you do a comparison between page 9 and page 4, on page 9 we see the labor costs, broken down by salaries and benefits and fringe benefits. if we look at page 4, about what the revenue expectations are, for example, fiscal year 2011- 2012, it is expected to be $30 million increase, but on the fringe benefit alone if we don't change a thing there, we expect the expenses to be $80 million. on that alone, we expect to outpace ou

>> as an employer, you could -- and actually calpers has done this -- you could tell york insurer that you want them to choose only a subset of the available providers in the city, so if there is high cost and good quality elsewhere, -- there is high cost in one area and good quality elsewhere, you might construct what is referred to as an arrow network, which would exclude some of the higher cost providers. supervisor campos: the first bullet that you had up there, it says insurance company say its dominant position give it the upper hand in contract negotiations. how does that work in terms of the relationship between the hospital, the insurance company, and the price? >> ok, so, you have two phenomena. one is controlling 44% of the beds in the city still that you cannot live without it. second, you cannot negotiate separately with the three or four hospitals underneath that umbrella. it is all or none, as dictated by then. -- by them. i think that explains most of it, right? supervisor campos: i see. >> this is just a note that a very noted economist did a study released last year.

in 2007, calpers sponsor of legislation to require our health plans to submit data to calpers. ashley was passed and signed by governor schwarzenegger and of limited as article 6, section 2285 4.5 in the public employees hospital and medical care act. we did get full claims data from all of our plans. in 2005, when we remove some of our high cost hospitals from our system, we also set regional prices for our contract agencies so that those premiums actually reflected the geographic cost of the region. if you look at blue shield's single party premium, or access clause in the bay area, it is $675. for that same premium by los angeles, the access plus is $420. supervisor campos: if we could go back to the point you made in trying to respond to the hospital changes to mitigate the effect of hospital consolidation, one of the strategies was to narrow hospital networks for blue shield in 2005. i wonder if you could go back to that. >> certainly. what we did was we built our data warehouse in 2003 and brought in all of our health claims data. we also engaged, and it is a little bit d