CalPERS is splitting up its valuable HMO contract among five different companies, ending the quasi-monopoly held by Blue Shield of California.
The vote Wednesday by CalPERS' governing board affects about 400,000 members, or about one-fourth of the CalPERS population, and reflects the pension fund's quest to curb price inflation.
"We wanted to increase competition. More selection and choice will help us on the path...toward lowering costs and improving quality," said CalPERS spokesman Bill Madison.
Blue Shield still has a piece of the contract but will now share the coverage with Anthem Blue Cross, Health Net, Sharp and United Health Care.
Separately, Madison said CalPERS plans to renew its contract with Kaiser Permanente, which has a portion of the pension fund's HMO business. He said Kaiser already has implemented many of the "integrated medicine" reforms CalPERS is seeking from all HMO providers.
Pricing won't be known until June and will be subject to board approval. All the new contracts will take effect next January.
CalPERS' health premiums rose 9.6 percent this year, one of the biggest rate hikes in years. HMO rates went up 8.7 percent.
Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.