September 14, 2006 14:53 ET

CPEhr Ready to Fill Void Left By Closure of PacAdvantage

WEST HOLLYWOOD, CA -- (MARKET WIRE) -- September 14, 2006 -- Rising medical costs have made their mark again, forcing the closure of PacAdvantage, the state-established health insurance pool serving small business employees.

The news of PacAdvantage's closure at year-end has prompted human resource consulting firm CPEhr to announce that it will help fill the void by offering assistance to former PacAdvantage members, which include 116,000 small-business employees.

"As a result of PacAdvantage's decision to not continue providing health plans, many small business owners with 2-50 employees will lose necessary benefits," said Anne Getzelman, Benefits Manager at CPEhr, one of California's most experienced leaders in human resources outsourcing. "By signing on with CPEhr and creating a co-employment relationship, small business owners are able to enroll their employees in large group plans where they can offer a competitive package of bundled benefit plans and leave the administration in the hands of CPEhr."

Medical expenses are rising faster than the costs of any other service, consuming an ever larger share of personal and national incomes. According to the Los Angeles Times, healthcare spending as a proportion of the country's economic output has more than doubled since 1970. Those factors helped lead to the downfall of PacAdvantage, according to officials.

PacAdvantage was established in 1992, banding together small businesses in an effort to negotiate lower insurance premiums for their employees. But PacAdvantage officials admitted they could do little to make insurance more affordable and that most of the insurance companies that once participated in the voluntary program have left.

PacAdvantage's main purpose was to offer choice to its members, but the latest departure by Blue Shield was the final straw. "Despite good-faith efforts among all parties, we could not reach a financially viable arrangement," PacAdvantage's president John Grgurina said in a statement.

PacAdvantage's demise is a perfect example of how affordability has become a major issue when it comes to the healthcare system. Over time, employers participating in PacAdvantage who had low-risk employees were lured away with less expensive premiums. Meanwhile, PacAdvantage was left with employers with high-risk members, which drove up costs.

The gap caused by shutting down PacAdvantage is also an opportunity for small business owners to explore human resources and benefit solutions offered by CPEhr. The Los Angeles-based company has been an industry leader since 1982, providing clients with viable options for outsourcing human resource needs. CPEhr's cost-effective strategies cover HR consulting, workers' compensation, payroll and employee benefits, the area where they'll be needed most with the loss of PacAdvantage.

"CPEhr offers an excellent bundled benefits package," said Getzelman. "By joining CPEhr, clients are able to participate in large group plans, offer competitive rates, and not have to worry about the administrative challenges of maintaining a small group plan."

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