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Health

March 23, 1994

State-Run Health Plan Lowers Rates: California's health alliance for small businesses dropped rates an average of 6.3%, prompting supporters to claim that the innovative new system is a success. Health plans unaffiliated with the alliance and competing for the same small-business customers have also been cutting rates in recent months. The result: a welcome reversal in California of the national trend toward ever-higher health care costs. The state-run alliance, called the Health Insurance Plan of California, operates as a purchasing pool for businesses with five to 50 employees, offering one-stop shopping for cut-rate coverage from 23 private health plans. Rates are lower than those typically available to small businesses because the alliance gives small firms the same kind of bargaining clout as giant corporations.

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