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Kaiser HMO claims jumped in 2024; Aon says increases were anticipated and will inform June rate renewal
Summary
Aon reported a roughly 16% increase in per‑member per‑month medical and prescription costs for Kaiser HMO plans covering active and non‑Medicare retirees in 2024; prescription drug costs rose faster and inpatient admissions increased for retirees.
Aon actuaries told the San Francisco Health Service Board on Thursday that Kaiser Permanente HMO plans serving SFHSS active employees and non‑Medicare retirees posted materially higher 2024 claims than 2023. Mike Clark, Aon, said total paid claims per member per month rose about 16% overall, with medical up roughly 15% and prescription drug costs up about 21%.
Key drivers: Clark said the non‑Medicare retiree population experienced a roughly 21% increase in inpatient hospitalization rates and that several high‑cost claimants — 11 members with individual claim totals above $1 million — together accounted for about 5% of plan costs. On the prescription side, Clark said spending increases were driven in part by anti‑infective and oncology drugs and by endocrine drugs, including growing GLP‑1 medication utilization.
Context and expectations: The increases were largely consistent with the trend Kaiser presented during the 2023 renewal process, when the board approved a 12.5% rate increase expected to reflect higher costs in 2024. Clark said the 2024 results align with Kaiser’s broader regional experience and that the SFHSS team will review Kaiser’s formal rate renewal next month; Kaiser’s fully insured premium rates for 2026 will be presented to the board in June.
Quality and preventive measures: Aon reviewed preventive screening and immunization metrics and said SFHSS members’ screening rates generally matched or exceeded Kaiser regional averages while some health‑risk indicators (for example cholesterol and blood pressure prevalence) vary by age cohort. Clark said many measures for the SFHSS population compared favorably to Kaiser regional averages, reflecting relatively strong preventive engagement among members.
Next steps: SFHSS and Aon will review Kaiser’s underwriting and meet with Kaiser ahead of the June renewal presentation. The board asked staff about negotiation strategies and whether aging of the workforce is a factor in cost growth; staff said many drivers are market‑wide and include drugs, labor costs and increased demand for services.
