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SFHSS board unanimously approves rate stabilization buy‑downs and rejects stop‑loss purchase
Summary
Using favorable 2020 experience, the board approved amortizing stabilization surpluses to reduce 2022 rates (PPO $330,000; Blue Shield HMO $4.856 million; Delta Dental active PPO two‑thirds use of $12.229 million) and agreed not to buy external stop‑loss insurance for 2022; all motions passed unanimously.
The San Francisco Health Service System board approved several finance and stabilization actions informed by Aon’s 2020 experience review.
Stop loss: Aon recommended SFHSS not purchase external stop‑loss insurance for self‑funded and flex‑funded plans in 2022 because existing large‑claim pooling, contingency and stabilization policies provide protection and reinsurance premiums tend to exceed long‑run reimbursements. The board approved the recommendation unanimously.
PPO stabilization: For the PPO city plan Aon recommended turning a carry‑forward deficit into a surplus and applying $330,000 (one‑third of the surplus) as a rating buy‑down across all PPO tiers for plan year 2022; the board approved the recommendation unanimously.
Blue Shield HMO stabilization: Aon recommended applying $4,856,000 (one‑third of the HMO surplus) as a buy‑down across all Blue Shield HMO tiers for 2022, leaving an approximate $9.71 million carry‑forward surplus; the board approved the recommendation unanimously.
Delta Dental stabilization: Because dental claims saw particularly strong suppression in 2020 (active loss ratio fell to about 87%), Aon recommended a one‑time suspension of the standard stabilization reserve policy for the Delta Dental active employee PPO and use of two‑thirds ($12,229,000) of the 12/31/2020 stabilization balance as a buy‑down for plan year 2022, leaving about $6.11 million in carry‑forward. The board approved the measure unanimously.
Votes and formal motions for each recommendation were moved, seconded and recorded on the public record with no opposing votes. Several commissioners asked for continued monitoring and for details to be included in May rate recommendations.
