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Board approves $7.02 million one‑time buydown of Delta Dental active PPO rates
Summary
The San Francisco Health Service System board voted unanimously to apply half of the Delta Dental active employee PPO’s 12/31/2018 rate stabilization reserve—$7,016,000—to reduce 2020 premiums, suspending the usual one‑third policy for this one‑time action.
The San Francisco Health Service System board voted to apply $7,016,000 of the Delta Dental active employee PPO’s rate stabilization reserve to lower premiums for plan year 2020.
Aon actuary Mike Clark told the board the Delta Dental active PPO has shown six years of favorable claims experience and a persistent build‑up in reserves. Clark recommended using one‑half of the 12/31/2018 stabilization balance—$7,016,000—while preserving the other half for later years and keeping other contingency reserves intact. "I feel, as an actuary, that still having $7,000,000 available for use in 2021 and beyond is adequate," Clark said during the presentation.
Board members pressed staff about utilization and equity: commissioners noted roughly one in three members were not using preventive dental services and asked whether encouraging preventive care could cause a short‑term spike in claims. Clark acknowledged that if preventive utilization increased substantially there could be a near‑term rise in claims as untreated conditions are diagnosed, but said the long‑term value of prevention can reduce more serious procedures.
A motion to accept the actuary’s recommendation was moved from the floor and seconded. The chair called for public comment (none) and the board approved the recommendation unanimously.
Practical effect and next steps: staff said actual rate tables for 2020 will be presented at the next meeting; the buy‑down applies only to the active employee PPO plan (retiree plans are fully insured or otherwise contractually locked). The board also directed staff and Aon to produce more detailed utilization history and preventive‑care metrics to help assess whether changes in member behavior alter future claims patterns.
Details recorded in the meeting file show the Delta Dental active employee PPO had approximately $14,000,031 in projected stabilization funds as of 12/31/2018; Aon recommended using one‑half (around $7.016M) rather than the policy default one‑third to achieve a larger 2020 buy‑down while keeping a reserve for 2021 and beyond.
The board’s approval is a formal one‑time suspension of the reserve policy for this single plan and action; staff will return with finalized 2020 rates and supporting materials.
