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Aon lays out five ideas to shore up City Plan finances; public and commissioners express concern
Summary
Aon presented five short-term proposals to bolster the City Plan—s long-term sustainability (create a separate plan for retirees without alternative plans, migrate UHC contracting, raise drug copays, raise out-of-network deductibles, rebalance dependent tier ratios). The proposals spurred public comment defending uniform subsidies for early retirees; board asked for rate sheets and more data before action.
Aon presented a diagnostic and a set of proposed actions aimed at preventing a worsening funding spiral for the City Plan, especially among early retirees.
The firm reminded the board that rate stabilization reserves have been used over multiple years to buy down rates and that the remaining reserve for 2019 application is modest (Aon reported approximately $1,661,000 available). Aon identified three major cost drivers: (1) spend-down of the stabilization reserve, (2) escalating prescription drug cost trends, and (3) adverse selection risks after the 2017 move of Medicare retirees to a fully insured platform (which previously…
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