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Actuary reports City Plan lost roughly $2.7M in 2016 but membership rose; board applies $1.51M stabilization subsidy to 2018 rates
Summary
Aon Hewitt told the board City Plan’s 2016 paid‑basis shortfall was about $2.74M while membership and average contract size increased; the board approved applying roughly $1.51M from the stabilization reserve to lower 2018 rates for actives and early retirees.
Aon Hewitt’s actuary told the Health Service System Board the 2016 City Plan experience showed membership growth and a reduction in per‑subscriber cost, but a paid‑basis deficit on the self‑funded PPO. The actuarial presentation said the trust ended 2016 with a paid‑basis deficit that the presenter quantified on the record as approximately $2,742,250.
The presenter explained the board’s prior decision to subsidize premiums in 2015 to stabilize the pool: that subsidy led to increased membership and a lower cost per member, though it produced a loss‑ratio figure above 100% because the premium base was intentionally reduced. “That says that you spent 28% more dollars than you took in,” the actuary summarized when explaining a 1.28 loss ratio for a subsidized pool.
For 2018 rate setting, the actuary reconciled the stabilization reserve and contingency buckets, reporting $3.793M in the reserve, plus $736K added back from contingency to give $4.529M total. He recommended applying one‑third — approximately $1.51M — to 2018 active and early‑retiree rates; the finance committee and the full board approved the recommendation unanimously.
Board members questioned sustainability of continued subsidies and asked for early‑year experience data; the actuary said he would provide the first three months of 2017 claims to help inform the 2018 rate case. HSS staff also committed to posting supplemental enrollment and multi‑year trend data requested by commissioners.
