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HSS board sets aside $1M to stabilize 2015 Blue Shield premiums, moves prior profit‑pledge funds into stabilization reserve
Summary
The San Francisco Health Service System board approved using $1,000,000 of 2013 excess to stabilize Blue Shield premiums for plan year 2015 and transferred roughly $8.84 million in prior profit‑pledge balances into a Blue Shield stabilization reserve for future rate-setting.
The San Francisco Health Service System board voted unanimously to use $1,000,000 of excess underwriting gains to stabilize 2015 premiums for the Blue Shield flex‑funded plan and to move $8,844,000 of prior profit‑pledge monies into a named Blue Shield stabilization reserve.
Pamela Levin, HSS chief financial officer, told the board that after funding incurred‑but‑not‑reported (IBNR) and contingency reserves, the trust showed about $3,000,000 in remaining surplus from the Blue Shield offering; policy permits applying $1,000,000 of that amount to reduce rates for the 2015 plan year. Levin said the net premium amount for the year was about $34.7 million and that the IBNR was approximately $18.1 million, with a contingency reserve roughly $13.2 million.
Why it matters: the move allows staff to use existing trust resources to moderate visible premium increases for members without changing base benefit formulas. Acting on an Aon Hewitt actuarial recommendation, the board also asked staff to reclassify about $8.84 million of earlier profit‑pledge receipts into a stabilization reserve tied to Blue Shield so that future rate‑setting decisions can draw on that balance explicitly.
Board members and staff emphasized process and limits. Anil Kosher, Aon Hewitt actuary, explained the reconciliation that produced the available surplus and recommended the two steps the board approved. Several commissioners questioned whether reassigning prior profit‑pledge dollars could be perceived as favoritism; commissioners and public commenters cited charter constraints (including the continuing role of the 10‑county survey in retiree calculations) and the need to ensure any premium adjustments apply across rating tiers.
Public comment raised service issues separate from the finance decision. Steve Lynch, a retired bank employee, urged staff to pursue complaints about confusing access to urgent‑care facilities through Blue Shield; staff asked that Mr. Lynch summarize his experience in a letter to Director Dodd so HSS can follow up with the insurer.
What comes next: staff will use the $1,000,000 allocation as part of 2015 rate illustrations and place the moved profit‑pledge balance into a Blue Shield stabilization reserve. Final rate cards and any further rate action remain subject to ratification in a subsequent meeting once pending labor negotiations are resolved.
