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HSS board approves Kaiser fully insured renewal, accepts 2% multi‑year rate guarantee
Summary
The San Francisco Health Service System board approved Kaiser Permanente’s fully insured renewal for 2015 and accepted a two‑year, minus‑2% rate guarantee after Aon Hewitt recommended a multi‑year lock to reduce volatility. Board members pressed staff for clarity on Medicare timing, pharmacy costs and employer contributions for early retirees.
The San Francisco City Health Service System board voted to approve a fully insured Kaiser Permanente renewal proposal for plan year 2015 and accepted a multi‑year rate guarantee that locks rates at roughly 2% below current levels for 2015–2016.
Aon Hewitt actuary Anil Kosher told the board the vendor’s case‑specific trend was 3.72% but that, after blending active, early‑retiree and Southern California pieces, the one‑year blended option produced a -2.77% result and the two‑year guarantee provides a -2% rate for each year. “So if the rate’s 100, it’s then going to be 98 and the next year it will stay at 98,” Kosher said during the presentation.
Board members asked detailed questions about the drivers of the numbers, including pharmacy costs and the calculation of the employer actuarial difference for early retirees. Commissioner Fraser pressed on pharmacy trends and generic utilization; Kosher and Kaiser representatives confirmed pharmacy cost per prescription rose while overall pharmacy spend increased at a lower rate because generic usage rose by about three percentage points.
Kaiser’s Cindy Striegel outlined caveats attached to the second‑year guarantee, saying the carrier needs to understand any carrier changes, contribution differentials or benefit changes that would affect membership shifts before finalizing a second‑year commitment. “If there are benefit changes that are made, we just want to understand what those are so that we can evaluate if we would anticipate member shifting,” Striegel said.
The motion to accept the fully insured option with the multi‑year minus‑2% guarantee was put to a vote after a brief opportunity for public comment; the chair announced the ayes have it and the recommendation was adopted.
The board requested staff return in June with final MAPD/Medicare numbers (Anil Kosher said those data are typically available in June) and to clarify how “gap dollars” and contribution formulas are applied across rating tiers, including E (employee only) and E+1 tiers where the presentation showed zero employee premiums under some scenarios.
Next steps: HSS staff will finalize the rate cards in June when carriers file Medicare/MAPD numbers and will implement the board’s direction on the fully insured Kaiser option, subject to the caveats described by Kaiser and Aon Hewitt.
