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Board directs study of dental discount card after Aon Hewitt finds high utilization
Summary
Aon Hewitt told the board retiree dental claims showed a ~99% paid loss ratio and a larger share of members hitting the $1,000 annual maximum than benchmarks; the board unanimously directed actuaries to study a discount‑card option rather than pursue a straight PPO.
The San Francisco City Health Service Board heard an extensive Aon Hewitt review of the retiree Delta Dental PPO and unanimously directed actuaries to study a dental discount‑card option as an alternative to moving to a strict PPO.
Gabriel Briggs of Aon Hewitt told the board the paid loss ratio over the past 12 months was about 99¢ for every dollar of premium, meaning almost all premium dollars go to paying claims rather than generating profit. Delta Dental data showed that a higher percentage of retirees reached the $1,000 annual benefit cap than typical benchmarks: roughly 19% in the first contract year, 18.3% in the second year and 10.3% in the short plan year.
Aon presented seven plan alternatives. One high‑impact but disruptive option — a straight PPO — could reduce premiums significantly (Aon presented an example that lowered premiums by about 21.89% under a straight PPO with no benefit enhancements), but board members raised access concerns: staff noted only about 27% of dentists in San Francisco participate as PPO providers, which could create coverage gaps for retirees.
Commissioners suggested surveying retirees about preferences and willingness to pay for enhanced benefits or discount arrangements. Commissioner Scott urged including retiree input to understand what services retirees most value. Several public commenters representing retirees raised questions about TMJ coverage, frequency of prophylactic cleanings (some urged allowing more than two cleanings per year), claim communications and the possibility of City subsidy for retirees’ dental premiums.
After discussion, Commissioner Fraser moved to direct the actuaries to study a discount‑card option and to avoid pursuing a strict PPO at this time; a colleague seconded the motion and the board approved it unanimously. Aon committed to modeling a discount‑card scenario and to return with analysis comparing cost, access and member impact.
The board asked staff to collect retiree feedback and for Aon to include network accessibility and likely member behavior in its next analysis.
