Supervisors forward HSS rate package amid sharp public debate over Kaiser pricing and transparency

The San Francisco Board of Supervisors Budget & Finance Subcommittee on July 17 forwarded the Health Service System's (HSS) proposed 2014 rates and contribution schedule to the full Board without recommendation after a daylong hearing that focused on Kaiser Permanente's rate proposal and requests for additional transparency.

HSS interim CFO Greg Sass told the committee the Kaiser renewal reflects a roughly 3.48 percent premium component tied to claims experience and utilization, plus additional federal taxes, and that approving the package now would protect continuity for about 46,000 Kaiser members and 107,000 total HSS members ahead of open enrollment. "It's a fully insured plan," Sass said, arguing the year-over-year increase was within expected health-care inflation for providers that operate hospitals.

The hearing became a flashpoint over demands for data and accountability. Multiple union leaders, Health Service Board commissioners and community advocates urged supervisors to press Kaiser for far greater disclosure of trend data, actuarial assumptions and profit margins. Chris Dailey of SEIU Local 1021 said the Board should use its leverage to get answers "or consider giving the people of San Francisco some of their money back." Randy Scott, a Health Service Board commissioner who voted against the renewal at the HSS board, said rejecting the package at this point would create "a horrible disruption" for members and urged moving the matter forward to the full Board with continued oversight.

Kaiser representatives, including Cindy Stragon and senior vice president Peter Andrade, defended the insurer's methodology and said the renewal is built from 2012 claims and utilization trended forward. The company pledged new operational commitments: a monthly claims-data feed to HSS, expanded wellness programming (including weekly on-site biometric screenings and seasonal flu clinics) and increased reporting and engagement ahead of 2015 negotiations. "We will strive to be more affordable. We will work hard to provide the service," Andrade said, adding Kaiser budgets a routine operating margin of about 4'to'5 percent.

Supervisors and commissioners pressed for explicit, written commitments and for a timeline to begin deeper 2015 talks. Committee members noted options for the city's health plan if Kaiser cannot change its approach: move to a two-plan model excluding Kaiser, or negotiate alternative funding and risk-sharing models, a process the HSS staff said would require compressed schedules and could extend decision deadlines into September.

Public comment reflected sharp divisions. Labor and union speakers acknowledged the need for accountability and asked the Board to keep pressure on Kaiser; education and retirement-system representatives warned that removing Kaiser would displace tens of thousands of members and substantially raise copays and member contributions. Several health-service board members who opposed the Kaiser renewal at HSS nevertheless supported forwarding the package to avoid immediate disruption, while also urging aggressive steps to secure transparency.

The committee voted to forward items 12 and 13 to the full Board without recommendation so supervisors can act next week; members said they expect to secure and publish clearer, written agreements from Kaiser and to press both local ordinances and state-level measures to increase insurer transparency.

Next steps: the HSS rates and contribution amounts will appear on the full Board agenda; supervisors and HSS staff said negotiations and data-sharing work will continue this year with the aim of influencing 2015 rate-setting and developing alternative contracting options if necessary.