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Health Service Board negotiates rate changes, applies a one-time Blue Shield credit to stabilize premiums
Summary
Health officials negotiated plan-year and benefit changes that cut projected increases for Kaiser and Blue Shield; a one-time $5.2 million Blue Shield credit stabilizes employee contributions for the shortened plan year, producing an overall 3.4% increase for the city—s six-month transition period.
The committee approved sending forward two Health Service System items that change the plan year and set contribution levels for a shortened plan year, after negotiations produced lower-than-projected premium increases.
Katherine Dodd of the Health Service System and the system—s actuary laid out the negotiation results. Proposition C allowed the system to move from a fiscal-year to a calendar-year plan. HSS and the actuary said that moving to a shortened plan year (July 1–Dec. 31, 2012) and negotiating benefit and administrative changes reduced an initial projected double-digit increase to a combined six-month city-wide increase of about 3.4% (total plan spend for the six-month period estimated at $351.3 million).
Specifics presented included reduced renewal rates for Kaiser (active/non-Medicare retirees from 6.9% projected down to 4.9%) and a substantial reduction in Blue Shield's increase after a one-time $5.2 million credit from Blue Shield to stabilize contributions during the transition. The actuary said those combined actions saved about $17 million relative to the earlier worse-case estimate. HSS also noted compliance with SB 946 (autism coverage) and made adjustments to dental tier pricing to meet imputed-income compliance rules.
The budget analyst found the HSS and actuary calculations sound and recommended approval. Committee members thanked staff for the work and advanced the ordinance and resolution with recommendation; staff will return in July with the next set of rate proposals when the annual calendar-year rates are prepared.
Key figures presented: - Six-month plan-year total estimated spending: $351.3 million (3.4% increase). - Kaiser active/non-Medicare retirees: projected 4.9% increase (reduced from a higher starting renewal). - Blue Shield: negotiated to a 7% increase for active/non-Medicare retirees after application of the one-time $5.2 million credit. - The $5.2 million credit was intended as a one-time measure to stabilize contributions and allow accountable-care organizations (ACOs) time to implement cost-saving care coordination.
