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Committee forwards Health Service System rate package after debate over trust fund use and transparency
Summary
The committee heard a lengthy presentation on a Health Service System package that reduces projected rate increases through competition and a trust‑fund subsidy, but budget analysts and public commenters warned of a $36.6 million city cost and demanded clearer data and written responses; the committee moved the measures to the full board with recommendation and asked for follow‑up reporting.
The San Francisco Budget & Finance Committee on Tuesday heard presentations and substantial public comment on proposed changes to Health Service System plans and employer contribution rates and moved both pieces to the full Board with a recommendation, after supervisors pressed for clearer documentation and follow‑up reporting.
Art Duncan, director of the Health Service System, described a yearlong process that, he said, reduced what would have been a larger cost increase through competitive bidding and plan redesign. Duncan said competition and provider changes cut an initial status‑quo increase from about 15.5% on the HMO side down to roughly 10.7%, and that the board applied a trust‑fund subsidy to ease impacts on members and employers.
Budget Analyst Christine Martin flagged fiscal impacts and information gaps. "The plans and the contribution rates presented before you will increase the city's contributions by 10.1 or 36,600,000.0 in fiscal year 02/2007, 02/2008," Martin said, adding that about $20.8 million of that increase would hit the general fund. Martin also said her office had been unable to obtain certain cost estimates for the flex‑funded PacificCare arrangement and projected a potential liability if actual costs exceeded premiums.
Public commenters including Health Service Board members, retirees and union representatives urged action to protect open enrollment timing and to preserve trust‑fund member interests. Claire Zvonski, a health service board member, emphasized that "all assets and liabilities belong to the members and not the city," and warned that spending down the trust fund could jeopardize long‑term self‑sustainability. Nancy Jin of the Protect Our Benefits Retiree Coalition argued that returning money to employers could be illegal and said the coalition might seek a city‑attorney opinion.
Supervisors expressed concern about information flow between the Health Service System and the Budget Analyst's Office and asked for written answers to the analyst's outstanding questions. After discussion, the committee voted to forward Items 3 and 4 to the full Board with a recommendation and requested follow‑up reporting by June on trust‑fund policy, actuarial certification and controller recommendations.
Next steps: the items will be considered by the full Board of Supervisors; the committee requested written responses and additional analysis to be provided in advance of budget deliberations.
