Board hears Aon on rising healthcare costs, approves VSP and New York Life renewals
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Summary
Aon presented drivers of a projected 9.5% national healthcare trend and flagged sharp GLP-1 pharmacy cost growth; the board approved VSP 2027 vision rates and New York Life renewals for life and disability products by unanimous roll call.
Aon actuaries briefed the San Francisco Health Service System board on national and plan‑level cost drivers for the 2027 rates and benefits cycle, emphasizing a multi‑factor trend environment and rapid pharmacy growth.
Chris Bridal of Aon summarized eight enduring cost drivers and said national trend for 2027 is projected at 9.5 percent, with price accounting for roughly 40 percent of that trend, utilization about 35 percent and service mix about 25 percent. He highlighted specialty and biologic medications, noting "more than half of drug spend coming from fewer than 2 percent of individuals."
On GLP‑1 drugs specifically, Aon reported diabetic GLP‑1 costs rose roughly 80 percent per member per month between January 2023 and September 2025, while weight‑loss GLP‑1 spend increased by about 600 percent per member per month over the same period. Presenters said adherence and lower prices will be necessary for long‑term net savings to materialize and that carriers are investing in AI and targeted programs to manage high‑cost members.
Following the education session, the board considered action items. Aon—s Mike Clark presented the VSP fully insured vision 2027 rates and contributions (basic plan rates held flat; premier plan premium +2 percent). The board moved to approve the VSP 2027 premiums and member contributions and adopted the item on roll call with all attending members voting "Aye." Aon estimated total VSP spend at roughly $12.6 million with employer and member shares noted in the presentation.
The board also approved the renewal of fully insured life, AD&D, long‑term disability and short‑term disability premium rates from New York Life (the product conversion followed last year's RFP), accepting the recommended rates on a unanimous roll call.
Next steps: staff will present plan‑specific experience and recommended rate renewals for medical and prescription plans in March–June as part of the charter‑mandated rates and benefits review cycle.
