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Actuaries tell committee Metro’s self‑insured plans need roughly 16.8% more in premiums for 2027
Summary
USI presented an actuarial walkthrough showing projected 2027 claims and expenses of $343.8M, projected premium income of $294.0M and an estimated $49.5M shortfall, which USI said implies about a 16.8% rate increase unless the board uses fund balance or changes plan design.
Lauren Christman of USI told the Study and Formulating Committee that Metro’s process for setting premium rates starts with 12 months of claims, enrollment and prescription rebate data, projects expenses forward and then compares that total cost to projected premium income.
"So that's how we come up with a 16.8% increase needed to the premium rates for 2027," Christman said, explaining that USI’s example combined projected claims and expenses of $343,800,000 with projected 2026 plan‑rate income of $294,000,000, leaving an additional $49,500,000 needed to cover 2027 net claims and expenses.
Christman also described how the plan cost is shared and what drives pricing. She said employees and pensioners remaining on the self‑insured plans typically pay 25% of the monthly cost while Metro pays 75%. She told the committee the recent jump was driven in part by more and larger high‑cost claimants in the most recent experience period rather than solely by unit price inflation.
Committee members pressed on administrative fees, trend comparisons with prior years and whether the spike was unusual; USI said administration fees were within normal ranges and that Metro’s historical trend had been much lower than the current projection. Christman noted that pharmacy trend and specialty drug costs are volatile and can materially affect future projections.
USI also walked the committee through the practical steps and timing for rate and plan changes: the benefit board typically approves rates at its first‑Tuesday‑in‑April meeting so any design changes to affect a given plan year must be modeled and routed through the benefit board and council in advance.
The committee asked whether employees had been notified about potential premium increases; Metro HR staff said communications will be sent after Medicare Advantage rates are finalized and annual enrollment materials are prepared. The committee requested actuarial scenario modeling (peer‑median comparisons and a lower‑cost plan scenario) to better understand how design changes could alter employer and employee contributions in advance of the next meeting on July 13.
The committee also approved the May 28 and June 8 meeting minutes earlier in the session.
