Health Service Board Rates and Benefits Committee Meeting

Transcription

1 Health Service Board Rates and Benefits Committee Meeting Final 2015 Blue Shield Rate Cards Active and Early Retiree June 12, 2014 Prepared by Aon Hewitt Health and Benefits

2 Contents Executive Summary Blue Shield 2015 Monthly Rate Cards 93/93/83 Contribution Strategy 100/96/83 Contribution Strategy Aon Hewitt Recommendation Appendix 1

3 Executive Summary At the May 8, 2014 the Health Service Board (HSB) meeting, the HSB approved the 2014 Blue Shield rates for the Active and Early Retiree populations and the methodology which used the remaining $8.8M of Blue Shield Profit Pledge funds in the HSS Trust Net Assets as of June 30, The HSB approved moving the $8.8M into the HSS Blue Shield Stabilization Reserve and to spend these funds on a one-time premium buy-down for the 2015 active employee Blue Shield rates. Moving these funds from the HSS Trust Fund Net Assets balance into the Blue Shield Stabilization Reserve will provide an appropriate audit trail for HSS' Financial Statements. This buy-down will reduce the premium difference between Blue Shield and Kaiser is intended to stabilize the Blue Shield and Kaiser pools, reduce migration and give the Accountable Care Organizations one more year to work to reduce the long term growth in health care costs. 2

4 Executive Summary continued While the HSB voted to move the $8.8M into the Stabilization Reserve, it should be noted that the $8.8M was not generated as excess premium revenue. Moreover, these funds were received prior to the development and adoption of the Stabilization Policy and HSS' initial adoption of that policy for Blue Shield Flex Funding. The three-year smoothing, as called for under the Stabilization Policy, is not appropriate with respect to the $8.8M Blue Shield Profit Pledge. The purpose of this report is to review and approve the final rate cards and add an additional rate card that illustrates the contributions under the 100/96/83 contribution model that was negotiated by one of the city s largest unions. 3

5 Blue Shield Flex Funded Monthly Rate Card 93/93/83 Buy-Down to Rate Pass (Actives Only) City and County of San Francisco Health Plan Renewals Blue Shield Flex Funded - 93/93/83 Contribution Strategy Rates January 1, December 31, 2015 Actives Early Retirees Employee Only Employee and One Dependent Employee and Family Retiree without Medicare Retiree & Spouse w/o Medicare Retiree & Family Premium $ $1, $1, $1, $2, $2, Vision $3.99 $8.00 $11.32 $3.99 $8.00 $11.32 Expense $2.05 $2.05 $2.05 $2.05 $2.05 $2.05 Buy-Down ($25.65) ($51.31) ($72.60) $0.00 $0.00 $0.00 Total $ $1, $1, $1, $2, $2, County Amount (early retirees and retirees only) 1 $0.00 $0.00 $0.00 $ $0.00 $0.00 Single Retiree Offset 2 $0.00 $0.00 $0.00 $0.00 $ $ "Actuarial Difference" 3 $0.00 $0.00 $0.00 $ $ $ Prop. E Subsidy 4 $0.00 $0.00 $0.00 $39.79 $ $ Subtotal City Contributions $0.00 $0.00 $0.00 $1, $1, $1, Non-Bargained Contribution Rate $ $1, $1, $39.78 $ $ MOU Negotiated Pickup 5 $ $1, $1, Typical Bargained Member Contribution $45.32 $90.49 $ Final Member Contribution 2014 $3.96 $80.22 $ $42.57 $ $ Difference $41.36 $10.27 ($156.05) ($2.79) $11.99 $32.70 Notes: 1)"10 County" City Contribution: Per Charter Section A8.423, the employer contribution must equal the average of the employer contribution to health premiums of the 10 most populous counties in CA, not including San Francisco 2)"Single Retiree Offset" : Per Charter Section A8.428, for Retirees= 10 County Amount; for Medicare eligible retirees= Medicare Premium ( because it is lower than 10 County Amount) 3)Retiree "Actuarial Difference": Per Charter Section A8.428, employer contributes the difference between a single EE and a single non-medicare Retiree cost of premium. Calculated for NON-Medicare retiree only 4)Prop. E Subsidy passed in Nov 2000 Election: Per Charter A8.428, employer subsidy for Retiree (R) and R+1 = 50% x [ Total Rate Cost - 10 county - Actuarial Difference] 5)100% of the 2015 Blue Shield Single, 96% of Blue Shield E+1, 83% of Blue Shield E+2 4

6 Blue Shield Flex Funded Monthly Rate Card 100/96/83 Buy-Down to Rate Pass (Actives Only) City and County of San Francisco Health Plan Renewals Blue Shield Flex Funded - 100/96/83 Contribution Strategy Rates January 1, December 31, 2015 Actives Early Retirees Employee Only Employee and One Dependent Employee and Family Retiree without Medicare Retiree & Spouse w/o Medicare Retiree & Family Premium $ $1, $1, $1, $2, $2, Vision $3.99 $8.00 $11.32 $3.99 $8.00 $11.32 Expense $2.05 $2.05 $2.05 $2.05 $2.05 $2.05 Buy-Down ($25.65) ($51.31) ($72.60) $0.00 $0.00 $0.00 Total $ $1, $1, $1, $2, $2, County Amount (early retirees and retirees only) 1 $0.00 $0.00 $0.00 $ $0.00 $0.00 Single Retiree Offset 2 $0.00 $0.00 $0.00 $0.00 $ $ "Actuarial Difference" 3 $0.00 $0.00 $0.00 $ $ $ Prop. E Subsidy 4 $0.00 $0.00 $0.00 $39.79 $ $ Subtotal City Contributions $0.00 $0.00 $0.00 $1, $1, $1, Non-Bargained Contribution Rate $ $1, $1, $39.78 $ $ MOU Negotiated Pickup 5 $ $1, $1, Typical Bargained Member Contribution $0.00 $51.71 $ Final Member Contribution 2014 $0.00 $80.22 $ $42.57 $ $ Difference $0.00 ($28.51) ($156.05) ($2.79) $11.99 $32.70 Notes: 1)"10 County" City Contribution: Per Charter Section A8.423, the employer contribution must equal the average of the employer contribution to health premiums of the 10 most populous counties in CA, not including San Francisco 2)"Single Retiree Offset" : Per Charter Section A8.428, for Retirees= 10 County Amount; for Medicare eligible retirees= Medicare Premium ( because it is lower than 10 County Amount) 3)Retiree "Actuarial Difference": Per Charter Section A8.428, employer contributes the difference between a single EE and a single non-medicare Retiree cost of premium. Calculated for NON-Medicare retiree only 4)Prop. E Subsidy passed in Nov 2000 Election: Per Charter A8.428, employer subsidy for Retiree (R) and R+1 = 50% x [ Total Rate Cost - 10 county - Actuarial Difference] 5)100% of the 2015 Blue Shield Single, 96% of Blue Shield E+1, 83% of Blue Shield E+2 5

7 Blue Shield Flex Funded 93/93/83 Buy-Down to Rate Pass Plan Year 2015 Monthly Contributions Active (Bargained) Early Retiree Member Impact EE EE+1 EE+2 EE EE+1 EE+2 Members Plan Year 2014 $3.96 $80.22 $ $42.57 $ $ Plan Year 2015 $45.32 $90.49 $ $39.78 $ $ % increase % 12.80% % -6.54% 3.30% 3.64% $ increase $41.36 $10.27 ($156.05) ($2.79) $11.99 $32.70 Employer Plan Year 2014 $ $1, $1, $1, $1, $1, Plan Year 2015 $ $1, $1, $1, $1, $1, % increase -6.43% -0.85% 11.46% 4.30% 4.12% 4.16% $ increase ($41.36) ($10.27) $ $60.00 $70.87 $71.46 Total Plan Year 2014 $ $1, $1, $1, $2, $2, Plan Year 2015 $ $1, $1, $1, $2, $2, % increase 0.00% 0.00% 0.00% 3.98% 3.98% 3.98% $ increase $0.00 $0.00 $0.00 $57.21 $82.86 $ Employer Impact Active: EE only monthly contribution increases from $3.96 to $ This is the result of the removal of the HSS Trust Subsidy for 2014 Active: EE + 1 monthly contribution increases by 12.80% or $10.27 and decreases 33.42% or $ for EE + 2 These changes in the EE + 1 and EE+2 categories are due to the change to the 93/93/83 (rather than 75% of Kaiser EE+2) Active: EE only monthly employer contributions have decreased 6.43% or $ This is the result of the removal of the HSS Trust Subsidy for 2014 Active: EE + 1 monthly employer contributions decreased by 0.85% or $10.27 and increases 11.46% or $ for EE + 2 These changes in the EE + 1 and EE + 2 categories are due to the change to the 93/93/83 (rather than 75% Kaiser EE + 2) 6

8 Blue Shield Flex Funded 100/96/83 Buy-Down to Rate Pass Plan Year 2015 Monthly Contributions Active (Bargained) Early Retiree Member Impact EE EE+1 EE+2 EE EE+1 EE+2 Members Plan Year 2014 $0.00 $80.22 $ $42.57 $ $ Plan Year 2015 $0.00 $51.71 $ $39.78 $ $ % increase 0.00% % % -6.54% 3.30% 3.64% $ increase $0.00 ($28.51) ($156.05) ($2.79) $11.99 $32.70 Employer Plan Year 2014 $ $1, $1, $1, $1, $1, Plan Year 2015 $ $1, $1, $1, $1, $1, % increase 0.00% 2.35% 11.46% 4.30% 4.12% 4.16% $ increase $0.00 $28.51 $ $60.00 $70.87 $71.46 Total Plan Year 2014 $ $1, $1, $1, $2, $2, Plan Year 2015 $ $1, $1, $1, $2, $2, % increase 0.00% 0.00% 0.00% 3.98% 3.98% 3.98% $ increase $0.00 $0.00 $0.00 $57.21 $82.86 $ Employer Impact Active: The EE only monthly contribution does not change Active: EE + 1 monthly contribution decreases by 35.54% or $28.51 and decreases 33.42% or $ for EE + 2 These changes in the EE + 1 and EE+2 categories are due to the change to the 100/96/83 (rather than 75% of Kaiser EE+2) Active: The EE only monthly contribution does not change Active: EE + 1 monthly employer contributions increased by 2.35% or $28.51 and increases 11.46% or $ for EE + 2 These changes in the EE + 1 and EE + 2 categories are due to the change to the 100/96/83 (rather than 75% Kaiser EE + 2) 7

9 Aon Hewitt Recommendation Aon Hewitt recommends that the Health Service Board accept the Blue Shield 93/93/83 and 100/96/83 rate cards. 8

10 Appendix

11 2015 Blue Shield Rate Card Footnotes 1) "10 County" City Contribution: Per Charter Section A8.423, the employer contribution must equal the average of the employer contribution to health premiums of the 10 most populous counties in CA, not including San Francisco 2) "Single Retiree Offset" : Per Charter Section A8.428, for Retirees= 10 County Amount; for Medicare eligible retirees= Medicare Premium ( because it is lower than 10 County Amount) 3) Retiree "Actuarial Difference": Per Charter Section A8.428, employer contributes the difference between a single EE and a single non-medicare Retiree cost of premium. Calculated for NON-Medicare retiree only 4) Prop. E Subsidy passed in Nov 2000 Election: Per Charter A8.428, employer subsidy for Retiree (R) and R+1 = 50% x [ Total Rate Cost - 10 county - Actuarial Difference] 5) 100% of the 2015 Blue Shield Single, 96% of Blue Shield E+1, 83% of Blue Shield E+2 10

12 Glossary Average Premium Cost per Subscriber: Total Monthly Premium/average subscribers/12 months. Blue Shield Profit Pledge: Announced in 2011, Blue Shield of California pledged to cap its annual profit to 2% of revenue less claims, and return any additional profit, beyond the 2%, to policy holders and the community with the approval of Blue Shield of California s Board of Directors. Stabilization Reserve: The objective of a stabilization reserve is to spread any underwriting gains or losses into following year s premium calculation in an even-handed manner such that the Employers and membership are not subject to volatile year over year changes in premium. The underwriting gains or losses are added or subtracted from the premium amounts to adjust for previous losses or gains. Each year loss or gain is spread over the next three years. 11