Health Service Board approves 2025 rate packages: Health Net down 1%, Blue Shield/ UHC and PPO see larger increases

The San Francisco Health Service Board approved a set of 2025 health‑plan rate recommendations covering multiple non‑Medicare plans, adopting Health Net Canopy Care rate cards that reflect a 1% decrease and approving renewals for Blue Shield of California and UnitedHealthcare that produce higher percentage increases for other plans.

Mike Clark of Aon presented the recommendations and the underwriting context, including use of Sutter legal‑settlement dollars that helped buy down rates in 2024 and a smaller remaining balance for 2025. “Staff recommends that the Health Service Board approve the 2025 Health Net Canopy Care HMO Plan rate cards as presented in this material, which reflect a 1% decrease,” Clark said during the Health Net presentation. The board voted unanimously to approve the Health Net Canopy Care rate cards.

For the larger Blue Shield portfolio, staff recommended an 8.7% renewal for Blue Shield Access Plus and UnitedHealthcare Select EPO, and an 11.8% renewal for TRIO HMO and the doctors EPO. Clark said staff projected a combined increase of about 9.6% across Blue Shield plans, and recommended moving the large‑claim pooling attachment from $1,000,000 to $1,250,000. He said that change would reduce fixed pooling fees and, using three years of large‑claim experience, produced an estimated savings of about $3,600,000 for the 2025 plan year. Clark noted staff reviewed multiple attachment‑point options and judged $1.25M the best balance of savings and retained stop‑loss protection.

Commissioners raised concerns about affordability for early retirees. One commissioner observed that costs for early retirees with dependents can be “almost a year” in the tens of thousands and called the increases “unaffordable” for some households. Staff responded that employer contribution formulas set by the city charter and MOU rules limit how contributions are distributed and that higher 10‑county benchmark increases help limit members’ share of the increase in some cases.

Separately, the board approved the non‑Medicare PPO renewal, which staff presented as a 1.3% total rate increase for that plan. Clark explained that the PPO’s lower overall increase is driven in part by membership shifts and stabilization adjustments; the board voted unanimously on the PPO recommendation.

Votes at a glance:
• Health Net Canopy Care HMO (2025 rate cards): motion moved by Commissioner Follinsby; passed by unanimous roll‑call vote.
• Blue Shield Access Plus HMO / UHC Select EPO (Access Plus +8.7%); TRIO HMO / UHC Doctors EPO (TRIO +11.8%): staff recommendation moved by Commissioner Follinsby; passed unanimously.
• Non‑Medicare PPO (1.3% increase): staff recommendation moved and seconded; passed unanimously.

The presentations noted several contextual financial figures: staff expects a net drawdown of the Health Care Benefit Trust of approximately $12,000,000 by year end, pharmacy rebates were discussed as material to projections (staff cited roughly $11.7M realized with a $16M expectation elsewhere in analysis), and Sutter settlement proceeds used to buy down 2024 rates totaled about $15,000,000 with roughly $2,000,000 remaining and available. Clark said Blue Shield factored a new pharmacy delivery model (effective 01/01/2025) and additional rebate assumptions into its projections. He also said administrative fees and increased pharmacy trend (driven partly by GLP‑1 drugs) are headwinds for 2025.

Next steps: staff will finalize contracts and rate materials for implementation and post the approved 2025 rate cards and contribution schedules; the Kaiser HMO presentation was deferred to the June meeting.