will remain uninsured and will choose not to enroll, some of those reasons may be unaffordability. >> will there be medi cal el jebl folks that will be impacted by costs as well? >> for the newly eligible, they will have no cost to medi cal, so they will have no premising and their cost sharing will be fairly minimal. >> and to the extent there's been some cost shifting under medi cal at the state, will that impact any individuals? >> i think the cost shifting at this state, it's been provides, california has very, very rates for providers, 59th in the nation, i believe, and that translates to access, so individual access to people for medi cal to the services they provide that they need, sorry. >> and just a couple of

questions about the employer spending requirement, from the per specie of the department of public health, how could the employer spending requirement benefit employees that may fall within the 35 thousand, 15 thousand, you know, 19 thousand? >> so, certainly the employer spending requirement does many thing, it allows for people to get health insurance which is primarily how it's used. most of the employer spending requirement is spent to purchase health insurance for employees, it can also be used as you know for the city option which can support their enrollment in healthy san francisco which doesn't mean the individual mandate, but the mra aoption under the city option can be used to purchase health insurance premiums for individuals. >> i see, and one of the things that i remember and i wasn't on the board when this happened,

do you remember reading about dr. cats that served as the director of public health at the time and i remember him explaining how the employer spending requirement was a critical component of insuring equitable financing of health care and it would make sure it maximized coverage of as many people as possible fr. the perspective of the department of public health, i mean, does the passing of the hca change that? >> well, i'm not sure if it changes that. i think they do similar things, both of them have incentives or mandates for employers to expand health insurance coverage, so i think that they do similar things. in terms of the employer spending requirement specifically on the department, it's only one funding source of

healthy san francisco as you said earlier and relatively small funding source for san francisco. >> and how much of a funding source is it, how much of the budget for healthy san francisco comes from the employer spending requirement? >> the employer spending requirement is about 14 million dollars to the healthy san francisco program. city general fund covers the healthy san francisco program at about 77 million dollars, and individual providers who as you know healthy san francisco is a leveraged program with hospital charity care, the value of those services are about 38 million dollars, all told, it eats a little over 100 million dollar program with about 14 million coming from employer spending requirement. >> just a final question related to that. if the -- without the employer spending requirement, where would the 14 million dollars come from, would that have to come from the general fund?

>> it would likely have to come from the general fund but it would be a likely smaller program, there would be fewer people in healthy san francisco, we know they'll have less enrollment moving into the future so it would be a smaller program as well. >> colleagues, any other questions? okay, great. now, i'd like to call on the office of labor, standards and enforcement. i see mr. gold berg is here. >> good afternoon, supervisors, my name is matt gold berg and i'm here to answer any questions you have about the employer spending requirement or any of our work on the health care security ordinance. >> and by the way, i want to okay naj that we have been joined by supervisor mali ya cohen who has been chairing another prior meeting and so

since 10:00, yes, and lucky we let paid by the hour at the board of supervisors, so that makes it easier, so mr. gold badgering, maybe the place to start is maybe if you can explain how the employer spending requirement works? >> sure, as you said earlier, supervisor campos in your introductory remarks, the security ordinance established the healthy san francisco program, it created the employer spending requirement, it's been in effect since 2008. the principle obligation or mandate soeshtd witched the employer spending requirement is that covered employers are required to make mandatory health care expenditures on behalf of their covered employees, so there's a few legal definitions embed ined that statement. the employer that is are covered by the law are those with more than 20 employees, and that's worldwide, you could have a single employee here in san francisco but if you're more than 20 employees

throughout the country, the single employee here in san francisco would be covered by the spending requirement. i've been saying 20, the mandate is 50 employees for the non-profits, so 20 employees for profit companies. the covered employees are those who work here in san francisco more than 8 hours per week and have been employed either employed for more than 90 day, so those coveresed employees are entitled to these mandatory health care expenditures made by the employer. the amount of money that any individual employer is required to spend is based on a particular rate that changes each year, currently there are two rates in play for 2013, large employers, those with more than 100 employees are required to spend $2.33 per hour for these covered employees whereas smaller employers, those in the 20 to 99 range are required to spend

$1.55 per hour on health care for their employers. i guess finally i would say just in the spirit of an overview, principally we see that employers make health care expenditures in a few different ways, we think of three general categories, the largest of those categories and i think the preferred route is that employers provide health insurance to their employees. we collect data on an annual basis from employers about how they're making these expenditure sos we know the vast majority of expenditures toward this requirement are made toward health insurance, approximately 90%. the next sort of category of expenditures as has been alluded to earlier, a number of employers contribute directly to the city option which affords their workers reduced fee or free enrollment in healthy san francisco program or for those who are not eligible for healthy san

francisco, a medical reimbursement account and we see that approximately 3% of all the expenditures under the employer spending requirement go toward that city option and then finally the third sort of category or bucket are these reimbursement program that is are typically administered by third parttys on behalf of employers and we see that in the range of 6 or 7% of the overall health care spending goes into those health reimbursement sketches and those are then accessed by employees to be refunded for any out of pocket medical expense that is they occur. >> and i know at the board of supervisors as some of my colleagues remember, there was i guess a little bit of a difference of opinion if you will among friends in terming of how to deal with health reimbursement accounts. i'm wondering if you can taug a little bit about what has happened around health

reimbursement accounts, there were many of us who at the time we were trying to close this loophole who were saying, listen, the federal government will eventually see these accounts for what they are and probably will not allow them to exist which is why we wanted to close the loophole, i wonder if you can talk a little bit about that. >> by way of additional background, our office is required by the health care security ordinance to collect data from the employer community on an annual basis, every year we collect that data and analyze it and we saw in saw over time that the amount of money that was being contributed to these health reimbursement accounts was going a large amount of that money was going unused by employees, that was sort of one data element that fed into a policy discussion here at the board and the mayor's office that led to an amendment to the ordinance so the practices around health reimbursement

accounts have changed in some respects commencing in 2012. >> how are health reimbursement accounts treated under the aca? >> recent federal guidance has come out to indicate that initially stand alone health reimbursement accounts and this is the practice here in san francisco in particular, these accounts are not coupled with health insurance coverage but they're provided on their own to employees. the latest guidance from the federal government indicate that is those health reimbursement accounts are going to be imper message under the health care act under violation of the larger principle that the affordable health care act has eliminated the use of any health care programs that have lifetime or annual caps, and stand alone health reimbursement accounts by their definition have annual caps on the benefits and as such, it's been widely understood and interpreted

following this most recent federal guidance that these will be impermissible commencing in 2014. >> i think for many of us, that's a good thing. now, if maybe for purposes of informing us, i know that when the debate around the loophole was happening, there was a different approach that was taken, as you know, i introduced legislation which mayor lee vetoed and there was sort of a revised legislation that was introduced and eventually passed and one of the things i want to ask you, and i remember that this was a key component of that legislation, and i will sort of read to you something that was includes, something that the mayor said at the time and the passage of the version of the legislation that was passed and was signed and he said, we must know what proportion of companies, however small, are

placing these unfair restrictions on their employee, hra's, if we find after collecting statistically significant data samples that there are more than just a handful of employers who are unduly restricting employee hra's, i will work with the board of supervisors to place additional regulations governing hra's. did we collect the data to know whether or not restrictions were placed by employers? >> yeah, we certainly did, supervisor campos. the amendment, the ordinance was passed in november of 2011. i think the may yoirl executive directive calling on us to give that direction was called shortly thereafter, so early in 2012 when we commenced [inaudible] how they complied with the ordinance in 2011, for the first time, we leaked data about health reimbursement

accounts and specifically whether and how those accounts were being restricted. and the data that we then reported based on the 2011 practices showed that 53% of employers who administered these health reimbursement accounts had imposed one or more restrictions on them, and by restrictions, what i mean here is the employees who had these accounts were prevented from using them for certain particular types of medical expenses. >> so, that i understand, so before the law was passed by the mayor and the board in 2011, the percentage in terms of employers who placed restrictions was what, 53? >> 53% >> and what happened the year after? >> we're now in the process, we collected the data that was submitted to us earlier this year, we'll shortly be releasing our annual analysis of that but we have a preliminary look at the date that was provided to us from

2012 and the number hasn't changed, essentially 53% of employers continue to report that they place 1 restrictions on their health reimbursement accounts. >> so, no change even after passage of that? >> no change even after passage. i would point out that there was some understanding at the time of passage that the board's hands were tied and as a result there was nothing in the ordinance that specifically was tattered at trying to reduce those estruses. i think there was some belief or hope in various communities and circles that that practice would maybe decline over time, but again, with this first year where we have now comparative data across 2011, 2012, it continues to be more than half restrict, we can drill down and show that there are major categories of restrictions and i think there was particular interest in the percentage of

employers who would restrict their use for health insurance swes for enrollment in healthy san francisco because if you're an employee who receives a health reimbursement account from an employer in lieu of health insurance, it would be expected or common that you might utilize those funds to purchase health insurance on the private market or enroll yourself in a healthy san francisco program, i think that's more likely to be true after 2014 when individuals have a legal mandate to provide that insurance and the rates we see 35% of these health reimbursement accounts precluded or prevented employees from using the funds to purchase health insurance and 28% of them precluded individuals from using the funds to enroll in healthy san francisco, the rates have stayed exactly the same, in 2011 and 2012 with respect to those specific restrictions as well. >> and i think those of us who

were not supportive o*f the amendment as it passed really believed that it wasn't enough to really make things change, it seems like in that sense, we have been provender to be rightfinger but i do want to acknowledge that there were efforts on the part of the business community, i know the golden gate restaurants association did a lot of work to make sure that those numbers were lowered and i know that a lot of information to its members, but it hasn't -- >> i would be remiss if i didn't also mention while the rates of restrictions have stayed consist tents, we have seen an up tick on the utilization of these utilization accounts, people have been reimbursed in a higher pe sen taj due to a lot of outreach from both the business community, other members in the community. >> so, now that hra's are not allowed under the aca, then

what happens in terms of, you know, compliance with the health and security ordinance, what ways do employers have? >> yeah, i certainly expect and there's all indications that there's a lot of robust policy discussions about this and any potential changes but for the time being, or pending any changes, i think our expectation or our understanding is commencing in 2014, again, no with standing the possibility of changes at the federal or local level, employers would simply provide health insurance or contribute to the city option, those would be the two principle methods of complying with our local spending requirement. >> i see. so, talking about the 53% of employers who place restrictions on these accounts, then we're talking abthese folks now going the route of insurance or healthy san francisco? >> yes, going the health insurance or contributing to

the city option, the contribution tos the city option as has been indicated previously, the pool and the size of the healthy san francisco problem, excuse me, the healthy san francisco program is likely to be reduced and consequently, the contributions that employers make to the city option will be routed to medical reimbursement accounts that are administered by the city for individual employees, these are similar to frankly the health reimbursement accounts that are used widely today and administered privately, there are some difference, one of those which i think you're getting to is that the medical reimbursement accounts administered by the city have no prescribers other than them being available broadly for medical services. >> you said earlier, i want to get the number right, that about 35% of employers that use these hra's have not allowed in

this past year that the money be used for health insurance? >> that is correct. >> if that money is now going to be used in healthy san francisco let's say, will healthy san francisco place restrictions on the use of that money? i would imagine that we are not going to prohibit people from using that to buy health insurance? >> that sounds unlikely. i would be reluctant to speculate but i can say there's no such restrictions on the administration of those accounts currently or over the five or six years they've been maintaining those accounts forward. er >> i think that's a great thing, you have more people using that money for health insurance. in terms of the medical reimbursement accounts, is there anything that we need to do in terms of clarity that we need to get from the federal government around how that works?

>> in all honesty, i'm not sure the details of that, and i don't know if other departments are looking into that, but for the time being, my understanding is absent any changes, you know, that those will continue to operate as they do even after 2014 under the hca. >> okay, colleagues, any other questions? great. just a quick question for the department of public health. i remember, you know, a number of conversations we had with director garcia and all the health professionals, from my perspective, it looks like more people will be able to buy health insurance. i assume that from the department of public health, that's a good thing? >> that is absolutely a good thing and we've said while healthy san francisco is a fantastic program, it is limited by its nature and health insurance is always

better than healthy san francisco. >> that's great. >> i have a couple of questions for colleen, i *f i'm sorry i missed the present tais and i'm waiting on the handouts, i may ask questions that you may have already addressed. when i look at healthy san francisco, i know people in the baby community that would qualify for healthy sf, but don't know about the problem, and so where i'm concerned with that is if people don't know about healthy san francisco, it's been on the market and out there for a bit of time, how are you going to do a better job of doing outreach and enrolling people in the affordable health care act that of which we'll be able to do in the fall? >> so, our first method of enrolling people is to look at who we have on healthy san francisco, as you said, there's a gap between your residents and healthy san francisco participants, we're looking specifically at converting the

healthy san francisco participants into health care coverage. we recently applied for an outreach and education grant which we were not successful in getting probably because we have too much outreach to our population already, we identified in the process of applying for that grant, we identified certain populations in our city that need extra attention in outreach and the southeast core door, in addition to asian and latino adult, small business and sole proprietors and young adults in school, so we intend to do a concerted outreach effort in the absence of the grant to those specific populations that we know will need outreach. >> this is exactly what i'm concerned about, about -- you understand there's a need for extra attention to outreach, at least i haven't heard and i haven't seen a plan on what exactly outreach is going to look like. i'm thinking we need to develop

a system that is more or less similar to the census, remember when there was census data that bewere collecting, people that were cultural competent and it was an economic engine, it helped go door to door and get people to fill out their census form. so, i would like to see something similar like that, so that would require the department of public health doing some kind of partnering with cover california when it comes to finding monies available to make such an effort come into a reality, or folding into the department of public health budget as well, there are grass roots organizations organizing right now in the latino as well as chinese communities that need extra help, meaning financial support, on their outreach, but before we can do outreach, it's a level of education that needs

to happen and there are resources that need to be developed and quite frankly purchased and paid for to get out there, so i don't know if your presentation discussed about this but this is something that i'm really sensitive ant because we don't have the opportunity, we are talking about people's lives here to allow this gap that -- to exist. there are a lot of people that now qualify for health care, for coverage. we need to make sure we are capturing every single person, every family that's out there and in this universe and getting them enrolled and i think the department of public health is going to need more health than just relying on their public clinic partners and allies, we need to be enrolling the non-profiteer and is the housing authority, they're always left off the table and i think we also need to be organizing with our

churches and i already said our non-profits, so that is really my position. supervisor campos? >> i wanted to add something to that, supervisor. one of the thing eswith os we are plan tog do is hold a series of hearings and the next hearing we're planning to hold which i would love to work with you is on this issue of what is our plan for enrolling people into the exchange, what kind of outreach, and my hope is that between now and the time we hold a hearing in september because the enrollment begins in october that we will get from the department of department health a robust plan for outreach. >> i'm feeling an incredible sense of urgency, it's still going to need some money and some resources and i don't know where those are going to come from. non-profit is already stressed and probably don't have accessed money and a budget to do this kind of work, but why not hire some of the people to

go door to door and knock and have them begin to do some peer to peer education. >> so, i have a couple of responses to that. first, we are working on a citywide communications plan and work witching the mayor's office on outreach and education plan for the city, we are planning to apply for the second round of funding with the same application that we had previously, with the some computations we had previously. in addition, we -- just this week, the department pulled together all of its community based organization contractors and in that discussion with them, we talked about the health reform implementation and the importance to get everybody covered on health insurance for which they're eligible. we asked them to consider being a sister, application enrollment as sisters under the cal foreign yo program because that does come with money, for

everybody who is enrolled with california, any person who's enrolled into covered california, they get 58 dollars, for every person you enroll, that's 58 dollars, so it could help support the enrollment. >> that sounds like the triple c bounty program, and again, i don't want to drop the ball on this because i would be really upset. if i get upset, i'm going to put a bug on campos's ear, and it will be contagious and you have a whole board of upset supervisors, so in your partnership with the mayor's office, loop us in, particularly those that are your partners that are working and representing the communities that are often left off the table. this is absolutely critical. thank you. >> yes. >> believe you me, it's a lot worse when you see supervisor cohen upset.

i think the point though, one point that i will make and we talked earlier about the convening of the universal health care council which is a good thing, if it's so important, it's too bad that it's only happening three months before the implementation, and another point i think, it's like i wish we had had this discussion before adopting the budget of the department of public health, of the health services agency because to the extent that more resources would have been needed, that was the time to have that conversation. >> one thing i neglected to mention to you is that cover california is also kind of running to keep up and there aren't resources available right now to even train application as sisters, so we're in a little bit of an education only place, we can't move to action until they move forward as well. >> thank you very much, i know we want to get to public comment, i have one question or one point that i think is

important to clarify and if i may, i'd like to ask our deputy city attorney, john gibner who's here with us, there has been a lot of talk from a lot of different folks, you know, about the legality of the health care ordinance and whether or not it's preempted by federal law and as our legal council for both the board of supervisors, the mayor and the department of public health, can you say something about that, what's the city attorney's view on that? >> sure, deputy city attorney, john gibner. the affordable care act has -- includes some language that states that it does not pre-empt local and state laws like the health care security ordinance. in termser of other questions that have arisen, based on the federal guidance we've received to date, there's no indication

that the health care security ordinance is preempted or otherwise adversely affected by the affordable care act and as you subjecting earlier, supervisor campos, the local law complements in many ways the affordable care act. >> thank you, i just want the hear it from the horse's mouth, if you will, because i want to make sure that everything's on the table. yes, supervisor cohen? >> thank you very much, so what does reetcher -- pre-empt mean, just to be clear? >> basically under the u.s. constitution, federal law is supreme and in many cases, if a local agency or a state adopts a law that directly conflicts with a federal law, the federal law trumps, in