supervisor chu: good morning. welcome to the regular meeting of the budget and finance committee. my name is carmen chu, the supervisor of the committee. victor young is the clerk of the court. do we have any announcements? >> [clerk announcements] >> thank you. supervisor chu: we will be calling a number of items out of order today. the item we will be calling first are items 6 and 7 with regard to the health services, because of some timing and scheduling issues.

we will also be calling item one, the issue on the disability access improvements. that will be called after noon. we want to let people know in case you're here for those items. please call items 6 and item seven. >> item 6. ordinance amending chapter 16, article xv, of part 1 of the san francisco administrative code by amending section 16.703 regarding board approval of health service system plans and contribution rates. >> item 7. resolution establishing monthly contribution amount to the health service trust fund. supervisor chu: thank you. i believe we have catherine got from health services here. >> thank you, members of the committee. item seven is usually the item taken ahead, the approval of an annual compilation of the average employer contribution to health benefits of the 10

largest counties in the state of california. the health system by charter makes this calculation each year. as you can see from the chart, last year, the average was $472.80. this year, 5 and $43.90. the charter mandates a minimum of 503 $0.90 -- 51 and $43.90 be spent. based on that, that number is important in calculating the rate package. -- a 51 and $3.90$503.90 be spe. with your permission, i would like to have race present.

i will go ahead and present from the packet that you have before you. i apologize for that. juan of the major differences in our rate packages here is we had to comply with the patient protection affordability act of 2010. many of you have gotten phone calls from constituents who had depended to turn 26 and wanted their coverage increased immediately. we will be adding that this year by law. the federal law also requires there be no lifetime limits on existing health benefits. currently, our plan had a $2 million limit. those will be lifted. it also restricts annual limits.

it requires mandated preventative services in-network have no copays or cost sharing. so all those immunizations, screening prevention will be done at no cost. at the bottom of page two, you can see exactly the different plans predicted that it would cost the city. it was not that much because we were already covering dependents up to age 25. in terms of other changes, the city plan, our self-funded plan, the money we put in is what we spend on those actual services -- that is determined on what we spend over the previous three years. we had a significant increase in that, so there is an increase in the premiums. we also increased non-formulary

drug cost. we did this in an effort to urge our members, patients to use generic, which kaiser already requires but we want our members taking responsibility in asking for a generic alternatives. and the self-funded plan is administered by united healthcare. they increased their administration fees by 1.5% from the prior year. in terms of the non staff model hom's, we had not -- hmo costs we have not done an rfp in three years. we had responses from bluecross of california, health net of california. " they answered 122 item questionnaires -- they answered

122 item questionnaires and then they presented the findings to a panel. the panel had outside experts, including representatives of the retirees, as well as myself, on it. from that, finalists were selected. we were not just looking at rates. weaver looking at the benefit packages, pension benefits, how much it would help keep our employees and retirees of the. blueshield's initial proposal came in at a flat price from last year. we went through a second round of negotiations and blueshield further decrease that rate by 0.25%, which is one of the reasons why this here you have a total overall rate increase when you combine all of our vendors,

that decrease contributed to an overall rate increase for all of our costs. we did make plan design changes that added additional savings. we increased the hospital per admission copayment from $100 to $150. this is a plan where we are encouraging our members and retirees that if there is a surgical procedure that can be done on an out-patient basis, that drives them to have been done out-patient. i spoke earlier about increasing the non-formula drug co pay for city plan. we also insisted that blueshield include a residential treatment for alcohol and substance abuse, which is in the kaiser plan, so that a member will have equal benefits, regardless of which hmo they

choose. and we also include -- smoking cessation programs can be used repeatedly. smoking contributes to a significant cost of health care. as a result of these changes, premiums were further reduced. exhibits in the documents show you what the premiums are. last year we were still dealing with closing in the pacific air flex spending plan. that has now been gone for two years. that is not included in the beginning of this next plan year. in terms of our vision plan, vision services plan actually completed competitively. we asked hmo's how much it would cost. they came in with a rate of 6.3%. they guaranteed that rate

through the year 2013-2014. they also added some enhancements, $60-cap for contact lenses -- this would only apply if a member only goes to a preferred provider. they did these enhancements without adding extra costs. we had been requested by many members -- people wanted more than one pair of glasses every other year. we said, how can we do this without costing the city any money? they came up with a buyout plan. it is entirely funded by the employees and retirees, where they would pay an extra premium to get an extra pair of glasses. we are still discussing whether it is feasible to implement that, given the people soft and emerged changes. i believe there will be some

changes to accommodate those difficulties. the dental fees -- the delta dental fee increase is based on claims experience. we did request the claims package, at least for delta dental, the standard of care, which includes three cleanings for anyone who is pregnant. if you can teackeep your teeth n why you are pregnant, your child will tend to have less cavities. we also have an implant benefit to -- under the same circumstances of the bridge benefit -- the standard of care today is not updated. that added an annual $1.9

million about a to the overall benefit. -- value to the overall benefit. employees also have a choice of two dental hmo's which have less cost sharing. so, in summary, page 9 tells the story. the city plan aggregate increase is a $78.8 million increase, 13.5% over last year, of which, member contributions are 25%. there are $250 deductibles and they also pay for every visit if they are in that work, -- in- network, as well as out-network.

blueshield came in at 2 and 94.1. -- 294.1. that is a point increase. employee dental came in at 47.5. that was a 4.7% increase. that made our total overall increase 693.7. this is a remarkable number. that is only a 3.1% year over year increase. the average increase right now in california is over 8%. so we did very well. coming in at 3.1, we came in below the 10-county survey. when we do that, the employee pays less and the employer pays more. the charter mandate picks up a greater percentage of it. so the city increase will be

4.2% this year, a percentage i am very proud of. i am prepared to entertain questions supervisor chu: colo. supervisor chu: thank you. let's go to the budget analysts report. >> on page 6 of the report, we point out, based on the city's 2010 monthly existing premium rate, the total cost for fiscal years 2010, 2011 for the dental plan to health services was a little over $323 million. that include general fund cost of $185.2 million. that was appropriated in the 2010-2011 budget. the comptroller's office has just received information they need, so we do not yet have a cost for 2011-2012.

on page 8 of our report, we say, as is shown on table 3, the city and county will bear an increased portion of the cost for blue shield and kaiser well city employee contributions in these two hmos decreases for fiscal year 2010, 2011, employee contributions for kaiser will increase 85.2% to $1.28 per month per employee for a total monthly cost of $505.22. seaemployee contribution for blueshield will decrease 23.4%, to 85.6. contributions for the city health plan will actually increase for employees by 33.7%.

we state the employers -- meaning, the city and county of san francisco -- all three plans would increase 6.50% in contrast to the decreases of blueshield and kaiser plans for employees. as shown on tables 7 on page 9 of the report, the city will pay 9.57% for kaiser employees, 85.5 for blueshield employees. on page nine, we state that therefore we know based on the current system for determining the employers or the city's contribution, determined by the results of the 10-county survey, the city continues to bear an unusually large and growing proportion of the cost of the hmo care. given the increasing concern regarding health and pension benefit costs, the border supervisors may want to consider

submitting a charter amendment to the electorate to revise the way the employers of the city's costs are calculated to more equitably share the cost of health care between employees and their employer, the city. we recommend that you do approve this ordinance and resolution. supervisor chu: thank you. to the comptroller's office, i know the but analysts have indicated what the fiscal year's contribution of were in terms of general fund support for the health service system. do you have a number projected for next year based on their rights? -- the rates? >> we will now. we just broke those numbers down. we expect to have that within the next day or two. i'm afraid i do not have it right now for the committee. >> if i may, madam chairman, if i could just echo. we do not have the final

numbers, but taking a rough look at where we are, compared to what we had projected earlier about this year's cost increases, it will be a smaller increase than we had projected. there will be some cost growth for the city and general fund. but compared to the growth that we have been seeing for the past several years, this is a lower rate of growth than we have seen on average over the past five years. i think it is worth pointing out that the work of the health service's board, work of the staff at the health service system is greatly appreciated. i think that is going to mean we are going to end up with cost increase lower than projected, while preserving benefits. so we will work with controllers office to provide you the numbers as soon as we have them,