prescriptions which was about $3,000 worth of bills but she never heard back and then two months later we got a letter saying prescriptions were not covered for anymore. the one thing we used our money for was strick frontline our h.r. policy. there was another case too of money expiring to get a direct example of that. one of our food runners missed a lot of work due to to scabeys. she could not be, you know, handing customers food and having contact with them with the sores on her arms, hands and fingers. she missed so much work she had goten in trouble at work and -- for being unreliable because of her absences. she had to bring a note that showed she was getting it fixed or she was going to get fired. we had to pool money together

for her. it was like $700 for her and her son. so i get really emotional talking about this because she is actually my best friend and she had about $3,000 worth of money that expired that december but she didn't have the money to go pay for prescriptions and the creams and the injections and everything she needed to get that treated for her and we all pooled money together at work and we came up with almost $800 for her from our own money. i gave her my whole entire check. i pay outor pocket for grad school. that was my tuition payment. i gave her help to pay for this medical stuff. her money has expired and they would not pay for it and they were telling her she was going to lose her job if she didn't get the treatment for it. we gave mer part of our paychex. i gave her part of my paycheck.

i don't regret doing that. i would do it again a million times over. it is sad what we had to pay $8,000 when she had $3,000 expire at the end of december and we had this dishwasher who worked there whose foot was really swollen from some kind of medical condition. i didn't get too personal to ask him about. he went to the doctor. he brought his bill. he had zero funds left because they were expired. he didn't go back and get the treatment. he can't afford it. i have six kids and i make minimum wage here. i'm not going to go back and spend the money if i don't have any money in my account. he came to work , on one shoe he had a work shoe and the other shoe -- foot he had an old tennis shoe without the laces because that was the only shoe that would fit on his foot.

there are just too many cases of us either being denied stuff because it wasn't covered in our policy or funds that had directly expired. that is about it. now i think there have been a few more people reimbursed. we're about up to $1,000. thank you. >> thank you. commissioners and members of the public who are here and thank you for giving us your time. [applause] i want to thank ron for taking the time to share -- and rosanne for taking the time to share their experiences with us. i just want to make a final point and i will be happy to take any questions. you have heard from the employees and you know, i think that better than i certainly can explain what it means to the

worker and we're going to hear from a number of folks through public comment and i'll recognize including some folks who are against this legislation. good people who are here to speak against this. and i want to hear what they have to say. but this is really about whether or not, i mean, we're going to have a healthy san francisco work the way this is supposed to work. some of the folks, some of the institutions that are going speak against this legislation are some of the institutions that were against healthy san francisco. i understand their arguments and i respect their i.p.o. for my perspective. beyond the compelling testimony of the workers for me why i feel so passion eighth about this, i think this is about recognizing that the vast majority of businesses here in san francisco actually are doing right by the workers of san francisco and the

vast majority of businesses in san francisco you don't hear of the situations we heard of today where you have fellow employees having to hand over another co-worker paycheck so they can pay for a basic treatment. i think it is out of respect to those businesses if we are going to have healthy san francisco, then that debate has been had. the city decided to have it. but if we are going to have it, we need to make sure that businesses play by the same rules and i have, you know, gained so much respect in learning more about what businesses are doing because it is a struggle but it is a change that they have made. they have made that sacrifice because they recognize that is one of the things that i learned in a very personal way of hearing about the owner of the restaurant, she recognizes that as difficult as it is for her to make that payment that as a business owner there is a vested

interest you in treating your employees are dignity because those employees give everything of themselves to be the best employee they can be and by recognizing their humanity and the fact that they have basic needs, that they have a family then you are not only helping them but you're actually helping yourself because it is in the interest of small businesses, it is in the interest to treat every worker are respect. that is -- with respect. that's why we're here today. >> ok. so do we have the director of healthy san francisco here? >> good evening. the director with the san francisco department of public health. i just wanted to take this opportunity to give you a sense of how the city has approached the m.r.a., which is our medical reimbursement account option, how we administer it and how readminister it to ensure that

not only employers but also employees understand what is available to them and now they can use those accounts. when an employer decides to select the city option, they are able to submit information through an electronic web-based system. that information that employers submit, essentially the address of the employees, the birth date of the flow and whether or not that employee currently has health insurance will determine whether or not we give them access to a medical reimbursement klt account or to healthy san francisco. the employer in no way makes that decision and once those funds have been transferred through our system, the employer is not able to recapture any portion of the dollars that are submitted on behalf of the employee. we work very hard to ensure that our employers number one have a

good understanding of the options that are available to their employees. under the regulations of the employer spending requirement, all employers are required to provide their employee with notice that a deposit has been made on their behalf. once that notice has taken place, we go into action to make sure that the employees ares are notified. we provide them with a telephone call giving them information that these deposits have been made on their behalf. we follow up that telephone call, which is also made, and i should mention in three languages in either english, spanish or cantonese. we follow that up with written information to each of our employees giving them information on the m.r.a. that is available to this. we actually take on the charge of setting up the m.r.a. accounts for the employee.

the employee is not responsible for setting up the account. we do that. we give the employee instructions on how to set up a technique password for themselves so that at any point in time they are able to once they have incurred an expenditure, to go online, pull down the form, complete that form, mail it in with copies of their receipts to get reimbursement. we ensure that the level and the types of health care benefits that are available for reimbursement are quite broad from prescriptions that you have heard about, health care, vision, individuals can even use the reimbursements to pay for health care people areups if they so desired. we work to ensure that individuals on a regular basis are up to date on the dollars that have been deposited by their employers on their behalf.

so we provide to all employees quarterly noticed. those noticed are in three languages. english, spanish and/or chinese. it gives them a statements telling them how much is available on their account and we encourage on a regular basis for individuals to use those dollars, as much as possible because we recognize that out of pocket expenses are difficult for our population to the extent where they can get reimbursed sooner rather than later is within their best interest. we do have on the healthy san francisco website, a language that indicates that the accounts are closed after a 12-month period if there is no activity. i will tell the commission that we have never closed an account for 12 months of inactivity because we really want individuals to use the dollars that are available to them.

we also recognized at the same time that individuals sometimes need incentives to use those dollars so we want to make sure that individuals use them. we do have a policy where by which an account becomes inactive. inactivity is based on two simultaneous actions occurring. one there has been no deposit into an account for an employee by an employer for 18 months, meaning that they have received no deposits, and at the same time, the employee has not withdrawn any funds from their account for an 18-month period. if, for example, an employee has withdrawn funds or an employer has not deposited funds, that accounts stays open. and vice versa. if an employer has deposited funds but the employee has not withdrawn funds the account

stays open. it is only in those cases for an 18-month period that we will close an account. when we close an qu account, we notify the individual that account has been closed prior to closing that accounts. we notify the individual at 90 days, 60 days and 30 days and we call them twice to let them know their account is in danger of closing. if we have closed an account, we can reinstate that account. so the individual does not lose access to those dollars. if an account has been closed, an individual will call our dedicated employee call line and indicate that, you know, they had mistakenly forgotten to contact us before they received the closure notice. we can reinstate that account for that individual. we maintain records of all closed accounts for a seven-year

period. so if that individual should, for example, forget or misplace their information and come back three years later after an account has been closed, it can be immediately reinstated with the amount of money that was in the account at the time of closure. to date, we have closed 5,000 accounts. we have only closed accounts once in the over three-year history that we have hassd m.r.a. accounts under the healthy san francisco option plan and that was actually in march of this year. we do not close accounts frequently as i indicated. we just close accounts with a per sentence three years into the practice. the average number -- the range in terms of the number of months in terms of inactivity for those accounts were accounts that were anywhere from 19 months inactive

to 34 months inactive. almost from the time the account has been established, the individual has not elected to withdraw funds. but as i indicated, if that individual should come back to us at a later date, we can certainly reinstate those funds. those are the -- the technical framework. let me say the department takes seriously the notion that individuals need to have access to the funds that are available to them. the m.r.a. was specifically set up to ensure that employees who are not eligible for healthy san francisco still have an option to get access to care and to have that care paid for by their employer as opposed to them entirely bearing the cost. we have over 31,000 m.r.a. accounts. the vast majority of our

employees who have accounts use those accounts, use them regularly, use them for valid expenditures to really ensure that they keep themselves healthy so that they can continue to work for their employers. we believe that we have managed the m.r.a. accounts in a way that provides flexibility for the employees in addition to providing them with ongoing information on how to access those dollars in a timely manner. if you have any questions, i'll be happy to answer them. >> thank you very much. what i would really like to do, commissioner kasselman has requested to ask a question. i'm going to let her do it. for the record, in the future, i would like to ask the commissioners to allow the presentations to finish before we interrupt them. everybody has questions that they would like to ask. i think it is better that we let

them finish their presentation without interruption. i don't believe this is the most efficient way to do it but since i started it that way it is only fair to keep it that way. >> i can wait. >> i don't want to be labeled discriminating against my own commissioners here, especially not sexual discrimination, which is even worse. commissioner kasselman has withdrawn her request to speak. we will get back to the schedule here. mr. scott -- if he is here? welcome. >> i didn't know i was spodse to be -- is this just -- supposed

to be -- is this normal? >> i'm sorry. there must have been a miscommunication between chris and i. i think we'll have you speak to -- and then as an insurance -- from the insurance industry at all in terms of how some of these accounts are set up, the health reimbursement accounts. >> well, the health reimbursement, the h.r.a.'s are the subject. that is very, very clear. what the h.r.a.'s say over what the laws say is that the employers sets up the terms of the h.r.a. it is my belief that the city in effect is setting the terms of what they can do in their h.r. sambings a violation and i have talked to a couple of

attorneys. that is -- basically as i said an h.r. sambings the subject and it is just determined -- the makeup of it is determined by the employer. that's what way it is described to me. as far as the second question was what are employers doing in setting these up? i'm sure that there are employers that are trying to beat the system and have set up very restrictive h.r.a.'s and probably -- well, not probably -- have not given proper notice. i'm sure that is the case. i have said i have worked with employers that have set up h.r.a.'s. we encourage them to let their employees know, we encourage

them not to make overly restrictive programs. try to make them work within the confines of the city retirement. having said that, though, it is -- i'm not saying that an employer shouldn't set up the best plans so they can -- but there is a an economic reality out there and there are situations where businesses are complying with the law but their profit margins are so low that without having some of that money come back, and it is not with the intent of eliminating it. they recognize a lot of their employees may not use it, especially in the immortal age, people don't get sick. they recognize they may not use the benefits there but they are facing the situation -- you're looking at somewhere between

10%-15% increased cost on labor for labor intensive businesses, that is very significant. i think it is $1.37 between 20-99 employees and 100 employees you're looking at a $2.07. that is a significant increase cost in labor and for some businesses, not so much applicable to restaurants, but where you have retail businesses or businesses that are -- not only are they -- not only is this a 10% cost on labor, but they are selling their product and they are at a 9% to 10% disadvantage with amazon, overstock because they have got to collect the sales tax. so you can have a business looking at 20% higher cost

because they are competing against the out of state internets. they have got to pay an additional 10% to 15% onlabor. it can be very difficult. now one of the things that the business community has talked about and wund -- one of the things we would like to get is information from businesses that are really -- have a situation where their profit margins are so low that they would actually lose money or make very, very little money if they had to pay out the full 100%. that having been said, there also are businesses, and you're going to hear from some tonight, that, again, have set up the h.r.a. by the rules, have notified people but this is access to capital is a real problem for small businesses. it is not a secret that it is hard to get loans from banks and giving access to money. and they are using in some

cases, they are using this money -- again, they have set up the h.r.a. they are using this money to hire people. and to hear people talk about this tonight, i know at least one employer to talk about, this is the only way he can expand his business and create jobs. the other aspect is, you know, if a business is -- is at a low margin area, they are going to have to take steps to try to address these additional costs. they are going to have to look -- i know one business that says it is a well-known restaurant that says they will move all of their back office space out of san francisco. they are going to look formecha- mechanization as ways to cut down on the labor. it will street journal report

was comparing the increased mechanization to the increased use of labor over the past two years. it was significantly higher, the cost of labor, then mechanization. you are going to see more independent contractors. there are employers that are abusing this, but most of the employers are trying to play by the rules and operating on a very thin margin. they are looking for ways to grow and expand their business. president o'brien: thank you. we have one more speaker before we go to the general public comment. mr. black? >> commissioners, rob black.

thank you for the opportunity to speak today. you have heard from the proponents of this ordinance that businesses are not complying with the spirit of the law by allowing for unused moneys to return to the employer, that because only 20% of health reimbursement account expenditures are used that the employer must be violating the intent of the law, that employers are restricting benefit packages with the intent of making them difficult to use, the example primarily around reimbursement of insurance premiums. i want to talk about those three issues. we believe the intent of the law was not to enforce employers to spend money on a. the intent was to reduce the number of people who received primary care from a emergency rooms and to provide low income

people with health access. we believe that was the intent of help the san francisco. the expenditure requirement was to put the burden on employers to help make that process happened. we believe reimbursement accounts are at the proper way to allow that to happen. regarding the 20% to 80% split the supervisor raised, it is important to put this in a broader context, a national context. between the ages of 19 and 34, that age group accounts for 20% of health-care expenditures in the u.s.. for service employers, people working in retail and restaurants and parking garages, that is your age group. we are heading that number. to say there is not 100% take up this not reflect how people access health care nationally in the united states.

another example of that -- if you take 50% of americans, the lower and that access health care, they only make up 3% of all health-care expenditures. you have a small group of people that make up the primary large expenditure area. but the vast majority are not using their health care or spending money on health care. to say that 20% is somehow an anomaly is not reflective of how we as americans access health care. regarding restricting reimbursement expenses to prohibit insurance premiums, it is important to understand how a group insurance plans work. providers of these plants require 75% sun purpose of -- participation rate of eligible employees. if you as employer of providing a group plan, 75% of qualified

employees have to participate. if you give some of them an hra that allows them to go out of your plan to pay for insurance premiums, that counts against her 75% threshold, which undermines your group plan. i am certainly not 25. you can tell by looking at me. if i was a 25-year-old employee, my group plan is more expensive than if i go out and buy it myself, because my group plan and my employer has has to cover the older workers, the people who are sick. that premium is higher. it is better for me to go by my own insurance plan, because it is cheaper. that means my employer might not hit the 75% threshold. they lose their group insurance

threshold and all those employees lose that insurance. that is a real aspect of whenever your employer provides group insurance. they are trying to incentivize people to participate in that program. otherwise it undermines their ability to have the group insurance plan. it is an important distinction that did not get brought out in the reports, why employers have to structure benefits that way. i also want to clarify issues around some of the numbers expressed today. there was the expenditure rate that was discussed. 87% of all health care expenditures, or 90% -- and they shifted a bit -- are for insurance. it gives the impression that very few businesses are using hra's.

860 employers, 29% of all employers regulated under help the san francisco -- healthy san francisco, use the reimbursement plan. the annual compliance costs is $50 million. that is $50 million on top of 860 employers, which runs about $58,000 additional per employer annually. 65% of those employers we are talking about have less than 100 employees. 65% of the people using reimbursement accounts in some way to comply are small businesses. it is hard to argue this is a small-business friendly piece of legislation. i also want to ta