and i certainly support the idea of needing to close this loophole. i think it has been very troubling the there have been employers or not paying what others have been, that there are some employers are a disincentive to do the right thing, to limit usage and otherwise not provide notice, and the fact that we have only had 20% of usage, i think we would all agree that that is not acceptable. that being said, as i think folks know, i do hope that we can figure out how to do this in a way of accomplishing the main goals of supervisor campos' legislation but do it in a way that does not dramatically increase costs for businesses that right now, today, are struggling to stay afloat. and that the folks know, last week i introduced a potential alternative to what we are considering today that as a number of things. first of all, the alternative that i introduced would eliminate the use it or lose it nature of current hra's.

and it would take care of the so-called january problem where an employer tries to get reimbursed for health care needs in its january only to find that money has expired at the end of december. we can achieve this goal by requiring that at least a year's worth of more of health care dollars must always be available to an employee. the alternate that i have proposed also strengthens a notification requirements by mandating strict requirements of quarterly notifications and strict requirements around the prominent posting of information for employees. my all time it -- might alternate also addresses what supervisor campos raised, that the "wall street journal" reference to this issue of false consumer advertising. my alternate states that when an employer says that they're charging a healthy san francisco surcharge, they need to let the city know that they're spending that money on health care. if they are not, they could be facing significant consumer

actions. the ordinance makes a number of other changes, but i also want to mention one final part of my alternate. which is, are there any legal issues with what is being proposed? and the language does get challenged in a court, and the court fines for those changes, which i do not think what happened, and i have included supervisor campos' language in the alternate that i have. so that his language would then prevail if anything would happen in court. all this being said, i do understand that there many issues at hand. i look forward to hearing the testimony. i also want to let folks know that what i proposed as an alternate is simply a starting point for a discussion, and i look forward to other potential ideas of things that we could do. i am not necessarily wedded to the deadlines and the dates and specifics. but my goal is to figure out a way for us to ensure that all employees of the health care that they deserve, but again, to do this with as minimal of an

impact on companies that we know, we have heard from our city economists, will be laying off hundreds of workers if the current version of legislation passes. all this being said, i certainly respect and appreciate all the work that has been done. i hope we are able to move this forward in a good way. i do look forward in the coming weeks to the alternate i have introduced and having a fuller discussion at this committee, and i look forward to hearing from everyone today. thank you. supervisor campos: thank you, president chiu. supervisor farrell. supervisor farrell: thank you. i will save my comments towards the end. but i would like to a knowledge that i believe someone is here from our mayor's office, jason elliott, and want to give you the opportunity to speak. >> thank you. i am from the mayor's office. before i begin, i would like to know if there specific questions. ok, first of all, i think the most important thing to state is

the mayor's appreciation to supervisor campos for highlighting this issue, forcing the city to acknowledge it and deal with it in a very real way. the mayor believes deeply that this is a loophole, and it does need to be closed. the credit for that is due to supervisor campos and his staff and the coalition they are working with to solve this issue. that is the most important thing to stress, that there is a loophole that needs to be closed. the mayor has remained focused on how we can close this loophole by providing brought universal health access and the health care ordinance to provide people to have low-cost preventive primary health care in quality settings, regardless of pre-existing conditions. that should remain our role as a city. the loophole is very real and does very much need to be closed, but it should be done in a way that the ultimate goal is nothing else other than

providing health access broadly and universally. it goes without saying that we are identical economic times and many small businesses are operating on a razor's edge. the economy does not release any business from its obligation with the health care security organs, the spirit, and the letter of that law. we have been casting about, speaking to folks on all sides, on all 20 said that this issue, big business, a little business, medium-sized businesses, workers, labor, supervisors, colleagues, and there seems to be a consensus that there is a very real problem that needs to be solved. this is not something we can just sort of approach, think about, and move on. this needs to be felt in a way that respects the goal of providing help access to low- income wage workers. how do we do that? we were presented a solution, which i would like to offer to

this committee as a potential solution. not the be all and end all, not the right way, but just another idea for you to consider. there has been quite a bit of talk on the the sort of two mechanisms. one mechanism or the money would accrue in the hra and the reimbursement account during the term of employment. there is another mechanism proposed by president shoe that would effectively create a rowling system of deposits. there was an idea presented that is a hybrid of those two. if i may, this is simply an idea, i do not have legislation. this is something that we were sort of given very recently. and we have been considering it as a policy look -- policy solution. supervisor campos: if i may, i do not know, quite frankly, as i have indicated to you in the mayor's office, our door has been opened. today's the first time i hear of

any proposal coming out of the mayor's office. we're certainly happy to entertain any proposal, but the point of the hearing today is not to talk about the president's proposal or any other proposal, but actually to talk about the issue before us. quite frankly, i think that in terms of making good public policy, when we talk about a proposal, the devil is in the details. our proposals are provided. once the mayor has his proposal in writing it is clearly delineated so we have all the relevant information, we would be more than happy to entertain that. i also worry about the extent to which we are deviating from the notice. i do not know if the attorney has any guidance on that. >> deputy city attorney, cheryl adams. i think it is reasonable to discuss alternatives within the scope of said the proposal. supervisor campos: ok, go ahead. >> i appreciate your comments. you're right, the devil is in the details. we're working hard to put

something on paper. supervisor farrell asked me to speak about this broadly. the mayor is of mind that in order to provide help taxes, which is the ultimate goal, you could use and the like this, make deposits into hra's . vocable -- make them. vocable. during the 18 months, an eerie vocable expense. the office of labor enforcement would conduct a series of interviews with employees and a service to its employees to understand what they think their benefits are, why they are or are not accepting the benefits. similarly, the labor enforcement would change its survey that it sent to all employers, to ask a number of questions. a few use an hra, do you allow for that to be drawn down to pay for help the san francisco are to pay for private insurance?

then a series of other questions we would collect that data to really understand the scope of the problem. if it turns out that health access is not being provided, because these hra's are being restricted so that the funds are not used to buy insurance, then we will have that information. we will have a conclusion based on real data from the real world. we hear compelling examples from workers about how they're not able to access the benefits. we should bear out those examples and see how prevalent in widespread they are. if it turns out after the time of examination and study that this problem is very widespread, as you contend that is, the mayor would be supportive of a policy that does provide broader halifax's, something along the lines of permanent expenses. his only comfortable making a policy like that in opposing it on the business community of the data is there to support it or refuted. getting the data from employers and employees is very important.

supervisor campos: i certainly look forward to a more in-depth proposal and the mayor. but we need more data to understand what is going on. in fact, the data is here. the data has been collected. it is not that the city has been trying to figure out, on its own, with the numbers are, but it is data that came directly from the restaurant's come directly from the businesses that are covered. one thing is clear, we have two examples. we have the health reimbursement account example, which is the liberal we're trying to close. then we have the example of what is happening with health the san francisco, in terms of the same specific accounts that apply to the same population. in terms of mra's. the same account, the same population. you see the difference in terms of usage. in help the san francisco, the usages 55%. with respect to the reimbursement accounts, the median is 50%.

you know, just on the data we have available that when you have none of the restrictions that the business community is opposing on these accounts, the people are more than three times more likely to use the account. i do not understand why there is a need to wait when the evidence is clear that the problem is not that workers do not need these accounts, but that, simply, they do not have access to the accounts. and i am not prepared to, you know, pay for yet another study, and many are paid for here in city hall, and we know it usually happens to those studies. i am not prepared to pay tax their money on something when we already have the data. you can get it directly from lsc. if you have not gotten it, my office would be happy to give it to you. but the data is there. >> thank you. we have looked very carefully at the data provided by the department of public health on

the health care security ordinance more broadly. the question still remains on the mayor's mind, focusing back on health care access, is of those hra's, are they restricted so that employees cannot use that money to buy into private insurance or into healthy san francisco? that data, as far as i know, does not exist. and that is precisely the data we would like to collect. a corollary to that, the business community, we have been in close contact with over the past weeks in debating this policy, the business community itself has stated that they are willing to encourage, within their own community, a change to how these hra's are set up, to encourage the ability to draw down the funds to pay for health insurance and healthy san francisco. supervisor campos: the problem with that, and i trust the vast majority of members of the

committee will do the right thing, a close to 90% are doing the right thing, but we also know that would lead to their own devices, there are members of the community that do not do that. and we know that of the 13% of businesses that are impacted by the ordinance, 80% of that money, 80 cents on the dollar is not going to health care and is pocketed by those businesses. i take exception with the idea that somehow it is enough to simply let the industry regulate itself. we created this law. we drafted the law. that law led to this loophole. doesn't the mayor think we have an obligation to fix that? >> the mayor certainly believes it is an obligation to provide broad health care access. is the most sensible way to do that is to make these expenses irrevocable while we find out if these hra's have a drawdown. and if we find out that they

actually do, maybe not likely, but it is possible, the congress is also true. we might find out that most businesses are not allowing for the hra money to be drawn down to buy health access. if that is the case, the mayor would be supportive at that point of moving forward ricky solution we are debating today. supervisor campos: again, i just heard about your proposal today. i look forward to hearing about is the civics. but if you are saying that only six quarters can be accumulated, you're actually -- >> that is not actually had. for the purpose of collecting the data from both the employer side and the employee side, we just say time out for the next 18 months. nobody take money out for the next 18 months. supervisor campos: so to the extent that only a portion of that is guaranteed to actually be going to the employee, you actually have a situation where the mayor seems to be saying that he is ok with consumers being asked to pay to cover

health care without getting a complete guarantee that all of the money they paid for, in fact, will the health care? it than they are prepared to say that? because that is a significant policy statement. >> it is a bit of a separate issue. what businesses and restaurants predominately put on the bottom line of their jackets and the healthy san francisco fee. the proposal i brought to you earlier this afternoon is one that deals with once that money is deposited in hra's, a candid or cannot be accessed by low- income people for primary health care? what we decided a long time ago with the primary preventative care is the most humane thing to do in the most cost-effective thing to do. in your example of the pregnant women spending $16,000 to deliver her baby, first of all, if she is low-income, she receives a discounted hospital bill. but taking for the moment that she is a middle income or upper-

income person, we do not want her to pay $16,000. we do not want her to pay $8,000. we want her to be covered. i do not know the insurance rules around that. but my point is we want people to have insurance, so that when they do have that element or the problem, they're not paying rack rates for health care services, because prescription pills alone will drain four thousand dollars or $8,000 or $12,000 in an instant. >> bottom line, the proposal you described is not guaranteed to any consumer in san francisco that when they're being asked to pay for health care that, in fact, every penny of that amount will go to health care. you say that is a different issue. but quite frankly, i the most consumers would take exception to that. it is not a different issue. it is connected to this. this idea that somehow this is $50 million coming out of a business's pockets, the money -- a lot of that money is coming from the consumers, who are the ones that are actually paying

for that. and the idea that you're not guaranteeing that people's money go to that, which it is represented to go to, i do not understand how a major could say that. >> i think i have said what the mayor's proposal at this point is. as you pointed out, i am not here with legislation to be considered. that is not the point. my point is this is moving on an accelerated schedule, and the mayor's goal of sending me here to speak to you is to just let you know we're deeply engaged in the situation and looking for policy-based solution that will provide healthcare access. that is my purpose of being here today to represent the mayor. supervisor campos: president chiu. president chiu: thank you. i appreciate you being here. we have wondered for many months exactly where the administration is on this.

i appreciate that you have come with some more specifics on exactly where you're going. >> here i am. >> here you are. a couple of quick questions. i actually increase it the 18 month timeframe you're talking about. i am absolutely open to a timeframe that this summer between one year and be in deficit timespan we're talking about, 18 months could be reasonable. we should talk about that. when you talk about it being irrevocable, your idea is that for the next 18 months, money goes into an account, and that money is the employees for the rest of the time? >> yes. president chiu: that sounds very reasonable. >> the reason for that is to sort of be able to have clean data on how it is being utilized. if an employee prefers taking that money back, we will not really been able to gauge of the employees are using those funds. president chiu: with the mayor's office at be willing to support

olsc staffing to make sure we get the data we need? >> yes. president chiu: when will we have details? >> as soon as i leave here, i will go back to my desk and work on it. this is something we're working on now. president chiu: ok, because we have been debating this for many months. let me ask a different question. my sense s someone who has been trying to work with all the various stakeholders for months now is that the good coalition that has put forth supervisor campos' legislation that currently has six co-sponsors, there would like to move to a vote. my guess, just a guess, is that while i appreciate what you're offering, i am not sure that that is something that the coalition would want to see as an amendment. it turned out that the version that supervisor campos has been to a vote and put in front of mayor lee's desk, what is your sense that he would sign it or

veto it? >> appreciate that. my goal here is not to derail any kind of timeline that supervisor campos and the coalition have but this legislation on. we have stayed focused, and it has been our primary priority to find a solution that is based in policy that provides health access for low-income and all workers. the mayor is in favor of something that looks much more like the proposal that i just laid out to you than the proposal you are currently considering today. president chiu: that is not exactly an answer to my question. supervisor campos: what is the answer? >> the mayor is not going to move forward on this proposal, and we would like to see a coalition and the health department get involved in this to provide perspectives on health outcomes and how we can provide access and come to resolution. president chiu: in other words, he would be to the current legislation? >> here is the thing, he has not said those words to me.

i do not want to represent that here and the committee. but our goal and our target, and my working orders have been to find a solution. the staff at the mayor's office has been meeting with a number of small business representatives and with a broader array of people to create a solution that looks something like what we were presented yesterday and what we presented today. president chiu: i appreciate that. from my perspective, i have been working for months to try to find a solution here. i think it would be helpful before tuesday for us to understand what the mayor is on that. it would give us all some clarity and guidance. of course, we have been talking regularly on this. we look for reducing this language as soon as possible. >> thank you, supervisor. supervisor campos: i do want to have a better sense of how well thought out your proposal is. if it is 18 months, right, that you're talking about, that is about $6,000, right?

>> depending on how many hours the person works. supervisor campos: it would be a lot less. how much research have you done on this? to get to the 18 months that you're talking about? >> as president to mention, we have been discussing this and debating the issues for months now. supervisor campos: for months. so are you aware that if the 18- month time span when to and the fact that the following procedures would not be covered. mri's will not be covered because they're too expensive. chest pain, the average cost of that, $15,000, would not be covered because it is too expensive. we talked about the cost of normal delivery, $16,000. if you have ac section, $22,000, again, would not be covered. any treatment of pneumonia, $23,000 would not be covered by what the mayors is saying. an appendectomy without the complications, if with complications from a more

expensive, 35 of the dollars, would not be covered. kidney stones, any kind of urinary tract infection, $40,000. again, $6,000 would not be covered. so is the mayor aware that all these procedures that are procedures that people throughout san francisco need would not be covered by what you're proposing? >> the policy goal of the mayor in the proposal i just laid out is to not look at those absurdly high costs, and we cannot as a city solve the issue is spiraling out of control medical costs in this country. it is at of control. but his proposals not aiming to san appendectomy should not be $30,000. but it says that that low-wage workers or that person has a need for medical procedure, that person is covered by either healthy san francisco or by private insurance to be able to pay for that procedure in the wake where they're only paying out of pocket for a co pay.

and a reminder, depending on the patients in time, the procedure may not cost the full $36,000. >> did you look to the issue of health and cost before you put the proposal forward? >> broadly speaking? supervisor campos: diddley the procedures? >> this is actually motivated by the out of control costs of health care. the idea is not to let someone develop the diabetes and heart condition and to actually do preventative care. the best way to do primary and preventive care is to have someone enrolled with the primary care physician. the way to do that is they can use that hra money. supervisor campos: but you are aware that these procedures will not be covered by the $6,000 you're talking about? >> i personally do not the cost of an appendectomy. supervisor campos: i would say that before you put a proposal forward, make sure that you have a better understanding of how it impacts the daily lives of people. make sure you put it in the

context of how expensive it is to get these basic procedures. because unless you do that, you know, you're talking policy without really having a deep understanding of how it applies to real people. and that is what we're trying to do. so i would urge you, please go back, do your homework, make sure that you look at cost. because that is ultimately what is going to matter to that worker, whether or not they can go and have their kid's teeth fixed, whether or not there kid gets pneumonia, that they can cover that. that is what it comes down to. it is not weather looks good on paper. it is understanding how it impacts real life. irish the mayor to go back to the drawing board a look at those costs. do not justesen and without understanding the context in which it happens. anything else, colleagues? let's not take it to public comment. there are a few names. you each have three minutes.

john, shasaun, keyong, mike casey, steve, tim paulson, gus feldman. please come forward. >> thank you, supervisor campos. i am here today to speak in favor of your legislation, as a worker who has been effected by this loophole. specifically, as someone who really had to fight to get my health care money. i work early this year, for the first six months of the year, for a very well-known, established, made from scratch cafe in bakery in the city of san francisco. i needed a lot of dental work done and was in the position, like so many minimum-wage workers, of not having health care, or so i thought. i found out through a friend about the health care ordinance. i asked my manager about it, and they told me they did not know

what i was talking about. so i asked my manager's manager, and they also told me they did not know what i was talking about. so i asked the lady who was in charge of all of these bakeries in san francisco and she told me, no, that does not apply to you. so i ended up going back and forth with the city enforcement agent, and i did end up filing a complaint. and back to my people at work, and is getting two different messages. the city had all the reports on file that the company was in full compliance, and my bosses said, no, we do not know what you're talking about, you do not get health care benefits. eventually, i marched up to the health care -- to the human resources office, and his story was different. of course i am covered, and this money is available for all the employees. here are the forms. all the paperwork is in order. of is getting two stories. long story short, i ended up being able to get some medical expenses reimbursed, but i

needed to fight for it. even after i got these expenses approved from the third party hra administrator, they still would not give me the check. i still had to go to the city's enforcement agent, and eventually i had to contact the owner of the company. this is a $50 million a year company. and i had to contact the owner directly to say, hey, you denied this program existed. once i got you to admit it existed in your improved my clients, it is two months and still not have a check. eventually, i did get it. but i am the only one there who demanded answers from the vice- president of human-resources. that is to say i quit that job. i work for another well-known established catering big three in the city of san francisco now, and they tell me i do not have health care benefits. frankly, i am worried standing here today speaking. i will not said the name of my employer, and i am and hoping they're not watching the closed circuit tv here.

but again, or i am now, i am still kolbe's benefits do not exist. and none of my co-workers know, and they're scared to come forward. that is why it is so important to close this loophole, because people will eventually find out they have the benefit, but it might be too late. some of the employers do not want their employees to know, and it just is not fair to the companies who are paying this. [bell chimes] supervisor campos: thank you. [applause] and i have a few more names. you can please come forward. president chiu: i just want to say one thing. i want to thank the courage of that worker who just spoke. [applause] and i want to say, i think both my alternative and supervisor campos' legislation would deal with the situation. if there is an employer who thinks of retaliating against an employee, that employer better be ar