subsidize this all this to keep this boat floating correctly. maybe the overboard answer is, i don't want to do it, but i will do it if asked to. >> supervisor mar? >> i really appreciate mr. sacs presentation and other commissioners from the health service board and their effort to really get the best deal for the city. my understanding is that kaiser rep is here with us and what's not sitting right with me, i'm looking at the documents from the may meeting which give an occasion again that kaiser is making tremendous profits. there is a chart showing kaiser's pricing trends from the last 5 years that shows the profit margin growing and while the health service board showing that we should be paying much less given the reduction in services

by kaiser but the profit margin growing through the roof. that does not sit right with me. it does feel like we are being gouged by kaiser. i accept that you are saying that you are doing the best, but it doesn't sit right with me given the profits rising by kaiser for the services how our city is not getting a good deal. >> would you like for me to address that or kaiser? >> i would like to know who is here from kaiser? >> would you mind addressing the utilization rates on how it impacts us or not? >> the utilization if it improves and the cost to that utilization, since you are fully in insured, the cost goes down and the base creates the

next year's rates should drive a lower rate increase. the difference is realtime, utilization savings, under a flex plan and if it comes below that, you get the cash in your trust fund now. the one is getting a better premium in the future, the other one takes risk and gets all the realized savings in the true cost in your trust fund cash balances today. that's why they take a risk. they don't pay a premium. >> is there anyone from kaiser who wants to address supervisor mar's questions? >> hi, good afternoon. i'm cindy from kaiser and andrew is our v p of actuary and i'm happy to answer any questions.

>> i would start with supervisors thank you for the chance to speak this morning. i want to address supervisor mar's question. the time period from that report was from 2012. we take a look at the demographics today and we look at historic experiences and come up with a premium for let's say 2010. that would have been based on 2008 experience and that's how we come up with the 2010 premiums. during those years, we had what is called similarly size subscriber groups requirement from the federal government which says we have to rate the two top accounts using our standard methodology or whatever discount we give the top two

accounts. you have to give discounts to the federal government. it becomes a very prohibitive thing. the one key variable here is when we do a rating, the demographics we have is what we know today. what generated the gains if you will, i'm going to use that term, is really in during those years we gained so much enrollment that we didn't know. we had families coming in. that was not accounted for in our rating. the arrangement, it's lagging by 2 years. as we got good experience, we took it into account into a future renewal. for 2014, the migration has stopped. it's trickling now. there is a little bit more balance between the two and we really don't see that migration anymore. if you were to ask me what do i think

of 2014. do i think the rates are fair? i think the rates are fair because the demographics i have today are the demographics we are going to have in 2014. the dynamics of the huge migration is no longer there. i'm sorry if i confused anybody. >> i'm still not clear on the justification for the large increase and i know the health service board heard information about what factually the integrated care managed system is and why those cost were going up significantly. i still don't understand that and i know there was a lot of discussion at the health service board level. if you can take a stab at explaining why there is such an astronomical increase in different cost set are not understandable to me or many people from the public?

>> i will take a stab at an easy description of that. what you see in our buildup is composed of many different things. the easily recognizable pieces are traditional billable fee for service. you go to the doctor, they bill for that particular provider. kaiser is an integrated delivery system. we were not very good at billing, but very good at providing care. the administrative services dealing with billing is something that we had to put in place. the providers for the care of medicine, they don't care whether they can bill for it. these are items that are not traditionally billable and over time as we've incorporated more technologies, toes integrated care type management services

have grown. we introduced the fee in 2009. we took another look at how those types of services have gone up, things like e-mail. you don't need to go see your doctor to see your lab results anymore. you can get it online. those types of services we wanted to rebalance the way our fees look to the way we actually deliver care. >> i know that one of the charts from the health service board may meeting showed significant profit margin and growing for kaiser an is the restructuring, the justification for the increases are the restructuring of the fee schedule and other medical services, but could you just talk about that profit margin and how, again it's justified for a 5 percent increase while blue shield and the city's plan are going down. >> i can't speak on our

competitors. i can only speak on the way we do rating. we look at your historical experience and look at the membership we have today and we have trend factors that apply consistently with applying business. that's how we look at this. the city, given the favor able migration we have had in prior years given that accounts for our increases. the other thing is that blue shield was started from here in terms of utilization. whereas integrated type of managed system, we are pretty tight. we start off from a place that we really didn't have that much base to lose if you will. >> i know miss dodd and sacs have been negotiate wg you for

years with a 65 years or so with kaiser. if we were still hoping to renegotiate this, would you drop kaiser members from health service? >> i want to make sure i understood the question. would we drop the members? if we at the end of the year without an agreed upon contract, we would have to have a discussion for members that are continued to be covered at kaiser. our objective isn't to disrupt their care. we have to figure out a way to be reimbursed for the services that are provided. >> thank you. >> thanks. any questions ? why

don't we move to the budget report before we go to public comment. >> mr. chairman, members of the committee on page 43, this refers to the city's cost. not sf unified school district, community college district. the total 2014 cost of $595 million the city's total cost approximately 87.8 percent. over all the cost for the health vision and dental plans and long-term disability and life insurance is 1.1 percent more than the cost for these

plans of 2013. we recommend that you a pprove the proposed legislation. >> thank you. >> why don't we open up to public comment. i have speaker cards here. once you hear your names called. we have a number to get through.

>> thank you. my name is tom moore. it acts for improved acquisition for organized labor. on the one point because you are going to hear some very eloquent statements from other people. i would like to point out something that came to me watching this process. you watched a contractor come in and talk about a complexed project involving a lot of people, a lot of hard decisions and difficult work and a great deal of community relations and they are carrying it out. i cannot imagine the situation where someone is telling you we are going to do it and we are not going to tell you how. we allow that only for our health plan. why? i ask you to draw

the line here and tell them that you will not go forward until they open up the window and show us what they are doing. it is not just a matter of their making decisions. it's a matter of how much money they are saving by their policies is a question of our access to the fact about what they are doing with us. that's really the basic issue here. >> quick question, because i appreciate your comments and i have been working on the transparency stuff. your comments are more on transparency and i agree with it. we are working on timing crunch. i just want to be clear that you are willing to kick this back, this doesn't happen over night. we are going to put 40,000 kaiser members at risk. is that something that you are

willing to do? i'm just very clear on a lot of this hey, reject kaiser. i want to be very clear about that? >> one question was a question that was not addressed today even by mr. rap port, and that is is it absolutely out of a question for a simple continuations of current policies to occur over a period of months. no changes except in the change of dates to get this worked out. i don't hear that is the case. if that is the case, that you cannot simply extend the existing payment agreements to work this out. if kaiser is ready to work it out we can propose the agreements we have. if that's not possible, we can change it. that being said. there have

been problems historically with the delivery systems where the provider was a famous strike in canada where physicians have gone on strike and where they were refused. the outcome of that has not been to see people having to suddenly get a new doctor. the outcome of that is say yes there was continuing care, the responsibilities, the ethics of the profession require attention to public needs and personal needs. i think that it would be, i think it's unthinkable that kaiser would shut it's doors. don't see any patients. >> i appreciate that, but what you are saying is your core question is whether we can coast on the continued rates. if we can't do that, which i will ask once we are done with public comment, what's your

position? ? >> my position is not shared by anybody. my position is do it. because if you do not draw the line here, where is it going to take place, 6 months, i year from now. i would say do it. we can explain to the public in this community to help them understand. >> if those kaiser members to potentially not having those benefits. i'm a kaiser patient, and i have no problems having those doors shut. >> i have 2 minutes up here but i don't think i will need it and it's just 1 word. it's extortion. that's what it comes dwoun -- down to. it's

extortion. give us $15,000,000 million. that's kaiser's choice. if we don't do this, there is going to be 40,000 people without health care. that's the decision kaiser made. that's going to be how they act as they want. as someone from formally a non-profit worker, to be in a situation where in the last month 1/2 non-profit workers have been here providing data, charts, spreadsheets and evidence, to get a cost-of-living adjustment and that got knocked down from 4 percent to 1.5 percent. we have done everything kaiser won't do. and we are supposed to be

thankful and lucky that we got 1.5 percent without any explanation as to why kaiser is going to hold a gun to our head and say give us $15 million or no health care. i consider that to be an act of violence. >> my name is aheadey johnson. we work in psychiatric emergency services. we help people with case management. as you know workers got 1.5 percent raise. we appreciate it but it's not enough. we find it

insulting that kaiser is gouging this money. it's a cut for us and cost more to work and live and buy food in this city. so we are demanding that you block the kaiser rate increase and give at least the 4.5 increase to the workers to do valuable work in the city. >> hello. thank you for looking into this situation. just an example of some of the work we do and why it's important to get funded. one of our clients, he's in our program for a year with bipolar disorder and working at sf general. before he went there, he would not speak. because he started working there, they offer services to people with mental health issues, he started learning how to initiate

conversations to become more functioning person. but recently sf general had to cut that program and he had to quit, they had to quit paying him and he wakes up at 5:30 a.m. and comes back at 3:00 p.m.. that's something we can't refer our clients to anymore. along with ramps that we used to always refer to people to vocational services. it's very important that we continue these services because we do want to keep our clients and the city moving forward in mental health. we know what happens when we cut mental health, they will be out on the streets. that's what we are asking for, thank you. >> thank you, next speaker. i apologize, i see members here from the health board as well.

so i want to call you up next and sharon johnson as well in terms of next speakers. >> good afternoon, i'm a resident of san francisco as well as aclu vice-president of organizing. i'm here to support my brothers and sisters from my unions and co-workers as well as members of the public who want to see some accountability and transparentcy. i have referred folks to primary care and medical and mental health services over the years and understand the complexities of the system and subsidies and you know how things get paid

and coverage. i think this is a very important issue, but i also think that we must definitely look into how we as a city practice giving out the money. what i'm sensing here and i'm fully convinced by folks earlier that we are giving out a blank check here. we are giving out too much money and no real scrutiny or analysis of why this money is coming out. at the same time we have a lot of services in the community that are just as valuable that this payment goes out to kaiser. i would like to see in money go back and get renegotiated to the health services board so we as a city do the right thing and make the best decisions. i feel like it's too much money. i'm not convinced that kaiser should be getting this money. this money should go to better services in the community to services that non-profits do for the city workers and county workers and

some that are here today and we need to stop the practice of giving money to large companies. if they are concerned about putting people out of health care services, they ought to know better. >> my name is david. acting field director aclu. at the last two meetings, kaiser was asked to provide the data to justify just like you are trying to do today. kaiser absolutely refused. they said almost every answer was that's proprietary. in the meantime kaiser has made $87 million, they billed this extra. they

have made a profit for $2 billion. kaiser is doing perfectly well financially. with no data, we don't understand what you are being asked to approve, why kaiser should be given the check without providing the data. they fail to provide the data to hhf and hhf expressed their dissatisfaction with their answers. we are asking you to do the same. we are asking you to stand up now. it is time to draw the line today, folks. because if you don't stand up, then who will? if we don't do it now, then when? so don't give it to them. don't give them the increase. they do not deserve it. >> thank you, next speaker,

please. >> my name is karen, president of the health service board. pretty much everything has been said here but i do want to point out that a similar incident happened years ago where our board did not approve the rates. we were told clearly that everyone would go into plan one and we would be vulnerable to litigation and that was quite a few years ago regarding another issue. i do also want to say that kaiser is still the lowest priced plan. and there is a reason for that, because years and years blue shield came up with double digits and kaiser with single digits. this is why, for years

kaiser was really quite a good partner and it was expressed many times in the board. now they are the able person at this particular time and i agree there are problems. i'm not saying there are. until we had transparentcy with blue shield. hhf is the lowest staff. what happens here with low enrollment is a problem. they are in a problem here already because of all the turmoil that's going on. >> thank you. next speaker, please. >> good afternoon, supervisor sharon johnson former health

services board. don't we all wish we had single pay r? we do. but we don't. kaiser is a corporation that makes money and there is blue shield. we have to still keep our eye on the ball and the eye on the ball today is those members. because they need the continuity of their insurance coverage. retirees especially need to know that the doctors that they have been seeing for 40 years plus, they will be able to continue to see. so i ask you please to go with the transparency. don't hold up the rates and benefits package. work with the board for that transparent -- for the cost

attributed to health care. i nor that you can do it. please don't play with our health care. thank you. >> thank you, next speaker, please. >> good afternoon supervisors. i sat with the health services board and i sat on a number of those negotiations over the years. i want to reiterate what my colleagues have stated that this really is about members. all of us on the health service board, all of us individually support very strongly

transparentcy legislation. those that are still on the board, that we can understand that methodology so that we can work with them in a much better way. historically, kaiser has been a good partner. we have had ups and downs over the years and always managed to work it out. they paid us several million in the past because we had issues that we continued and when we resolved them they agreed that their rates and issues needed some reimbursements. please remember it is truly about the members. we also have the unified school district, community college and the court members as well. if this package doesn't go through, it is true because i was on the board and i remember specifically, we own city plan one. we are in the business of delivering health care. the only plan that we can guarantee

to our members is the city plan. the cost for that because it's an indemnity plan, it's not just the premiums that would blow our members out of the water especially our family members and the retirees, but it's the percentage of cost of care that they would have to meet and continue to pay throughout the year. it would be devastating for our members. that is the only plan we can legally continue. kaiser has been our partner for over 66 years. we have worked closely with them and we will continue to work with them. they remain despite this increase, they still remain the lowest cost plan and i think it's important to know. dental, vision, mental health are all part of this package. we are not just bifurcating one group he