look at those we have a 5.22 increase in our kaiser rate, increase in blue shield rate, our dental plans are running at 2.48. we believe it's due to more increase. we think it's going to moderate in 2014. our lifetime disabilities in 2014. our pay rate is $659 million. the members cost on this is $84 million. that is an 11.3 percent of the premiums. on the next page is the summary of the

impacts. >> can i ask a question. from previous documents that i thought it showed that the blue shield premium decreased in previous documents along with the city plan as well, but the aggregate premium increase shows that blue shield went up. can you explain that discrepancy. i can't remember where that was where the document that i was reviewing. my understanding that the city's plan and blue shield was going down and kaiser was going up by 5 percent. >> this is an aggregate of the active and early retiree rate. this aggregate view is a combination of all plans we have under a health plan and that's true for both kaiser and blue shield. the blue shield

medicare increase was 5.9 percent emerged with the active and early retiree rate which was zero, i believe. and so for an over all, a point 55. >> supervisor mar, i believe you were referring total table on page 39. that does reflect the aggregate rate for all the employers and the employees as opposed to what is reflected in our report that shows the significant reduction for the city health plan as well as for the blue shield represents the city of san francisco's cost and that is the blended rate for the employees, but it's only the city's contribution. >> thank you. >> that's an important

distinction. the city of san francisco's membership for employers has a lower percentage of kaiser members than the other employers. so the impact of the 5.25 percent increase for kaiser has less an impact on the premiums than it does on the rest of the employers. >> supervisor avalos? >> looking at the difference between we are seeing blue shield about even and the city plan going down, we are seeing an increase in the kaiser rates. how can you explain that difference? >> yeah, i do intend to address that in a few slides. would you like me the do it now? >> we'll get to that. that's a concern i have. >> turning to the care act. this is a significant part of

the 2.4 increase percent. this is due to the new taxes and new fees by the affordable care act. it's a significant part of our care. the increases come from three major fees that are going into effect as of january 2014. the patient center and the reassurance program and the health industry tax which is the largest of those. and the $16 million breaks down by health plan by $10 million coming from blue shield and the city plan and that's how these fees are applied. because they are 501 c 3 of the taxes. they

are significant and the health insurance industry taxes expected to continue into future. we will see this each year. >> the next slide on slide 6 is a break down. an aggravate view for blue shield and kaiser. blue shield a 6.55 increase and due to increase of affordable care act taxes and fees and 5 percent reduction in the requirement. the negative 2.9 reduction in 2.4 increases in taxes. the health insurance tax does not apply to self insurance plan. so that's lower. the affordable care act

taxes and fees and premium increase. >> the difference between aca taxes and fees and blue shield and kaiser. what is the difference? it's usage? >> that's the difference in how the taxes apply to different insurance companies. because kaiser is a 501c not-for-profit, they have applied that for the insurance company. the rolement with kaiser is greater than blue shield? >> it's close. it's about 50-48 percent. >> is blue shield older? >> the age risk of the population, the risk of the population that was an assessment done in 2012 and

presented to the health service board, the ratio population is higher than the blue shield population. >> can i make a comment here. i just wanted to point out when you look at blue shield and city plan compared to kaiser, both blue shield and city plan are self insured plans, the rate you see for blue shield and the negative race increase you see for city plan, has nothing to do with blue shield's offering. what it really is, is we are projecting actuary what we will have to pay in self insured claims next year compared to what we thought we would have to pay this year. because we are realizing some favorable utilizations this year which generated some cash, we can

project that savings in claims for next year and that is what is generating these savings. this is not one company offering a rate over another. these are both self insured plans. so when we are, i think it's important when we look at these side by side, kaiser is a fully insured indemnity plan. while we can make actuarial presentations, we can view disaster or emergency or terrible flu season that can affect this rate. these are not present in the calculation. >> thank you. i'm sorry if it's

taking me a while understand this. it looks like the kaiser former care act taxes and fees is 1.77 percent. you can factoring that to a $9.3 million increase. i don't understand how blue shield is going up 3.2 percent and we have a $20 million saving. is blue shield covering that itself and kaiser is charging us and potentially gouging us in other jurisdictions? >> no. blue shield doesn't really involve blue shield at all. the $20 million savings is what we realized in the first year of the blue shield self insured plan. what happens when you move to self insurance. a year ago we were in a fully insured plan with blue shield.

blue shield continues to be responsible for all claims for dates of service prior to january of this year. so to start this year like we did with the flex plan. it takes time to submit it by the patient and be paid by the third party administrator. you wind up with a cash savings in the first plan that lag from the time of services occur until we pay in march, april or may. that is in the first year of self insurance. the $3-4 million savings below that that represents utilization savings. when we set our rate for the flex plan for the employer and employees, we benefit a lower

payment amount than is anticipated. all the utilization savings and cash flow savings, come back to the city in a self insured plan. in a full indemnity plan you don't have that because they are insuring based on the plan. regardless of when it's paid or processed. in kaiser's case they are still paying claims from last year and they are responsible for those and we have no responsibility at all for the cost of those claims. does that make sense? i know it's a lot. >> it doesn't make sense and it's going to take me a period of time hopefully with more transparentcy from kaiser to explain the rates. >> the difference in indemnity

insurance versus self insurance is they take the risk of claims or loses like your auto insurance. they don't give you a rebate when you don't have an accident. just like in auto insurance over the years you get good drivers discount. you get the immediate upside or down side of claims, loses. if this was a car insurance plan for blue shield and you had an accident this year, you would be spending more. right? so that's basically we are going -- if more or less uninsured on those two plans, largely self insured for the vast majority of the claims we incur. >> thank you. one that i want

to take a few minutes on because it is really a remarkable slide. since catherine dodd has assumed responsibilities for the department we have significantly evaluated and adjusted every aspect of our benefits. the co-pay and deductibles and long-term disability, we have aco's working and working with the health service system. funding with blue shield. we completely retoo old the plans new networks. the shop is now in california. we have really looked over the last 4 years of every aspect of the administration of benefits with the health service system. i think towards our goal of stainable affordable benefits, we have to look for every aspect of financial waste. in

2011 we did a lot to get our co-pays in line. with 3.1 percent in 2011, this race is unprecedented and not only help us pay for our employee benefits and our retiree benefits but also mitigated our long-term liability which is a significant concern do this city. with 50 percent of our members in kaiser, we know we could not obtain our goal of sustainable and affordable benefits without dealing with the financial waste in kaiser. we do have a plan and we are going to talk about that because it is an issue with 50 percent of our members in there. we have to draes that and we plan to. i wanted to spend just one more slide on

good news. greg, did you have a question? so slide 8 again is reviewing the compressive cost containment strategies and really unprecedented single digit trends for the last 4 years. i know from our members that they appreciate and how important it has been for them over the last four difficult years financially for families to have been able to deliver what is essentially flat trends for the last four years.4 years. there is also the view of this just for the city and county of san francisco on slide 9. the premium increase is a 7 percent increase. a 1.1 percent increase and a negative

2 percent decrease for that portion of that. that's primarily due to the blue shield and city plan premium. >> we did also want to mention on page 10, that there is a rates and benefit packet. a flat premium incentive subsidy. this was at the meeting on the health service board. the board approved a rate card for the blue shield and city plan and this card will provide a subsidy from the trust fund to bring the 2014 only contribution to be the same contribution of the kaiser contribution for our members. this rate would apply to any member whose union agree to the contribution strategy. this was to ensure that a member didn't have to jump out of a plan 1 year and be able to jump back into a plan next year because

the out of pocket to blue shield going up $60 for the employees only, feeling they had to move to kaiser and the next year it would be corrected. this would allow the continuity of care that is important to our members. >> moving on to slide 6. this is a review for the kaiser negotiation project. we just wanted to share with you that there is a substantial effort made to engage kaiser into negotiations over the last 6 months. we had six meetings between health and service executives since january, numerous phone call conferences. two health board meetings in the last few months to deal with this and public comment from the mayor's office and all of our labor leaders. i think this is important, we are in discussions with the other large employers who do business

in the city and county of san francisco and the surrounding area on collaborative efforts to address our joint concerns with the kaiser pricing process and will be moving towards that in 2015. kaiser has internal challenges to changing their price structure. we are really very confident that for 2015, we'll be bringing back a pricing strategy to address all of our concerns. >> we would like to make a few recommendation. we recommend the health service system, the health service board and board of supervisors legislative analyst recommend approval for 2014 benefits. we think we should realize this really

impressive renewal of 2.4 percent increase. we believe that it is important for all of us to preserve the continuity of care and avoid disruption of services for the kaiser enrollees in the package. we have a deadline guideline for the enrollment period which requires the rate package to be an approved. we are engaging kaiser for a plan for 2015. lastly we did want to discuss the implications for not approving the rates. they are

substantial and not immediately evidence. to exclude kaiser and not approve this rate package and ask the board to create a new rate package for you with or without kaiser in it, it will take until august 20, to complete. to get through the organization, health organization board and the legislative analyst review. we would be looking at august 20th before we can bring you back a new rate package. in addition if kaiser were excluded we were would basically have blue shield and city plan. all of our membership would be in a self insured type model where the city would be taking on risk of700 000-0000. >> can i ask a question. so i understand from the city attorneys as well, we don't have the ability to parse out

kaiser versus blue shield or plan anything separate. i know we've been looking into this for the last few days. would you mind confirming that or if there is someone else? i just want to make sure that's clear on the record. i know it's been a question from community members and i want to make sure that is formally addressed. >> eric rap port from the city attorneys office. i would like to recommend that it has to be accepted as a packet or sent back to the board to be reformulated. >> there is no ability today or tomorrow. this is one package up or down from the board of supervisors. >> yes. this is from the charter a, the packet has to be supported from an actuarial report and this package had a report attached to the package and if you would modify it, it

would modify the report which would have to go through health services board again. >> if this is not approved, what is the result on enrollment and people being able to continue coverage. >> i would be happy to answer your question. the charter creates a legal obligation for the city to provide health benefits to city employees and retirees and provide access to health, maybe i don't understand your question. i'm getting a look from supervisor farrell that i don't understand your question. >> it's possible that this could get to the full board and that i have been told that we need 9 members to approve and with the kaiser rates, some of us might not want to approve. what if the board does not approve, what happens to the existing insurance plans that

employees have? >> you will have a problem. i have a presentation. do you want to wait for that. the city has an obligation to provide the care. >> i think we are starting to parse questions from there. why don't we've her run through the implications for that. >> i will answer your question in my presentation. >> great. thank you. >> okay. just to continue, the financial obviously we would have to update the budget and the liability for potentially increased rate in blue shield and city plan are higher than the kaiser rate and we would have to reschedule meetings for both the health service system and the board. the supervisors are in recess until august and we would have to reschedule that. we are also -- to be

clear, that's to reschedule during recess? >> yes. we could not wait beyond august. the federal law requires that we have rates available to members as of october 1st. we do have to prepare our rates every year and it takes us about a month to do that. >> to be clear, if we did not approve the rates here at the board and the board sent it back, and we did not reconvene during recess in august, now i'm talking the board of supervisors and the health services board, the only rate that you can give for open enrollment would exclude kaiser? kaiser would not be an option next year. >> the whole packet would have to be rebuilt because the rates would change. >> so we couldn't provide by

open enrollment? >> no. the only way if the package is rejected is to come back with a new rate package in august and that would be the absolute latest that we can possibly go. those two options really are a new rate from kaiser which health service system and health service board do not believe we will get from kaiser. there are kaiser representative here if you want to question them on that or to redo the rate package without kaiser and there is no one i hope that is actually considering that. just dropping 40 thousand people would be devastating medically to the people who are accessing care. >> the legal implications of violating the federal mandate. we'll get to that. >> i want to express a little

bit of frustration. i know mr. got leeb, mentioned that we have a problem. kaiser has a problem about not being transparent by unjustifying this huge increase. my hope is that we are keeping this out there like you laid out the plan in that, but i guess i resent this putting it to us that we have to approve it when it's clearly not justified at least with the documentation that we have. that's the frustration that i have. >> all right. i appreciate we are going to have some comments during this conversation. we have procedures here at the board of supervisors not to applaud. if you have comments, you have a chance to speak. i appreciate you not disrupting the dialogue. thank you. >> i appreciate that comment and i think you are echoing the comments of the health services and the health service board.

>> the last item i suggest some action plans many and we are negotiating for 2015. it makes us responsible for the risk. there is an enormous amount of risk to assume and we have to evaluate that very carefully. we are also looking at cost options or continued options for cost competitive of all the alternatives for in the potential that we have to move away from kaiser for 2015. for the board of supervisors to continue to work legislation for all contracts with the city and county of san francisco and continue negotiations with kaiser so we are not at the

last bill for next year and working with legislative issues and supervisor farrell is leading the issue on transparency and we are leading the issue for that. and pledge commitment from all health plans doing business with the city. and on the union side, the unions are very supportive of effort. there is always a voluntary boycott for kaiser. models that don't favor kaiser will be important as an opportunity to pursue that with that i would like to have eric rap port to speak to the charter obligation. >> okay. mr. rap port, thank you.

>> good afternoon. h hf asked me to come here today to outline the city's benefits and rates process. first i want to make clear that the charter creates a legal obligation for the city to provide health plans for the city employees and retirees and active care for the employees, san francisco unified school district and college district and superior court. by the way, 80 percent of unified district employees are kaiser members. the city's current contract with blue shield and kaiser expire this year. there is no obligation for kaiser or blue shield to provide services

after this end of this year 2013. i understand there was a kaiser rep from the at the last board meeting. i don't think there is an ability to continue talking to provide the rates from the packet now. >> what were those statements by the kaiser health board meeting single ? >> they were general information. >> that they will not drop services. >> i don't think you can read it as a binding statement. >> what did they say? >> i will let them speak for