the health services board meeting will now come to order. please stand for the pledge. >> i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation, under god, indivisible, with liberty and justice for all. >> madam secretary. item no. 1, please. >> roll call? >> sorry. roll call.

>> vice-president, supervisor ferrel, commissioner expected, commissioner fraser, commissioner scott, excused. commissioner swain, expected. we have a quorum. >> all right. item no. 1. action item. approval of the meeting set forth below regular meeting of february 13, 2014. >> all right. are there any corrections to the minutes? no corrections. >> move. >> second. >> it's been moved and seconded. any public comment on this item? all in favor say, "aye". >> aye. >> opposed? it's unanimous. >> now we'll go into the section. commissioner scott is not here today today. our

first item is action no. 2. city clerk: item 2. action item. preservation amount. >> good afternoon, my name is gabriel brigs and as you are all aware every year the survey is done where -- we survey the 10 most populus counties in california other than the city and county of san francisco and what the union and employees contributions are and take the average for each county and period of time charter, the city contributes that dollar amount of health care to the city employees. information gathered from the survey, 10 county survey, we go online

and get all the information we can from the counties including the benefit designs. today we will be reviewing that. >> is there any way we can put it on -- >> all right. >> just the highlights of this, please. >> all right. on page 2 you will see that the average monthly contribution for the 2015 plan year is 567.80 cents. that is higher than last month. you will see that 1.46 is lower than historically it has been

increased by and there is a few different reasons for that. there are a few counties that have made changes to what they are offering to their employees. for example, sacramento county, they took way all the plans except for the kaiser plans they were offering and now they are offering new plans and lower cost plans, high deductible plans and their employer contribution went down significantly. there are various other counties that behaved as we would expect that had high increases, but there were a few counties and we can go through a few of them if the board would like that contributed to this low increase. >> ask the opinion of any board member. would you like to go through it? >> i don't need to. i read the chart. >> okay. so are there any

questions? >> you use d the same methodology? >> the methodology is on page 2. >> i believe this is the lowest that i have ever seen since i have been on the board. i was ask petitioner if she would agree to that. i noticed that pers had a quite low pay for pharmacy. they are stuck with the generic with $5 across the board. those are the things that i noticed. santa clara county had also the same for local. >> are there any questions? >> dr. gopey? >> i just wanted to point out

that when hhs and the board supported the 9383 contribution model for last year, it was because we were concerned about the volt tilt in the county. we had already seen that fresno county had a flat contribution and we were hearing the county's talk about limiting the contributions there. so, the volatility in the county is something we have been concerned about and i think we remain concerned about this is the sign of things to come and more counties are looking at limiting the employer contributions around that. so, more, i think we were asked last year, the health services to look at the counties carefully to see if there is anything else we can do, but i think it's reflecting the environment in the

marketplace right now. >> any other comments? this is an action item. we need a motion. >> so moved. >> second. >> okay. the motion is to approve the 10 county survey. it's been moved and seconded. any public comment on this item? >> speaking of the former commissioner, i just, you are right, we haven't seen these kinds of low contributions for a while. in the mid-90s we did. there was a shift and it was fresno and riverside that brought us down. there was one point where riverside entered as one of the 10 counties where previously it had been in a different county. we have only seen this trend in the

last 10 years. it maybe a cycle that it goes through. it had to do with collective bargaining and a number of other issues in population. fresno is one county to watch more than riverside. they brought the 10 county matt down several times over the last few years. thank you. >> thank you. any other public comment? seeing none, all in favor say, "aye". >> aye. >> all opposed? it's unanimous. item no. 3. city clerk: item 3. action item approving of action plan continuing fee proposal. >> on hewitt you have before you a presentation last year as part of the rating cycle we went through a laborious settle calculations and now we

are under a 2-year rate. the rates are posted on page 1. the e plus 2 is $11.30. and as a matter of being complete. we wanted to let you know that you do offer the vision care benefit for people who need computer assistive glasses and cost $0.85 per employee per month. we also wanted to raise on page two of this document that we at that time determine is reasonable and sufficient for premium yuns -- and you are under a rate and we bring the rate as part of the cycle of this business. do you have to approve them? >> i don't know. i will to

have ask eric about them. i think we need to reapprove? >> you have a 2-year? >> i'm trying to think back a year ago did we approve a 2-year rate renewal. >> it might be best. >> it's not going to hurt. >> okay. i need a motion. >> so moved. >> second. >> okay. it's been moved and seconded to approve the vsp's 2015 proposal. any public comment? >> dennis krueger, active and retired firefighters. i was under the impression this year they were going to offer a 2-tier plan. they had

discussed it before, but i see nothing in this proposal that accounts for that. >> thank you. that's a good question. the system can now handle it. it will just take us about 6 months of work to rebuild the system to be able to administer this. so currently, the vision benefit and the medical benefit are being administered together. the eligibility files are combined and the programming is combined. to split that out it will be a much bigger effort than we initially understood. it is in interest of ours to do that. we have clean up with the basic administration that we are working on and we are hoping to still bring that offer in the future. at this point i can't tell you exactly when it maybe for 15, it maybe for 16. >> so there is still a

possibility it be offered in 15, but most likely later on. >> i'm sorry, open enrollment 15, but plan year 16. >> thank you. >> any other public comment? all right. all in favor say, "aye". >> aye. >> opposed? no opposition. it's unanimous. >> item no. 4. city clerk: item 4, action item consideration of city plan stop loss coverage for 2015 plan year. an hewitt. >> so just as a matter of historical to revisit to what happened last year, we presented some stop loss options and the board voted to not stop loss insurance because it wasn't necessary and it wasn't, the premiums were going to cost more than

the expected rebates. so, on slide 2 we have an overview of what stop loss is. unless there is any questions about that, i'm just going to skip to the actual quotes. there were four quotes that united health care has provided. two of the quotes are for actives, early retirees and medicare. whereas the second care is for actives and early retirees. the table on slide 3, shows the quotes, the contract terms would be for, so paid 12 means that anything that was incurred ever since at the beginning of the contract would be covered as long as it was paid in 2015. that's a contract term. you will see that for an individual deductible $500,000, it would cost $26.90 per month. a duct eductible

for $1 million it would cost -- per month for a thousand dollar deductible. on slide 5 we done some analysis. we took the large experience that the city plan experience from july 2012-june 2013 and we took the claims and we trended them forward by 7 percent a year. we have calculated that with the $500,000 deductible, the rebates would be approximately $908,000. if you turn back to slide three on the table, you will see that for alternatives 1 and 3 which are at the $500,000 deductible, the premium is well beyond with the expected rebates would

be. if the deductible were at a million dollars, our estimates show there would be no reimbursement whatsoever. ian hewitt's recommendation is to not ensure stop loss. there is a reserve of $16 million reviewed at the last meeting. in case there were catastrophic claims there is a contingency reserve to be used. even then we don't believe it would be necessary. >> thank you. any comments? can i have a motion? >> so moved that we not purchase it. >> second. seconded that we do not purchase stop loss insurance for united health care. any public comment on this item? all in favor say, "aye". >> aye. >> all those opposed? it's

unanimous. now, item no. 5. discussion item. city clerk: item 5, discussion item, review blue shield non-medical claims experience benefits designed and determine preliminary contribution for 2015 plan year.ian hewitt. >> you may have an substitute tab for tab 5. >> thank you. >> okay. before you you have the presentation on tab 5 as blue shield. so we reviewed the experience. this is the third year flex funded. it behoves us to share with you how it did do and we take the risk and you obviously want to know did we come under or over or did we generate all the

reserves we need and the contingency reserve and how the numbers are looking. in addition to giving you a flavor to what will conclude in june, is how did it do. as a matter of refreshing, we revisit on page 2 and 3. what's at risk, what are you paying for, those kinds of things. under those flex funded as all of you know for the audience and everybody who is listening, you pay straight fees for administration charges in capitation it outlines here what is covered under capitation. therefore, those kinds of thing are paid on a fixed age adjusted basis. whether you are at risk, a deeper exposure a volume for claims whether you are inpatient, and pharmacy claims then you pay your administrative and as we have discussed before you have various taxers, you have your

reassurance and hit tax. you pay the full tax because this is an insured product. with that being the case, we will now visit on page 4 of the experience that happened on a paid and on an incurred basis for 2013 under the flex arrangement. it's a lot of data, so bear with me because i can't real it all. what you ended up collecting for the actives is $230 million which is under the monthly premium which is right there. that's what was brought into the the trous to cover the claims and cost structure of the flex funded program for 2013. your total expenses on a paid basis were $203 million. so you have on a paid basis 88 percent loss ratio which turnout to be just fine. certain thing i want to point out is if you look at the

total expense for total paid expense for january and february, more january, we explained when we went through this process that for that month, the insured contract would pay the claims that were incurred december 12th and before and so we would expect to see less paid, literal paid claims but you would have to take the difference in that in the premium and bank that in your reserve. with that being said. you had at 88 percent and in the far column what we did was shared that you needed $18 million, $18 1/2 million dollars in reserve for funded. we added $18 million to the paid claims and that is a ratio of 95 percent. are there any questions for the way it turned out? it turned out just fine. >> what did i say?

>> for actives. sorry. >> can you back up for one second. can you ream -- remind me and i apologize me. we are at risk for the hospitalizations, we are at 4 for specialty physicians so you don't send everyone to the hospital. >> can i make a request that we get a better system. my question is what is the structure that alliance their incentives with ours? >> they have acl claims targets that we fund. we set a certain amount of fundings that is a claims target and that is adjusted for certain anticipated to bring the cost down for standard studies for this set of risk. so i work with them and we agree that is hhs and with their actuarial

people, if you hit these thresholds you will get a certain amount of money. it's fairly complex. >> is it a with hold on the capitation? >> no. i don't know if we could as a trust do it that way, but it's literal additional bonus. if they go below this, that's how. there is a massive amount because they are driven to hit these targets. >> these are in here? >> she is saying no, but we have actually, can i say, when we price the product, the spread in here, i didn't add the claims target as part of the idnr reserve. but the difference between the premium, we actually with hold that money on the balance sheet of the trust. so yes. they are in there, but we didn't address it in this document.

>> so it's -- let me ask it in a different way. is the 95 percent loss ratio, is that actually account for all of our expenses? >> it accounts for all of your expenses except your claims targets. >> we can have our cfo speak to this, but there is another reserve in the trust to pay out if the targets are met which i'm not sure where we are in 13. it maybe really close. we may not pay out anything but there is a reserve and we spoke to that in a previous meeting. pamela may know off the top of her head. >> pamela. hhs. when i did the financial report i mentioned a figure of $68 million, in that is a figure we have to set

aside for commitment. one if you want to call it a reserve is $6.6 million and that is the aco's incentive payments in the event that we have to pay out. >> thank you, i appreciate that. so, can you help me understand why we would no include that in the incurred loss ratio. because if we do end up paying it out, we will have to refill that bucket out of the premium in the next year. should we in really looking at the performance add the claims pay out to it? >> your point is well-taken. so i wouldn't disagree with it. we could have added the $6 million. the balance sheet holds that money already. so at the time i introduced this, it didn't. i could say if we are going to be really true to the pin, we could spread it across all various categories

of business. >> right, the good news if we add the 2.6 to the 18. we are still under the 230. that's the good news. >> yes. >> i would suggest when you come back with the final rate we are closing to knowing whether we want to pay that or not. >> a very astute practice there. the percentage pay out was in the rates so these rates included the possibility of having to pay this out. i just want to say one thing, it's for both pieces, the actives and early retirees. we are well funded. good question. >> in some ways we really hope they hit the target. that's the interesting part because they hit it on the other side. >> if they hit the targets we

are thrilled. well said. any other questions? excellent questions. okay. i will move on. early retiree data set. early retirees, i don't know what is about the city's early retirees whether they are in city plan, kaiser, their loss ratios are better than the actives. i have no idea, the premium, the way it was established. >> that is stressful. >> that's what it is. but i wasn't here when they actually did this. but their loss ratio is incredibly good. they are active people, obviously. they just said i'm done with this and i'm going to ride my bike. very impressive. we collected $35 million and only needed $3.3 million on an added basis a little amount for the possess penl tenl --

potential of the claims target. this is incredibly good. this is from a financial perspective as an old guide actuary, i want to be in front of you 1 year later that we have great numbers to backup the decision. good decision, it saved a bunch of money and what i want to also remind you is that they wanted 10 points more for 13 than you took. you said, it's at 13 points. we came in at 2.5 points. so excellent excellent decision. this year you took a 0 oechlt --. >> for the first 2 months, in 2013, they had a really bad flu season. these numbers are looking a lot better. i'm

very optimistic and actuaries are not supposed to be optimistic. they are supposed to be conservative. we'll nail that zero this year. there goes my credential out the door. so we go ahead and roll it altogether and we are at an a 93 percent loss ratio and fully funded and have a $13 million obligation to the continue gency -- reserve. we don't have to hope that we'll get the contingency reserve which was what i initially anticipated when i did the math. it's all coming right away. these are looking pretty good. with that being the case, i want to go, are there any questions? i want to

take a 5 percent trade on the conclusive page, putting it forward, used a target loss ratio that on a very conservative for the actives alone, very conservative without banking in the better scene, this projected for 2 years would only be a 7 percent increase. so we would raise the zero up 7 percent. we don't rate it that way. we rate it together. it would be a 7 percent decrease. that being said, the over all high end of the increase which i will honor which i have to fine tune is probably no greater than 5 percent across the board. when we are done in june, given the data in ic and i was not sure after a 3 1/2 and zero where i would be, my assessment of this and it's

tentative and i have to establish why i'm saying this. it's that no greater than 5 percent for blue shield and hopefully lower. so i'm visiting with the aco's about 14, quite a bit. talk to them about 15, what the metrics have to be to keep that number under 5 percent so we can come back and say we have enough math and enough conviction to say we are going to be 5 percent or less for 2015. that's my tentative general -- renewal for 2015. anything about that one? >> yes, ma'am? >> can you talk to be a little bit about the idnr and contingency reserve. here i just