Clara county specifically when we did one of our peers and we had people at hss look at it again could correct me if im wrong but they want to the new period of collective bargaining adjustably increased with a offered. It stayed fairly stable for a while. Our understanding is gone up in the hope it will continue to go up. So theyre just being more right now. It was more of we need to is that correct . That is correct. But they also formalize the county plan could Santa Clara County employees could elect to be part of the Santa Clara County health plan. I think its called valley health. Yes. The county was subsidizing it. The county stop subsidizing it. Yes sir i will make sure im clear. Some counties like la offers an account like 50 different plans and some are like five. These are not weighted. These are not weighted averages based on how many people actually elect what looks like a cadillac plan or something week its just an average of 15 that is the algorithm until we go through the process. You are absolutely correct, sir. [crosstalking off mic] in the charter to doing actual item we have some flexible the correct me if im wrong, eric that we can adjust this to a certain degree but the average of the averages is embedded in the charter language. Okay. Any other questions from the board . Im ready to entertain a motion. So moved. Second. Properly moved and seconded that we adopt the recommendation contained in the 10 county survey. Can i say the amount . Let me finish the motion. With an average amount of 649. 17. Okay thank you for that prompt for the action. So that is a motion. And a second. Any other questions or comments from the board . Any Public Comment . Hearing none, and seeing none, no Public Comments, we are now ready to vote. All those in favor say, aye. [chorus of ayes. ] opposed, say nay. The motion carries unanimously [gavel] thank you. We are now ready to move to action item before in the rates and benefits agenda item number four action item presentation on selffunded program the insurance stoploss recommendation mr. Hewitt its come to my attention this particular document again mr. Hewitt ashtray. This particular document may not be in the packets. So we need to flash that one up on the screen. Then ill talk about what it says. Okay. We have it on the screen. Its the handout we were given prior to the meeting thats updated is that part of this presentation or another . No. Its different. All right. Okay. Okay. Do you have on your ipads this presentation yes we do okay. What it basically says is that what we are talking about is that the as the board including myself for some reason the board looks at each year whether or not they have the proper risk abatement coverage the insurance to correctly cover any apparent risk the may attack the bounty of the trust. This is what you request from the actuaries to bring to your attention and to we with our reserves are contingency reserves in any external the insurance recovering a risk exposure correctly . Do we need to get more coverage for any new exposure has been created or do you feelor is your professional judgment that we are in good shape as we sit right now . So where do you have exposure . Thats where you take risk. You ship it off to the vendor and the vendor says, i got this. Good to go. You dont have to worry about any additional calls on monday. What happens is where you have the selffunded dental, the selffunded ppo program, and you have your flex funding could love three areas where you have exposure to risk because you create a premium equivalent. You charge that and collect the money from all the entities part of this trust and then you pay claims. If you bunch of excess cost he would say i need to be able to cover that cost. We share with you who these are on the very first page as i spoke to United Healthcare and in this document we presented last year we discussed what the virtues of this which is kind of what ive already alluded to, and then we going to talk about but you presently have. Would you presently have is a contingency reserve. We presented the contingency reserve amounts in january that were set as of june 30, 2016. We set them once a year, take [inaudible] reviews them put them in the audit statement. They say these are correct that the fiduciaries are doing a good job holding these amounts of money and if the proper exercise and taking care of your exposure. We go through this and say, yes, reassurance is a good thing but you technically have with your contingency reserve, quite a bit of the insurance. So it is your own internal reinsurance. Then you have a policy if exposure gets a little out of hand called a stabilization policy could you say, okay, we have a fully funded set about reserves for terminal liability that is what we incurred but not reported reserves which is reserved required to havethey take the response within risk in house and pays claims. What that is for the edification of the audience beyond me, you collect claims coming after a certain date and time you have the money on your books to pay those claims. So you are Balance Sheet is in order in terms of that amount of money. Let your contingency reserve each we will share with you is in the document amounts vary vary by these programs and you also the stabilization reserve. So with the stabilization reserved as if this things runs a little more expensive than we had taken in, then we go through and set that amount. We did that last time for United Healthcare. Will do that again for blue shield. We will do that next month for delta dental. You take that money and over a three years you amortize that money and it goes into a deficit of three years to bring it back. You are always trying to true up the pool and cover your exposure as it is based on your historical necessities to cover based on certain algorithms that actually slick to develop. With that being said, i want to go to the and and say, here is my recommendation here i am sorry. I just want to show you how much contingency reserves contingency that can be found in the appendix is that correct . Yes sir. You have as of june 30 5,000,006 and 49 United Healthcare contingency reserve. Thats the last posted amount. Last month, when we did the United Healthcare claims stabilization we highlighted the fact that some of that is not present necessary anymore because you have moved the medicare retirees over to the fully insured premium we give you the same schedule we give you enchanted. Here is your dental delta dental amount and for who showed up 50 million in contingency reserve that the amount you have money up to cover excess exposure. Under bead with the recommended it says given the funding policies in the reserve supplement stabilization and having all these programs. The [inaudible] we recommend who is weak we aion hewitt youre actually. Thank you okay. Reference no additional beinginsurance is required and any further insurance would be considered redundant im not change the position because you have all this money already on about Balance Sheet from last year. You basically restate what we said last year. Its very same march meeting. At this point i would want you to buy no further reinsurance and maintain all your great policies. Thats it. Any clear fine questions from the board . Weve not had the stoploss for years we you have external to this we have stoploss with blue shield of 1 million. So embedded in the flex funding arrangement is a 1 million cap to your individual claims exposure to flex funding. You do not have the stoploss for United Healthcare. You have the contingency reserve. You have not had stoploss United Healthcare since ive been your actuary. But you made have it in the basket im just unaware. All right. Any of the questions . Commissioner sass yes thanks. When i look at the visit she can get out here and i saw other sheets in the package that i actually do see stoploss, stoploss credits showing up on our total expenses for the flex funds claims four 2015. So its recommend from a milliondollar builtin stoploss . Yes sir our practice has been to not augment that . That is correct because the pool is so big you dont generally speaking though lower than our threshold because of the tradeoff could you be a premium that has alone for expenses, margin etc. And since you have the cash resized with 300 million proposition for that piece alone is probably not cost beneficial to lower that say 500,000 and push that money out. At this point in time. Any other clear fine questions . If not im ready to entertain a motion. So moved. Is there a second . Second. This is been probably moved and second except the recordation of aion hewitt not to purchase any further reinsurance for the plan year 2018. Is there any questions or comments from the board on the motion . Is there any Public Comment on this item . Hearing none, and seeing none, no Public Comment we are ready to vote. All those in favor say, aye. [chorus of ayes. ] opposed, say nay. It passes unanimously [gavel] next item we will go to discussion item number five. Sec. Item number five discussion and review blue shield 2016 flex funded nonmedicare claims experience could aion hewitt. Now is this where we have a extra piece of paper . Yes circuit he was not asking you where im just asking yes a piece of paper. Theres an extra display chart distributed and i assume available here in the room . Yes is a stack of them on the desk. That updates one of the slides and you will highlight which one that is. I will definitely do that. As a matter practice before we present the claims stabilization for blue shield since visiting risk taking proposition we present the experience data to give you an idea of how this program has run since you take the risk in house and youre exposed to these costs and the truss of course has to fund the claims. With that being said, please, turn to the summary and ill go through and give you some highlights of what happened. There is an adjustment that was made that we will describe to you but overall, expenses with all adjustments made total sense is increased 3 on a member per month basis. Decapitations actually because of changes in membership went down and pharmacy costs which we have shared with you in the past are very problematic increased 8 get some of these bolts are things you would expect to hear as we go on. We have a fairly substantial executive summary item i would like to explain to you and say we have the highest regard for the habits of blue shield for what they have done to benefit the trust and what has happened is, is this board one . Poet one microprinted paragraph . Yes im going to let you know what has happened page 3 of the presentation yes page 3 of the presentation all as all the dollars can we get all the claims we get all the decapitation administrative fees, blue shield in their quest for integrity doing the right thing for the right reasons, was working steadfastly the department of managed health care they were able to change the definition of what is considered an insured product when it comes to your flex funding program. So what does that mean to you . Redesignated as insured in 15, in 16 you are no longer designated as insured. So the 9,000,009 or 34,000 estimate of your [inaudible] is no longer with blue shield it is now in your Balance Sheet good theyve given us one payment and they will eventually in the next month or so give us the second payment. What has it done . Is changed the results of the experience for this program four 2016 and you will no longer be charged the tax regardless of the changes of what is going on in washington today, if it was to be maintained, he would not be under current definitions, assess the tax. That is a 10 million swing in cost. When we first presented these materials and 13, when we went to the aco, to the flex funded we were in the aco but to the flex funding part,you are not assessed a hit tax. As time has gone on abysses created a very large expenditure for this city and county. So this isi knew being a little dramatic but im very happiness happen on your behalf. I think this is great. This change the results of 2016. Going from what would be a slight deficit of four 5 million who are 4 5 million. All driven by the hit tax. So that is what i want to share with you and then we can now look at russia was 90. 64 . Yes, sir. Yes, sir with the hit tax you collected more money than you spend creating again. We need the bounces in the trust fund will be bigger. All right. Yes, sir . This wont be too into thousands of the it will be true forever. You wont pay. One. Forever but in terms of Balance Sheet, we see every december no. Thats what i thought did i mistake that . No. I just want to make sure. When we get to page 4, type a concern about the trends but i guess when we get to page 4 can talk about it absolutely. Just to be clear this is a onetime event yes onetime event he paid the money and we got it that thank you commissioner sass isnt it the true the premium structure we built for 2017 assumed a hit tax . Actually be hit tax was not requested foror, for one year, go ahead Congress Waived the hit tax kind of an election everybody want to get reelected to the way the hit tax. Okay. So when we did the renewal he did not include the hit tax. So we generated a lot of cash. Thats 1 million they have been buried in there. Its not there. We took it out. With that being the case, but in 18 you are absolutelywe will not be assessing that tax. We dont have to waste of tax rates undercurrents lockley under current law, yes, sir so for 2016 absences refundable would have shown a loss in actuarial loss for the year in actual loss compared to her estimated position as opposed to adding some dollars to our stabilization reserves wouldve been taking a significant amount of funding yes, sir that is correct. Well outline that in our next presentation how that impacted our overall unanswered. So turn to page for this is a great discussion before i do that anymore questions or comments . Please, proceed what you have on page 4 is a month by month experience in this it table that we presented in the past. This table is developed by our good friends at hss uswe actually use this this is the cash accounting. This ties explicitly to the finances and experience the invoicing of the trust. We dont take an independent claims extract tried to back to the cash number should these are the trust cash numbers. The way i practice is and actually went to present this information i like the cash numbers good in that particular have been going to this particular exercise. So what is this . This is the top line is the premium annexes the admin, our run rate for admin is 2. 4 million. Then we adjusted 02 9 million in december because thats when we found out this money was coming back to the trust. At the end of the day, the admin expense for the year is 18 million, 18,000,007 and 31,000. That number is quite a bit less than the number was in 15 and we will see this in the next schedule. Now decapitation is run at roughly 6 billion. Radical claims, that being fee for service, said her health plan, hill physicians, we let you know what the previous meeting they did quite a good job so some of their stuff is sort of managing through the aco has improved good this is all of the expense for the noncapitated piece. Capitation is physicians received a prepayment and they take care of the defined set of benefits on behalf of the patients were employed or early retirees from this program and the rest is a feeforservice exercise. So we go through that. Pharmacy as we know has caused everybody a lot of headaches because of the incredible exponential growth of specialty drugs. Then the good thing about the pharmacies we get rebates. So we pay 52 million in the pharmacy claims and we got 3. 2 million in rebates. We pay 709,000 to the Hill Physician Group for their heating a claims target. We had some stop loss and this year we had much more stoploss in the prior year with a beat thresholds and we change the monthly [inaudible] saw this been said when you look at the expenses and you look at but we took into the house adjusted for the hit tax, it created a 90. 64 loss ratio. So good news is we brought in money. We paid everything we could got an adjustment and we have more money than we brought in so that will help us adjust the stabilization reserves which we will present in our next presentation all right. That is the data this is a discussion item. Any other questions we look at the line on capitation, the reason why capitation is going up is the number of subscribers is going down . Yes you have professional groups who raise their capitation rates and you have the who raises their capitation rates for Mental Health services. So they come into the marketplace and they say we will take care of it for this and every so often they just raise the amount that they charge. Then theres another thing that can happen is if youre a mix of people you have more older people then you end up paying more capitation because there age adjusted. So have we had increases in caps . Yes. Have they been extraordinary, no yes, they do increase. I was looking at the number of subscribers going down and capitation goes up. Yes sometimes its the billions we comes when the customers coming. Half of the month is paid. Some these go up and down. Anyway any other questions commissioner follansbee yes our make sure im clear. When i look at the monthly incurred loss ratio 90. 64 for the year, with thats driven by december because before december if you just average 11 was about 102 but technically the reason was driven down is this refund from the shield which would normally that have appeared in thethat tax that we were dissipating, that have appeared in administration . Its a onemonth hit but technically we had not paid at that Administration Cost within equal to that over the course of the year because 90. 64 is still valid even though it looks skewed . Yes. Per 17 usc much lower number. Under administration. I think its roughly 6 or 700,000 less a month. They could give you the [inaudible] right. Questions from the board . Any Public Comment on this item . Public comments. There is no Public Comment. Any other comments . Pete well, well we have one more page. This a year over Year Comparison to dr. Follansbees comments you see what was interesting for the administration. It was 28 million. That was 18 without adjustment. So what we hope to see and we expect to see your pretty sure we will see, is 89 with in th