tv Government Access Programming SFGTV April 19, 2019 3:00am-4:01am PDT
>> any public comment on this item? come forward. >> my name is erica. i am a current employee. i am covered under blue shield. i have run into several issues in my ability to access insurance. i have spoken with the director yant. i am going to speak on the drug prescription coverage. >> speak into the microphone. >> i will share personal and private information that is a bit uncomfortable. i know i am not the only member that is experiencing this. i have prescribed a litany of drugs that aren't covered under
a co-payment. if i go to a specialty pharmacy the cost is 50% of the negotiated rate. i have copies of this if you need it. that was the price that i was quoted. then i was given the price if i pay 100% out of pocket. 100% out of pocket is 40% less or 40% less than if i used my insurance which is supposed to be 50%. the 50% of the covered rate. my personal question. can i get reimbursed the 50% that is the coverage rate? the real question for you is how many other drugs fall into this category? how many other members are
paying 100% out of pocket because the insurance coverage they pay for, that the city pays for would cost them more. i recognize there is no vote today but i wanted to highlight the great responsibility that you have t to t to to ensure t for our public dollars. theresy tremendou -- there is as impact this will have. i called another one from san francisco. these are from boss t boston. that is the cost. thank you for your time. >> have you talked to our director? >> i do appreciate everybody
coming here to speak out today. it is a challenge. erica has been a fabulous advocate for herself. we have worked alongside of her to uncover some of these difficult situations that our members experience from time to time. i appreciate having the opportunity to work directly with her and the carrier to see where we can intervene in this case or in cases in general. it speaks to and i know that many folks here including our board hear from members on a regular basis. it is so beneficial that we hear directly from them so we can dig deep into the story. that is the most informative we can do. i think it allows us to provide the most support to our membership. i appreciate it and we will continue to work through this
situation. >> thank you for coming. >> i think the one thing we know there is always money in drugs. whatever side of the fence you are on there is a lot of money in drugs. one of the things that occurred to me while listening to this presentation is the level of advertising that is going on. when you are trying to get patients to consider generic, they have been watching ads for name brands for a period of time, number of years, many months. i know actually i had colleagues who said they would still be working if it wasn't for hue hua that helped them on the job and i have watched transition with
the colleagues. then what i notice is the drugs are advertised for other kinds of conditions which is always curious to me. this is a drug that has multi-uses and the diagnosis seem very opposite. i think what we are not looking at, if you are trying to get people to switch to generic there is a psychological issue. this name brand is the best there is. when you are offering me generic it is sub standard. it is a third rate. i know out to buy my benadryl from cost could. i can get a big bottle to last a year from costco versions a regular pharmacy. i think we have to take a look at the bigger picture.
as long as the drug manufacturers understand they can use advertising to influence people, when it comes to what we are looking at is saves money. also the fact we are looking at an exact replica of the original but lower costs because we have passed that threshold where they are not trying to recover all the money on experimentation or whatever it is and advertising. it is the same thing. in our blindses as consumers we -- in our minds as consumers we don't see it as the same. you are offering generic. i don't know how to change that. you can see it in magazines and on tvs and the internet, everywhere you look you see ads for new drugs and the influence it has on consumers.
thank you. >> any other public comment. i want to say a former speaker. it seems like the last couple years i have heard a lot of complaints about expensive drugs people have to take. life saving drugs they have a tough time affording. it seems like there is something more we should be able to do about that as a health plan. i don't know. the whole pharmacy thing is scary. that is just a comment. we are done with the regular rates and benefits section. we are now moving to the regular board meeting matters. that is item 14, please. >> item 14. reports and updates from contracted health plan representatives. >> good afternoon. i am from kaiser.
i would like to introduce a change in account management. for those familiar with a trisha. she has been the account manager or a couple years and has done a wonderful job and has been promoted to management. we are happy for her. as she transitions out we have a new account manager to take her place. that is debbie. sheep has many years of experience -- she has many years of experience working on public sector accounts. i am confident she will fill the big shoes patricia has been wearing. >> any other reports here? public comment? seeing none. item 15. >> item 15. opportunity for the public to comment on matters within the
board's jurisdiction. >> last chance for public comment. seeing none. item number 16. >> opportunity opportunity to place items within the board's jurisdiction on future agendas. >> you are in negotiations still? okay. nutrition counseling from blue shield. they are the only plan that doesn't have that as far as i can tell. i mean if they are not going to do it then we should find somebody else that will. that should be part of the plan. there shouldn't be any question. last reports said go to your primary care doctor. that was like an insult to me. that has to be part of the negotiations. i appreciate that. thank you. anyone else have comments on this item? seeing none.
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minutes on any particular topic. please make sure your cell phones are off our own silence. that takes us to the first -- we have to vote to go into closed session because we have a couple of items. motion is in order. we need to vote to invoke attorney-client privilege to discuss existing litigation with legal council, so we need that as a motion. >> i move it. >> do we need a second? >> thank you. all those in favor of going int all those in favor say aye? >> aye. >> we will go back into public session. a quick review of our rules. the same rules. public comment is allowed and limited to 20 minutes on any one item or in general. next item is item four, general
public comment. does anyone wish to speak? >> my name is richard and i am a retiree. i just wanted to say a few things but generally i haven't been around for a while, but in the secret session clearly there is something to hide, i guess. someone's intellectual property, we can't know what they're getting, what we are getting, it was interesting to read some of the recent comments, and i gather that you said if you had invested in index funds instead of this group of hedge funds or whatever they are that 88% funded, perhaps you could rethink this and get out of these entangling secrets of alliances that mostly i use to
-- i know that the p.c. these days is backing the privatization where the public's sphere has to be turned into something for private ownership of the prophet would be much less accessible. we know how the public sphere is less six -- accessible to us each day. there's also the idea to invest in some of the local building projects. giving -- given a lot of our recent failures, the new transbay terminal, i would guess , not really knowing, that probably a lot of our public construction projects are mobbed up. he would know more about that than i do, but i certainly hope you wouldn't be investing in some of those companies. i see no reason why the subway has to take so long unless there
is just a lot of stuff going on. we know that that particular budget has been fudged a lot, and certainly it is not something that other cities would put up with that kind of delay on such an important project, presumably, i guess that is about it. i really urge you to get away from the secrecy of the hedge fund and come back to normal, prudent and public stewardship. >> my name is john stenson. i am a 44 year member of our pension fund. i understand that you have reduced the rate on our pension fund asset from seven-point 5% and seven-point 4%. based on this, i cast low liquidity.
the rates for retention should be at least 10% not seven-point 4%. you should be able to get a 7.4% from a low cost, moderate risk index fund, or a 60-40 balance fund. they need only to invest in three assets. stocks, bonds, real estate his, you only need of localized investment in these three asset classes. those of you who don't know what it is, it is somebody that believes in the investment philosophy of the late jack bogle who started the mutual fund. let me give you the past ten year returns of an investment in stocks, bonds, and real estate.
ten year annual returns, 15.7%. vanguard 60-40, balanced fund, ten year return, 11.07%. vanguard of real estate index, ten year return, 18.17%. average return of these three funds is 15%, the management for these funds are less than half of 1%. asked misconduct poker, if you average seven-point 4% return on your at high risk," cost, hi liquidity pension fund assets, and what you will pay in a management and performance fees in the next ten years, it should be enough to buy a san francisco office building for you all to do business in. thank you.
>> first of all, i would like to welcome you to the board, hopefully you serve for the same dedication and confidence as wendy jordan who proceeded you, and also my concern about hedge funds. i don't believe they perform as well as the other securities do, and i think that there are other good investments that can be made that was pointed out by the previous speaker, so it is basically what hedge funds are doing, as they're having a growing incidence in the economy they take overseers, they take over hospitals, they take over so many corporations when they are not doing well. they are basically -- it is like a herd phenomenon where elephants are attacked by hyenas
, they start nipping at the heels of the stragglers behind. in the economy, some of the stragglers can recover, but basically the hedge fund manager takes over, sometimes they will run the corporation into the ground, they will lay off employees, and then they will proceed to sell it on the market as a part -- -- on a profit. i don't think we should be investing in this kind of immorality, and also, we will have lousy returns to show for it. these are my concerns. thank you. >> if there is no further public comment, and before we move on -- go ahead, mr. sanchez. >> and president of protect our benefit. i will start off welcoming scott , our new trustee. we want to work with you, we expect good things from you, that is great. we also would like to go on record of thinking commissioner
peskin and jordan for her years of service. you came in at one of the most difficult times. when i think about the retirement system, where they are today, top-tier, writing at the top two or three in the nation and the public pension fund, i know it has been a collaborative effort. staff does not give enough credit, managers don't get enough credit, bill, you don't get enough credit, but i know we have a very cohesive retirement system. it is something that the city should be very proud of, and welcome aboard. thank you. >> i can't let that go. retired employees of the city and county and vice president with retirees. i just want to say ditto on what
my colleagues said. welcome to scott, commissioner, we worked together for many years on the health services system, and it was very successful, so i'm looking forward to you having successful term here as well. i just wanted to say in advance to everybody, happy holidays for easter, and many easterners to celebrate everything you can. keep up the good work so we can get that supplemental by the end of july. thank you very much and we worked forward to working with you this next term. >> that concludes item four, public comment. i was going to take this moment before we start voting to introduce our newest commissioner trustee. would you like to do it now or wait? >> okay. item five, minutes of the march 13th meeting.
are there any additions, corrections, or deletions? i motion -- a motion to accept is in order. >> we adopt the minutes of the march 14th meeting. >> is there a second? motioned by bridges and seconded by two. all those in favor -- correction , is there public comment? no public comment. all those in favor say aye. >> aye. >> opposed? >> no. item six, consent calendar. i can't hear you. [indiscernible] >> he may not -- you may not abstain without aboard -- -- a vote of the board. >> but we can vote to that? >> motion to recuse is in order. is a second.
>> a motion to abstain. >> thank you. >> we vote to allow him to abstain. >> all those in favor? opposed? >> it is unanimous. a motion to adopt the minutes is still in order. all those. >> opposed? six, consent calendar. >> to any members wish items to be set aside for separate consideration? if not, are there any items that you wish to ask questions of staff or whoever? if not, a motion to accept it. the consent calendar is in order before public comment. motion made, seconded.
any public comments? all those in favor say aye. >> aye. >> opposed? none. that takes us to the investment calendar, item number 7. mr. coker, you have the floor. >> very good, thank you, questionnaire. board members, you may recall that last month we began a series on risk management. this is a three part series. the first was last month, and that was on asset allocation optimization of risk and return. the second part is today, and there's three parts to that. one is and will be presenting a comprehensive analysis of our liquidity profile profile, as well as our cash flow forecasting and in addition to that, we will have two more parts to the risk management
today, and that is we have a two series of casing schedules, one prepared by cambridge, another prepared by tori cove. these are our to offer private market consultants. there are some mild differences, but we look it -- we look at as much data as we can, if we have talked sets of data, we want to evaluate those. and then the third part of the risk management series will be next month, and that is a sweeping view of all the risk exposures throughout our portfolio, both by asset class and for the plant as a whole. with that, i'm going to ask anna to walk through today charge of materials on liquidity. >> before you start, i want to bring something to your attention. sometimes when you look at us and the microphone is over here, your voice will be missed, since we're on television, plus a couple of board members need to hear your explanation on this topic, make sure you pick up on
it because the volume will not necessarily pick you up. >> thank you. >> okay. , good afternoon. we will proceed with a second wrist a management presentation. the first one was last month hit we refuse -- we reviewed the risk asset allocation. the big part of any comprehensive risk management framework is the liquidity management, and we will dive in and talk about what we propose for the san francisco retirement system. we propose an annual process that evaluates three core pillars, and brings it all together in one picture. i will start on the right with the forecast of pension obligation. this is where i would like to acknowledge the work with our
actuary, janet, who is doing an amazing job in making sure to work hi ron and we also worked with an apc so that we have good estimates of what to expect in terms of our pension obligations i will have a few slides on that , but we've collected a lot more details, and there's also been a presentation on the trust , and their scenarios these are why we are here and why our biggest obligation here is to make sure we continue paying the benefits that are promised. so that is the first pillar, in the first input of the liquidity profile. the second is on the left-hand
side, and we will spend a lot of time today analysing and understanding how we estimate and this is the cash flow forecast for our private investments. we have considerable allocation to private investment, and the asset allocation that we reviewed last month, we have 45% of total plan assets dedicated to private investments. these are draw down vehicles. they draw capital and opportunistically distribute it, and it's hard for us to estimate what the calls are, and what the liquidity profile is, but it doesn't mean we wouldn't be able to do it, and we will walk through the models and if few basic case scenarios and stress test that we performed with
cambridge, with our best leaders in this private investments to understand that is the second pillar, and the third pillar of the annual liquidity management framework is understanding what is the liquidity profile of the assets we have what type of rebalancing can we do to best meet our obligations, and i will give you an example, we talked about bill talked about last time, about origins of the compounding, and understanding that we are net payers, and we will talk about it have a
billion outflows of the funds to you for, 2018. we had to work internally, and i will describe how it works, with how the system works to make sure that we can meet this, and what is the profile of each asset that we hold is the framework, and it is very important to make sure that we also run it in base case and a stress test, and understand what are the stress tests. moving on, i will skip page 3, moving on to page 4. a lot of credit here to janet and chiron where we are looking on this page, in red, on the bottom, these are benefits plate
payments plus implement of colours and in us -- administrative expenses. this is the cash out. actual, and then projection for the next five years on the top of the page, you see in green, the contributions we receive from both members contributions and employer contributions you can see that they are net outflows this year, it is over half a billion dollars in five years, close to $700 million ouija project and think about it and it will be $1.1 billion. the further you go, the larger area it is, but it is important to understand that they grow, and important that the net outflow gross, right now we are about 2% net outflows.
particular markets are not there yet or feel uncomfortable, that can impair all the hard work that our investment team is doing day after day and month after month. improving, now hundreds recommendations that we bring in front of you. >> we've attempted to show even in the most severe stress is we have plenty of liquidity. we have one and a half billion net outflows for private markets and $500 million for benefit payments but that 1.5 is anchored in that point in time. those numbers turn positive years in the next two
presentations. that is partially offset by rising net-cash outflows for benefit payment that's we know is 500 and good visibility, it will be 700 million in five years and a billion in 10 years. as we're going to show you in the second and third presentation today, is that if we meet our return objectives for the private markets, the cash inflows from private markets net of capital being called by managers, should equalize our net benefit payments even when they climb in 2028. >> let me walk you briefly through the two sets of graphs on this page. what we attempted to do here is look at the data that we have
for private equity portfolio. this is our private equity portfolio parted in 1987. over the course of 32 years, this generated $4.5 million of health. so $4.5 billion of wealth, how do we define wealth or what cambridge calls value creation. the total value, which is a market value of the private investment, plus the distributions we received from our managers minus we we paid or called by our managers. so, that wase that was valued.
so, on the graph on the left, we will see the percentage of the funds and we invested in 500 funds, you will see if we -- the distributions were equal, if we equal percentage of wealth, or depreciation, from each fund, then we would be looking at the orange line that is 25% of managers, distribution of wealth. that's not what we see. we see that 25% of managers generated over 65% of wasn't. that is the data from our portfolio. on the right, similar analysis and you will see that if we assume -- that each vintage equally adds to the wealth
accumulation then 25% of vintages would have generated 25% of returns. that's not what we see. the analysis here as 28 years of vintages and i didn't include the younger vintages, but you will see that 25% of vintages or years that investment in january that's 60% of wealth. so, as a result, the conclusion is that if one or two vintage years can drive the performance of the entire private equity portfolio and that's why it's so important for us to understand what is our commitment? and talk about it now and what does it do? what's the right commitment to private investments where there's market dislocation and it has a result on the over all
allocation. with that, i will turn it over to david. >> this is now moving on to item number 8. can we call number eight? >> discussion item. >> very good. this is the first of two and this is tory cove in cambridge. >> commissioner, he has a comment before we move onto th the -- >> they need to call for public comment on the previous item -- >> is there any public comment on the last presentation? >> i would just like to say -- [ please stand by