ABOUT LACERA

INSURANCE, BENEFITS & LEGISLATIVE COMMITTEE MINUTES 10-15-09

PRESENT

• Simon S. Russin, Vice Chair
• Edward L. Blecksmith
• Ed C. Morris

ABSENT

• William de la Garza, Chair
• James P. Harris, Alternate

ALSO ATTENDING:

BOARD MEMBERS AT LARGE

• Sadonya Antebi
• Yves Chery
• Les Robbins

STAFF, ADVISORS, PARTICIPANTS

• Lita Payne
• Gregg Rademacher

• Mercer Human Resource Consulting
• Clay Levister
• Laurie Silva

The meeting was called to order by Chairman Russin at 12:15 p.m.

1. APPOINTMENT OF VOTING MEMBER(S) IN THE EVENT ONE OR MORE REGULAR COMMITTEE MEMBERS ARE

   The Chair did not appoint an additional voting member.

2. APPROVAL OF THE MINUTES OF THE REGULAR MEETING OF SEPTEMBER 10, 2009

   A motion was made by Mr. Morris, seconded by Mr. Blecksmith, to approve the minutes of the regular meeting of September 10, 2009. The motion passed unanimously.

3. ACTION ITEMS

   1. Recommend the Board of Retirement direct LACERA’s voting delegate to support Tulare CERA #1, relating to reciprocity, for inclusion in the SACRS 2010 Legislative Platform.

      A motion was made by Mr. Blecksmith, seconded by Mr. Russin, to approve the recommendation. The motion passed with Mr. Morris voting no.

4. FOR INFORMATION
   1. Federal Legislation – Social Security COLA

      For the first time since 1975, there will not be a Social Security COLA for 2010. President Obama is currently asking Congress for a $250 emergency payment in 2010 for seniors, veterans, retired railroad workers, and people with disabilities. This proposed $250 payment is approximately a 2% increase for the average Social Security beneficiary.

      Also, two bills have been introduced to provide for an emergency COLA for 2010. In addition, two bills have been introduced to modify the formula that establishes the COLA.

   2. Staff Activities Report for September, 2009

      The staff activities report was discussed.

   3. CIGNA & Anthem Blue Cross Claims Experience

      The CIGNA & Anthem Blue Cross Claims Experience reports through August, 2009 were discussed.

   4. Health Care Reform Webcast September 30, 2009
   5. Chart of Health Reform Proposals
   6. Health Insurance Reform and Medicare
   7. LACERA Health Care Reform Talking Points

      One of the main health care reform issues which is likely to impact LACERA directly is the effect on the Medicare Advantage programs. Medicare Advantage programs are currently paid an amount of money by CMS that is greater than the average cost of providing Medicare services. Over time, it seems clear that the intent is to reduce those payments to the Medicare HMOs. This could cause significant increases in premiums, plans reducing service areas, or opting out of Medicare Advantage altogether. It could potentially reach the point where premiums are in excess of the benchmark, which would mean losing the savings advantage of the County supporting the Part B premium reimbursement policy.

      Some of the other items in terms of trying to save money on the Medicare fee for service program are structured around changing reimbursement rates to providers, and not reimbursing hospitals for things that are avoidable if proper care is given, i.e. bed sores. The intent is to have providers change their behavior and keep these things from occurring. If they don’t, these facilities will still try to obtain revenue to cover those expenses, and that goes directly to the commercial market, the insurance policies that are provided to active employees as well as to the pre-65 population. There is already a 15% increase in those costs to pay for offsets in Medicare and Medicaid that don’t actually cover the real price. Also, as costs continue to go up, and Medicare reimburses less, that will be borne directly by the insurance plans.

      There are a variety of other revenue pieces in the health care reform plan associated with surcharges on taxes. As insurance companies are taxed for Cadillac benefits and other types of things, those taxes will be accrued via premium rates, which will be passed along to the consumer.

   8. Federal Legislation
      • Weekly Highlights – September 28, 2009
      • Weekly Highlights – September 21, 2009
      • Weekly Highlights – September 14, 2009
      • Weekly Highlights – September 8, 2009

      Submitted for information only.

5. MISCELLANEOUS
6. PUBLIC COMMENT
7. GOOD OF THE ORDER

   (For discussion purposes only)

8. ADJOURNMENT

   The meeting adjourned at 1:00 p.m., after setting the time for the Operations Oversight Committee at 1:05 p.m.

Documents subject to public disclosure that relate to an agenda item for an open session of the Board of Investments that are distributed to members of the Board of Investments less than 72 hours prior to the meeting will be available for public inspection at the time they are distributed to a majority of the Board of Investments Members at LACERA’s offices at 300 N. Lake Avenue, Suite 820, Pasadena, CA 91101, during normal business hours of 9:00 a.m. to 5:00 p.m. Monday through Friday.

Listening Devices are available at days notice before the meeting date. Persons requiring an alternative format of this public notice pursuant to Section 202 of the Americans with Disabilities Act of 1990 may request one by contacting Cynthia Guider at (626) 564-6000, x3327 from 8:30 a.m. to 5:00 p.m. Monday through Friday, but no later than 48 hours prior to the time the meeting is to commence.

10/23/09