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GIC Public Hearing. February 3, 2011. What’s the Problem?. Budget pressure on state revenues versus state expenditures continues despite some improvements in the economy We’re not out of the woods yet.

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GIC Public Hearing

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Gic public hearing

GIC Public Hearing

February 3, 2011

Gic public hearing

What’s the Problem?

  • Budget pressure on state revenues versus state expenditures continues despite some improvements in the economy

  • We’re not out of the woods yet

Total health benefit cost per employee rises 6 9 in 2010 the sharpest increase since 2004

Total health benefit cost per employee rises 6.9% in 2010, the sharpest increase since 2004

*ProjectedSource: Mercer’s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April) 1990-2010; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey(April to April) 1990-2010.

Disparities in provider costs

Disparities in Provider Costs

Attorney General’s “Investigation of Health Care Cost Drivers” and Division of Health Care Finance and Policy hearings 3/16/10

  • Provider payment tied to market leverage and geographic isolation

  • 10 Massachusetts hospitals get 10% - 100% more than the other 55 for similar work

  • Price variations for hospitals and physicians offering similar services are NOT explained by quality of care, complexity of services/sickness of population or whether the hospital is an academic teaching or research facility

What have other employers done

What Have Other Employers Done?

  • Shifted costs to employees

  • Implement high-deductible plans (example: $1,000-$5,000 deductibles before benefits begin)

  • Institute co-insurance (example: member pays 20% of the cost of services)

  • Eliminated retiree benefits

Gic public hearing

Among Firms Offering Health Benefits, Percentage of Firms That Report They Made the Following Changes as a Result of the Economic Downturn, by Firm Size, 2010

*Estimate is statistically different between All Small Firms and All Large Firms within category (p<.05).

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2010.

Average ppo deductible for individual in network coverage

Average PPO deductible for individual, in-network coverage

Gic public hearing

Average Annual Worker and Employer Contributions to Premiums and Total Premiums for Family Coverage, 1999-2010













* Estimate is statistically different from estimate for the previous year shown (p<.05).

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2010.

Gic public hearing

Among All Large Firms (200 or More Workers) Offering Health Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

*Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2010; KPMG Survey of Employer-Sponsored Health Benefits, 1991, 1993, 1995, 1998; The Health Insurance Association of America (HIAA), 1988.

National health reform

National Health Reform

Added benefits and costs effective July 1, 2011

  • Dependent expansion to age 26, regardless of dependent’s status

  • No copays or deductibles for preventive services

  • Projected added premium costs of 1%-2%

What has the gic done to deal with the challenges

What Has the GIC Done to Deal with the Challenges?

2004 - Instituted Clinical Performance Improvement Initiative: members pay lower copays for providers with the highest quality and/or cost-efficiency scores:

Tier 1 (excellent)

Tier 2 (good)

Tier 3 (standard)


Physicians for whom there is not enough data and non-tiered specialists are assigned a plan’s Tier 2 level copay

Other gic initiatives

Other GIC Initiatives

  • Kept premium increases as low as possible (7.91% for FY11 and 3.19% for FY10) – but, deficits caused mid-year deductibles and increased copays

  • Introduced additional limited network plans: Harvard Pilgrim Primary Choice Plan and Tufts Health Plan Spirit

The state s budget crisis

The State’s Budget Crisis

  • $1.2 – $2 billion structural deficit projected for FY12

  • Causes: loss of $2 billion in one time funds, including $1.5 billion from ARRA

  • Escalating health care costs

  • Tax revenues will increase slightly, but not enough to get us out of recession (and $1 billion less than FY09)

House 1 s requests to state agencies

House 1’s Requests to State Agencies

  • All agencies asked to be part of the solution

  • Charge to the GIC – Find solutions to preserve and protect current benefits with more enrollees and no additional dollars

House 1 released 1 26 11

House 1 – Released 1/26/11

  • $1,662,466,938 for FY12

  • $1,645,669,744 for FY11

  • Variance $16,767,194

  • Doesn’t include modest rate increases – still in negotiation; or additional 1,800+ members from MBTA

The gic s philosophy

The GIC’s Philosophy

  • Don’t choose a solution that just shifts all the extra costs to the enrollees

  • Try to lower costs instead

The gic s approach

The GIC’s Approach

  • Share responsibility for reducing costs and improving quality– providers, members, health plans, and the GIC

  • Maintain comprehensive benefits and choice

  • Promote value of limited network plans

  • Adopt only modest employee share increases

  • Educate members about provider performance

  • Encourage healthy behavior

  • Maintain retiree health benefits

Option1 change premium contribution

Option1 – Change Premium Contribution

  • Increase premium contribution ratios by 5% for all actives, retirees, and survivors = $82 million

  • Appropriation Act does not get done until June – therefore, we can’t change ratios until it is enacted

  • Legislature made a 5% increase last year. Not likely to do it again.

Option 2 limit plan offerings

Option 2 – Limit Plan Offerings

  • Limit plan offerings, such as:

    • Drop all broad network plans

    • Drop all but one state-wide plan

  • Disruption and opposition from plans, providers, and enrollees (including legislators) would be extreme

  • Some plans could go under

Option 3 increase copays and or deductibles

Option 3 – Increase copays and/or deductibles

  • Increase upfront deductible or go to high deductible plan designs

  • Eliminate the fourth quarter carry-over of the deductible

    • Could save up to $20 million


  • Deductibles very unpopular

  • Hurts sicker patients

  • Doesn’t fit GIC principles

Option 4 make the buy out program more attractive

Option 4 – Make the Buy-Out Program More Attractive

  • Proposed legislation to add a mid-year buy out enrollment

Option 5 re enrollment with incentives to choose limited network less expensive plans

Option 5: Re-Enrollment with Incentives to Choose Limited Network, Less Expensive Plans

  • Counteracts inertia – most employees do not change plans – 2%-3% per year

  • Focuses attention on costs and savings

  • Rewards state employees who become part of solution

  • Puts market pressure on high cost providers

  • Savings depend on migration patterns

Option 5 re enrollment continued

Option 5 – Re-enrollment Continued

Some negatives:

  • Minor inconvenience for enrollees

  • Major work effort for GIC and GIC Coordinators

Commission vote of 1 27 11

Commission Vote of 1/27/11

  • All state employees required to re-enroll in health insurance

  • Overcomes inertia – most employees do not change plans – 2%-3% per year

  • Employees may be more likely to consider limited network place

  • Incentive offered to join limited network plans

Who will be required to re enroll

Who Will be Required to Re-enroll?

  • All active state employees who reside in Massachusetts and are covered by GIC health insurance

  • The GIC will choose a plan for you if you do not re-enroll: Be proactive!

  • Municipal members and state retirees and survivors will not need to re-enroll

State employees who enroll in limited network plans

State Employees Who Enroll in Limited Network Plans

Will receive a three-month premium holiday if you enroll in:

  • Fallon Community Health Plan Direct

  • Harvard Pilgrim Primary Choice Plan

  • Health New England

  • Neighborhood Health Plan - NHP Care

  • Tufts Health Plan Spirit

  • UniCare State Indemnity Plan/Community Choice

Provider access and plan cost

Provider Access and Plan Cost

Premium differences from last year don t know this year s yet

Premium Differences From Last Year – Don’t Know This Year’s Yet

Premium differences from last year continued

Premium Differences From Last Year (continued)

Weigh your options

Weigh Your Options

  • Find out if you are eligible for the health plan (See your Benefit Decision Guide)

  • For the plans you are eligible to join and interested in…

    • Review their benefit summaries and monthly rates

    • Weigh features that are important to you

  • Determine if your doctors and hospitals are in the plan’s network and which copay tiers they are in

    • Be sure to specify the health plan (e.g., Tufts Health Plan Spirit or Tufts Health Plan Navigator)

    • Note that if your doctor or hospital leaves the plan in which you have enrolled, you must select a new doctor or hospital that participates in your current plan for your care.

Once you choose a plan

Once You Choose a Plan

Your choice of plans is for a full year:

July 1, 2011 – June 30, 2012

You cannot change plans until the next annual enrollment period unless:

  • You move out of the plan’s service area

  • You become eligible for Medicare, in which case you must enroll in a Medicare plan

Open enrollment

Open Enrollment

  • April 8 – May 9, 2011

  • Changes Effective

    July 1, 2011

State employees who must re enroll

State Employees Who Must Re-enroll

  • Will be mailed notice beginning of March at home

  • Plans will market to you during March

  • Will receive a guide at home this year instead of through your benefits office with a special health plan enrollment form

  • Other enrollment changes (dependents, buyout, LTD, optional life) on regular forms

  • Return forms early to your Coordinator – no later than May 9

Unicare indemnity plan community choice

UniCare Indemnity Plan/Community Choice

Benefit Changes Effective 7/1/11 - $5,000 out-of-pocket per person calendar year maximum unchanged:

  • Co-insurance for non Community Choice (out-of-network) hospitals: pay 20% of allowable charges plus copay

    • Inpatient admissions

    • Outpatient surgery

    • Laboratory services

    • Facility charges

  • Hi-Tech imaging copay at non-Community Choice hospital will increase to $200

Prescription drug benefit changes effective 7 1 11

Prescription Drug Benefit Changes Effective 7/1/11

  • UniCare members: Nexium and Aciphex Proton Pump Inhibitors (PPIs) for heartburn no longer covered; covered options include over-the-counter PPIs, generics, and a brand alternative

  • Tufts Navigator and Tufts Spirit members:

    • Members who receive their maintenance medications at a retail pharmacy must tell CVS Caremark whether or not they wish to switch to a 90-day supply through either mail order or a CVS pharmacy

    • All specialty medications will be provided through CVS Caremark’s specialty drug pharmacy

Open enrollment for dependents ages 19 26

Open Enrollment for Dependents Ages 19-26

  • Definition of dependent under federal health reform: son, daughter, stepson, stepdaughter, adopted child, or eligible foster child

  • Dependent must live in health plan’s service area unless enrolled in full time student coverage. Or, family needs to select UniCare State Indemnity Plan/Basic.

  • New form – available during open enrollment

Other federal health reform changes effective 7 1 11

Other Federal Health Reform Changes Effective 7/1/11

  • $0 copay for preventive services, such as mammograms, scheduled immunizations, routine physical and OB/GYN visits, colorectal cancer screening, and cholesterol screening for adults

  • Calendar year deductible will no longer apply to these services

Life insurance for state enrollees effective 7 1 11

Life Insurance for State Enrollees Effective 7/1/11

  • The Hartford awarded new contract as life insurance carrier

  • Basic life rates will go down

  • Optional life rates will change:

    • most active employee rates will stay the same or go down

    • many retirees’ premiums will increase – evaluate whether optional life makes sense

Long term disability for state employees effective 7 1 11

Long Term Disability for State Employees Effective 7/1/11

  • Benefit Enhancement for disabilities occurring on or after 7/1/11:

  • Benefit increasing to 55% of your gross monthly salary - was 50%

Vision carrier for dental vision program

Vision Carrier for Dental/Vision Program

  • Program for Executive Office managers, legislators, and legislative staff

  • Carrier selected at 2/11/11 Commission meeting

  • Possible benefit changes

Benefit decision guides

Benefit Decision Guides

  • Mailed to active state employees and all retiree/survivor homes week of April 4

  • Municipal employees will receive through their benefit office

  • Guides will be on the GIC’s website by April 1

Do your homework

Do Your Homework

  • Plans will have provider network details on their websites before open enrollment

  • Or, call the plans for provider details

No frills health fairs

No Frills Health Fairs

  • Because of re-enrollment for state employees – large crowds expected

  • Scheduled in large facilities near state employee worksites

  • No wellness exhibits – focus on information to help members choose a plan

Gic website resource www mass gov gic

GIC Website

  • Benefit Decision Guides, newsletters and other publications

  • Latest open enrollment news

  • Information about and links to plans and their provider directories

  • Answers to frequently asked questions

  • Forms to expedite your enrollment decisions

Please be patient

Please Be Patient

  • May be difficult to get through to the GIC by phone during open enrollment

  • 50 staff – processing over 100,000 forms, working the fairs, and answering calls

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