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Municipal Healthcare and the GIC. Andrew Powell Analyst/Consultant Boston Benefit Partners, LLC Bridgewater-Raynham Education Association October 5, 2010.  177 Milk Street • Suite 310 • Boston, MA 02109 • tel 617.570.9100 • Healthcare Costs.

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municipal healthcare and the gic

Municipal Healthcare and the GIC

  • Andrew Powell


Boston Benefit Partners, LLC

Bridgewater-Raynham Education Association

October 5, 2010

177 Milk Street • Suite 310 • Boston, MA 02109 • tel 617.570.9100 •

healthcare costs
Healthcare Costs
  • Steadily rising over the past decade +
  • Massachusetts has some of the highest costs in the nation
    • Best access to care
    • Aging population
    • Robust Bio-tech industry that drives technology
    • Teaching Hospitals
  • National Healthcare Reform
    • Reforms health insurance with access and mandates
    • Does not address cost problem
budgets vs healthcare costs
Budgets vs. Healthcare Costs
  • Leaner budgets are squeezing everyone
    • Reduced local aid
    • Less revenues with bad economy
    • No real cost-reduction strategies
  • Unions are caught in the middle
    • Pressure to make changes
    • Protracted negotiations over salary and benefits
    • Has become a political battlefield
      • Boston Globe
      • Mass. Taxpayers Foundation
      • Boston Municipal Research Bureau
controlling costs limited tools
Controlling Costs – Limited Tools
  • Plan Design Tools – immediate impact
    • Coinsurance
    • Deductibles
    • Co-pays
    • Premium contribution percentages
  • Non-plan Design Tools – long-term impact
    • Workforce wellness
    • Tiered or selective networks
plan design copays
Plan Design - Copays
  • Traditional office visit copays increasing - $5 copays disappearing and $20 or $25 [or higher] copays are common
  • Separate, higher copays for specialist office visits
  • Higher copays for 3rd tier drugs and new 4th tier drug copays
  • New in-patient and out-patient service copays
  • New MRI/CAT scan procedure copays
insurance product innovations
Insurance Product Innovations
  • Driven by employer cost concerns
    • Leaner budgets, reduced local aid
    • pressure to reduce premium trend
  • Move to the GIC …or create a plan with similar benefit design?
    • GIC plan design options
    • Municipal Blue products from Blue Cross
    • High deductible and tiered network products from Harvard Pilgrim or Tufts
sample bcbs plan
Sample BCBS Plan

Blue Options Plan = Tiered Networks

  • Tiered Copays for PCP
    • Tier 1 - $15
    • Tier 2 - $25
    • Tier 3 - $45
  • Specialists - $45
  • $100 Emergency Room Copay
  • High End Imaging/MRI, CAT, PET Scans
sample bcbs plan8
Sample BCBS Plan

Blue Options Plan = Tiered Networks

  • Tiered Hospital Copays/Admission
    • Tier 1 “Enhanced” $250
    • Tier 2 “Standard” $500
    • Tier 3 “Basic” $1,000
  • Prescription Drugs
    • Retail - $15/$30/$50
    • Mail Order - $30/$60/$100
sample bcbs plan9
Sample BCBS Plan

Blue Value Plan = Higher Copays

  • $20 PCP and Specialist Copay
  • $75 Emergency Room Copay
  • $50 High End Imaging/MRI, CAT, PET Scans
  • $500 Inpatient Hospital Copay
  • $250 Outpatient Copay
  • Prescription Drugs
    • Retail - $15/$30/$50
    • Mail Order - $30/$60/$100
be afraid be very afraid if
Be Afraid…Be Very Afraid if…
  • You are offered a plan that uses the following words:
    • Value plan
    • Rate Saver plan
    • Best Buy plan
  • These plans are good for management; not necessarily good for employees
what is the group insurance commission gic
What is the Group Insurance Commission (GIC)
  • Established in 1955 by State Legislature
  • Purchases Health Insurance for more than 350,000 state and municipal employees, retirees, and dependents
  • Quasi-Independent State Agency Governed by 15 Commissioners
    • Appointed by the Governor
    • 4 Labor seats, 1 Retiree, 10 Industry, Management
  • July 2007 – MGL 32B, Section 19 Amended to allow Municipalities into the GIC
why is gic so attractive to municipal management
Why is GIC so Attractive to Municipal Management?
  • Premium costs tend to be lower
  • More plan choices
  • No bargaining over plan design, unions lose ability to negotiate
  • Reduces school district’s administrative burden
  • Media and some politicians have called the GIC a “panacea to costs”
gic health insurance plans
GIC Health Insurance Plans

GIC Plan Options

  • Active Employees & Non-Medicare Eligible Retirees
    • Regional HMOs (11.5% based on 2009 enrollment)

Fallon, Health New England, Neighborhood Health Plan

    • Statewide, Limited Network HMOs (New as of 7/1/2010

Tufts Spirit and HPHC Primary Choice

    • PPO Plans (55% based on 2009 enrollment)

Tufts, HPHC, Unicare Plus & Choice

    • Indemnity (21.5% based on 2009 enrollment)

Unicare Basic with CIC

* 80% of municipal subscribers to date have selected a GIC PPO plan

gic health insurance plans14
GIC Health Insurance Plans

GIC Plan Options

  • Active Employees & Non-Medicare Eligible Retirees Choose from:
    • 4 Statewide PPO Plans
    • 2 Statewide, limited network HMO Plans (new option)
    • 4 Regional HMO Plans
    • 1 Indemnity Plan
  • Medicare-Eligible Retirees:
    • Retirees must join Medicare if age 65 and Eligible for Medicare (Self or Spouse)
    • Choose from 6 Medicare Supplemental Plans
gic retiree health insurance plans
GIC Retiree Health Insurance Plans

GIC Plan Options

  • Medicare Supplement Plans
    • HPHC Medicare Enhance
    • Tufts Medicare Complement
    • Tufts Medicare Preferred
    • Fallon Senior (Worcester Area)
    • Health New England MedPlus (Western MA)
    • Unicare Indemnity Medicare Extension OME

w/ CIC (90% of current enrollment)

gic plan types
GIC Plan Types
    • No networks necessary
    • National coverage with no referrals
    • Best suited for outside of New England retirees and residents
gic plan types17
GIC Plan Types
  • PPO
    • No PCP referrals necessary
    • Regional networks of physicians limited to New England
    • Provides an out-of-network benefit
gic plan types18
GIC Plan Types
  • HMO
    • Requires use of a Primary Care Physician
    • Referrals necessary for specialty care
    • Coverage only available within HMO’s network
    • Tufts Spirit plan does not require a PCP referral
gic eligibility rules
GIC – Eligibility Rules
  • Municipal Employees May Not Participate in GIC Dental, Vision, Life or LTD programs.
    • Lawrence will continue to offer Altus Dental plan
  • Each Member Must Provide Birth and Marriage Certificates for Dependent Coverage
  • New Hires are Eligible First of the Month after 60 Days
  • Retirees over Age 65 on Medicare with Younger Dependents have Special Enrollment Rules
gic eligibility rules23
GIC – Eligibility Rules

Medicare Eligible Retirees

  • If 65 and Medicare Eligible
  • Retiree Enrolls in Medicare Supplement Plan
    • If Retiree has Spouse and 1 Dependent under 65, they enroll in two single GIC plans (Example with Tufts/HPHC)
    • If Retiree has Spouse and 2 or more Dependents under 65, they enroll in Family GIC plan (Example with Tufts/HPHC)
the gic option
The GIC Option

Advantages Disadvantages

Lower premiums Higher out-of-pocket expenses

Moderate premium increases Lose right to negotiate co-pays

*Retiree Protection No Blue Cross products

No GIC Life, Vision or Dental

* Why do retirees acquire protection under the GIC? . . .

section 19 coalition bargaining
Section 19, Coalition Bargaining

What is Section 19

Coalition Bargaining?

section 19 coalition bargaining26
Section 19 Coalition Bargaining
  • The Law:
    • Mass General Laws Chapter 32B Section 19
    • Allows a city/town (or regional school district) to negotiate with all of the town (or district) unions at one bargaining table over the issue of health insurance.
  • Section 19 amended in July, 2007
    • Allows cities and towns to opt into the GIC Pool 1 rates through Section 19 coalition bargaining.
    • Allows for impasse resolution procedure.
section 19 coalition bargaining27
Section 19 Coalition Bargaining

The Process: How does a municipality get intothe GIC?

  • Local governing body (Selectmen, City Council, Regional School Committee) votes to adopt Section 19 of MGL ch.32B. Acceptance may be contingent on eventual entry into GIC.
  • Municipal representatives meet with the Public Employee Committee to negotiate a Section 19 / PEC Agreement. Either party may force other party to meet with 30 days notice.
  • Bridgewater-Raynham is already Section 19
section 19 coalition bargaining28
Section 19 Coalition Bargaining

The Process: (cont.)

  • Negotiations focus on:
    • Premium % contribution split
    • Medicare Part B % contribution
    • Impasse resolution procedure
    • Duration – must join for three or six years (GIC only)
  • The Agreement must be finalized before December 1, 2010 in order to get into the GIC for July 1, 2011!
  • No agreement can take place unless accepted by the local governing body and 70% of the union coalition weighted vote.
section 19 coalition bargaining29
Section 19 Coalition Bargaining

The Public Employee Committee (PEC)

  • PEC includes reps from each collective bargaining unit and a retiree designated by the Retired State, County and Municipal Employee Association (RSCMEA).
  • Retirees have 10% vote.
  • Remaining 90% vote is weighted, based on number of employees eligible for health insurance.
municipal insurance legislation
Municipal Insurance Legislation

Last year we were told - There will be changes.

  • Governor wants change.
  • Senate Leadership wants change.
  • House Leadership wants change.
  • Municipal leaders want change.
  • Cost of Active and Retiree Insurance are overwhelming municipal budgets.
  • The economy is not getting better.
municipal insurance legislation31
Municipal Insurance Legislation
  • Two concepts in play
  • Senate/Special Commission on Municipal Relief
  • House/Massachusetts Municipal Association
municipal insurance legislation32
Municipal Insurance Legislation
  • Senate/Special Commission
    • GIC determines its average cost per subscriber of health insurance.
    • Municipal employer calculates its average cost per subscriber.
    • If municipal cost is less than or equal to GIC –no action required.
    • Mandatory Medicare (Special Comm.)
municipal insurance legislation33
Municipal Insurance Legislation
  • Senate/Special Commission (cont.)
    • If municipal cost exceeds GIC by xx%, triggers process to bargain changes
    • Section 19 convenes
      • All unions (PEC) in one process with municipal employer
      • Unions use weighted voting – 70% standard
      • Retirees have 10% vote – get protection
municipal insurance legislation34
Municipal Insurance Legislation
  • Senate/Special Commission
    • Parties can
      • Agree to go into GIC (health insurance only)
      • Agree to plan that meets GIC cost benchmark
      • Go to arbitration
    • Some penalties may apply
      • If municipal employer does not meet GIC cost
      • If agreement on insurance not meet benchmark
      • Penalty – loss in local aid
municipal insurance legislation35
Municipal Insurance Legislation
  • MMA
    • Municipal employer granted unilateral right to alter plan design.
    • Limits on out of pocket costs to participants based on similar GIC plans.
    • Bargain on premium contribution splits only – impact bargaining.
    • If exceed GIC plan o-o-p, then have to bargain.
municipal insurance legislation36
Municipal Insurance Legislation
  • Has become a focus in Gubernatorial race
  • Likely to be addressed on floor in winter 2010
  • MMA is lobbying heavily
  • The insurance companies are ready for either option or no change
Q & A

Andrew Powell

Boston Benefit Partners, LLC

617 – 570-9100 extension 224