municipal healthcare and the gic 177 milk street suite 310 boston, ma 02109 tel 617.570.9100 n...
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Municipal Healthcare and the GIC
177 Milk Street • Suite 310 • Boston, MA 02109 • tel 617.570.9100 • www.bosben.com
Andrew Powell Analyst/Consultant
Boston Benefit Partners, LLC
Bridgewater-Raynham Education Association
October 5, 2010
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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”
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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 Plans
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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
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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 Retiree Health Insurance Plans
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GIC Plan Types INDEMNITY
– No networks necessary– National coverage with no referrals– Best suited for outside of New England retirees and
residents
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GIC Plan Types PPO
– No PCP referrals necessary– Regional networks of physicians limited to New
England– Provides an out-of-network benefit
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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
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Sample Plan - PPO
Plan Design Options TUFTS NAVIGATOR PPO
In-Network Out-of-Network
Primary Care Physician Office Visit
$20 copay 20% after deductible
Specialist Office Visit $25 Tier 1$35 Tier 2$45 Tier 3
20% after deductible
Calendar Year Deductible $250/$750 $400/$800
Emergency Room $100 $100
Inpatient Hospital Care $300 Tier 1$700 Tier 2
Per admissionMax of 4/ calendar year
20% after deductible
Outpatient Hospital Care $150 copay/4 per year 20% after deductible
Prescription Drugs
RetailMail Order (90 day)
$10/$25/$50$20/$50/$110
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Sample Plan – Limited Network HMO
Plan Design Options Tufts Health Plan Spirit
Limited Provider Network, No PCP Referrals
Primary Care Physician Office Visit $20 copay
Specialist Office Visit $25 Tier 1$35 Tier 2$45 Tier 3
Calendar Year Deductible $250/$750
Emergency Room $100
Inpatient Hospital Care $300 Tier 1$700 Tier 2
Per admissionMax of 4/ calendar year
Outpatient Hospital Care $150 copay/4 per year
Prescription Drugs
RetailMail Order (90 day)
$10/$25/$50$20/$50/$110
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Sample Plan – Regional HMO
Plan Design Options Fallon Select HMO
Regional Provider Network PCP Referrals Necessary
Primary Care Physician Office Visit $15 copay
Specialist Office Visit $25 Tier 1$35 Tier 2$45 Tier 3
Calendar Year Deductible $250/$750
Emergency Room $100
Inpatient Hospital Care $250Per admission
Max of 4/ calendar year
Outpatient Hospital Care $125 copay/4 per year
Prescription Drugs
RetailMail Order (90 day)
$10/$25/$50$20/$50/$110
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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 Rules
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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)
GIC – Eligibility Rules
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The GIC OptionAdvantages 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? . . .
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What is Section 19
Coalition Bargaining?
Section 19, Coalition Bargaining
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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.
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Section 19 Coalition Bargaining
The Process: How does a municipality get into the 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
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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.
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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.
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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.
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Municipal Insurance Legislation
Two concepts in play
Senate/Special Commission on Municipal Relief
House/Massachusetts Municipal Association
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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.)
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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
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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
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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.
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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
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Q & A
Andrew Powell
Boston Benefit Partners, LLC
617 – 570-9100 extension 224