Association Deeply Opposes $60m Cost Shift

FEBRUARY 17, 2015: Over the objections of our Association and union representatives, the Commonwealth’s Group Insurance Commission (GIC) voted to increase copayments and deductibles for Fiscal Year 2016, beginning July 1, 2015.

While this increase marks the first of its kind in more than five years, Association officials strongly oppose what we view as further cost shifting onto the backs of retirees and employees who utilize their insurance benefits.

Members should please note, Medicare enrollees are NOT impacted by many of the cost increases. For instance, the annual deductible for Medicare enrollees remains just $35 per person. Please see below for further details.

In voting in favor of the increase out-of-pocket costs, GIC officials pointed to the rising cost of healthcare as the driving force behind the decision. The GIC’s overall costs are expected to increase by some $160 million in FY16, driven largely by higher drug costs and the inability of some health plans to meet benchmarks set by the state’s cost containment law, Chapter 224, Act of 2012.

“Unlike past years when higher insurance utilization was truly the driving force behind cost increases, the culprit today is largely the cost of healthcare. In other words it is due to the cost of the product increasing faster than anticipated,” says Association President Frank Valeri. “I understand that Massachusetts is the most expensive healthcare market in the country and likely the world. But that is not the fault of our members, many of whom are now going to struggle to pay higher out-of-pocket costs.

“More needs to be done to control prices and establish a reasonable cap on what any individual is required to pay out-of-pocket. In reality, these increases are a $60 million tax increase on public retirees and employees.”

Had the GIC not increased copayments and deductibles, enrollees would have faced a 9-10% increase in monthly premiums for FY16 – far exceeding the previous five-year average increase. For FY15, the average premium increase was just 1% across all GIC plans.

“While we cannot reverse the vote of the Commission, what we can do is advocate for a broader reform of healthcare. Retirees cannot reasonably be expected to keep picking up new costs year after year. Our members simply cannot afford these costs,” said Association Legislative Director Shawn Duhamel. “These issues have to be addressed by the legislature and Governor Baker.

“We also look forward to working with Attorney General Maura Healey and Treasurer Deb Goldberg as they use their offices to help gain control over costs borne by retirees, whether they be on the healthcare or pension side of the table.”

The following are the changes approved by a vote of the GIC in Friday, February 13, 2015 as explained in a statement posted on the GIC’s website:

Benefit News for Fiscal Year 2016

Current projections include a $765 million shortfall for the Commonwealth and the GIC’s deficit accounts for $165 to $190 million of that shortfall.  Most of our current budget shortfall is structural – we have been underfunded for the last three years and the budget base was not updated for the additional members that we have added, the end of federal funds, and the supplemental budgets we’ve received.  The FY16 premium requests received from the plans, especially two of the larger ones, are not realistic given the budget situation. Additionally, too many patients are using expensive academic medical centers for routine care, further increasing costs for all of us.  

The Administration has committed to making the GIC’s budget whole.  However, despite the new budget base, there’s no room for increased spending next year.  With many pressing Commonwealth of Massachusetts concerns, agencies have been asked to come in with level funding.   The GIC has been pushing hard through the Centered Care Initiative to change the way providers are paid and move from fee for service payment arrangement that reward providers for ordering unnecessary tests and procedures to global payments.  This has been a tough slog and progress has been slower than we would like.  We will continue to push for these changes, but in the meantime, the Commission has had to make some difficult decisions.  These were not easy decisions and they will affect all of us who work for the state and local communities.  However, members will continue to pay lower out-of-pocket costs by seeking care from Tier 1 and Tier 2 specialists and Tier 1, and in some plans Tier 2, hospitals.

The major Employee/Non Medicare Health Plan changes effective July 1, 2015 include:

  • Harvard Pilgrim Independence Plan and Tufts Health Plan Navigator will become POS plans.  Members must designate their PCP with the plan and get referrals to specialists for the highest benefit level.
  • Prescription drug copays will increase to $10/$30/$65 retail up to 30-day supply and $25/$75/$165 mail order up to 90-day supply.
  • The calendar year deductible will change to $300 (individual) /$600 (two person) /$900 (family)
  • All health plans will tier specialists and the copays will increase to $30/$60/$90
  • Inpatient hospital copays for the wide network plans will increase to $275/$500/$1,500
  • Outpatient surgery copays for most plans will increase to $250

There are a few benefit enhancements:

  • The calendar year deductible will transition from a calendar year to a fiscal year.  For 2015, it will be a calendar year, for January – June, 2016 a half calendar year, and July, 1, 2016-June 30, 2017 will begin the fiscal year calendar year deductible. This will eliminate the deductible barrier for switching plans at next year’s Annual Enrollment.
  • Other ancillary benefits will also transition to the fiscal year (for example, physical and occupational therapy)
  • The Flexible Spending Account program for state employees will also move to a fiscal year and follow this same transition schedule.
  • For the Dental/Vision plan, new coverage for composite fillings on posterior teeth – covered at 80%

For Medicare Members

  • Prescription drug copays will increase to $10/$30/$65 retail up to 30-day supply and $25/$75/$165 mail order up to 90-day supply.

Additional details will be in the GIC Benefit Decision Guides.  These will be shipped to agencies, municipalities and retiree/survivor homes beginning April 3 and will be available as a download on our website at the end of March.