GIC Continues to Examine Health Plan Affordability

Review Comes at Request of Mass Retirees 

AUGUST 7, 2018: Following several years of increased healthcare costs paid by retirees in their insurance through the state’s Group Insurance Commission (GIC), Mass Retirees called upon the Commission to consider affordability prior to any further increases in cost. 

That request was championed by Commissioner’s Jane Edmonds, Tim Sullivan and Toby Choate – among others, including GIC Executive Director Roberta Herman – who initiated a special Subcommittee on Affordability. Since spring, the Subcommittee has been examining GIC costs in terms of premiums, copayments and deductibles to report on how they compare to similar health plans for retirees and active employees. 

At the August GIC meeting, which was held today, the Commission announced that it was breaking the information gathered into the impact on three subsets of enrollees: Active Employees, non-Medicare Retirees, and Medicare Retirees. The GIC has enlisted the help of the state’s Department of Revenue to help provide demographical information on household income.

Without learning private and confidential information on individual retirees or their families, the GIC will be provided with generalized information on the aggregate household income of employees and retirees within the three subsets.

Affordability is difficult to determine. While definitions amongst individuals will widely vary, by determining household income and geographical cost-of-living data, the GIC hopes to be able to develop composite models that represent the three types of enrollees.

“When looking at what is affordable or who is in need of help, you have to look beyond someone’s pension amount. That number, regardless of how high or low it might be, does not tell the full or an accurate story. The pension of a career public employee might be higher than average, but that person may not qualify for Social Security or have other retirement income. Whereas someone with a more modest pension might have split their career between the public and private sectors and now receive several different sources of retirement income,” explains Association Legislative Director Shawn Duhamel.

“Further complicating matters is household income. Affordability for a married couple could be quite different than that of a single person or someone whose spouse has predeceased them, especially with Social Security’s Government Pension Offset (GPO) law. These are not easy questions to answer, but the facts are important when trying to help the people most in need of relief.” 

GIC officials expect to have the DOR’s report ready for discussion in September, with a full report by the Subcommittee slated to be released in October. The fall deadline is important because the GIC will soon begin to finalize plans for FY2020. Benefit decisions, including setting out-of-pocket costs and premiums will take place early in 2019.

“Once the income analysis is complete, it is important that the right comparisons are done in determining what “affordable” means in Massachusetts in 2018 and beyond. Using national averages or the federal poverty standards are not accurate guides, in my opinion. We know that Massachusetts is among the most expensive states in which to live. We also know that our healthcare costs are, on average, higher than most other states,” said President Frank Valeri. “Those factors must be accurately accounted for, along with the fact that our retirees did not participate in Social Security while in public service.

“We know that the cost of healthcare is becoming increasingly unaffordable for a growing number of retirees, especially those who do not qualify for Medicare. Something needs to be done to provide relief for those who are struggling, namely our older retirees who are getting by with very modest pensions and little to no Social Security. Let’s hope the GIC is serious about finding a way to help.”

Members should look to the November edition of the Voice for a full update.