Legislature Weighs Health Insurance Reform

Legislature Weighs Health Insurance Reform
Retirees President Frank Valeri With CEO Shawn Duhamel

Rising Costs & Affordability Main Concerns

SEPTEMBER 2019: Earlier this year, Mass Retirees filed six separate legislative proposals relative to health insurance benefits for public retirees and surviving spouses. Known as “bills”, these proposals are now before various legislative committees where public hearings are held, followed by detailed analysis by committee staff.


A complete listing of Mass Retirees sponsored bills, along with sponsors and bill numbers, can be found in the May 2019 edition of the Voice.


Since 2010, retirees and employees have been forced to absorb a sharp rise in out-of-pocket costs at both the state and local levels. These higher and new costs come in the form of copayments and deductibles – both serving to lower and control the growth of monthly insurance premiums.


The premium contribution split is determined both by state law, as well as through local regulation and contracts. Chapter 32B, the state law governing municipal health insurance, allows for a minimum irrevocable contribution of 50% by any community. However, many cities and towns contribute more than the allowed minimum, with the state-wide average now believed to be 75/25. Contribution rates for state retirees are set by the legislature, with three levels of contribution depending upon the date of retirement (90/10, pre-7/1/94; 85/15, 7/1/94 to 1/31/2010; 80/20 anyone retiring on or after 2/1/2010).


While higher copayments and deductibles lower insurance premiums – thus lowering the costs for the state and municipalities, as well as monthly payments by retirees – healthcare costs do not magically disappear. Higher out-of-pocket costs are paid by those retirees and employees accessing health insurance benefits.


“During the winter of 2010 we saw one of the largest out-of-pocket increases ever when the state GIC introduced its first ever deductible for non-Medicare plans, along with higher copayments. This was done to help the state balance the budget during the recovery from the 2008 economic collapse,” recalls Association Insurance Coordinator Cheryl Stillman. “From that point forward retirees at both the state and local levels have witnessed a steady increase in their costs. We’re now at a point where many retirees, especially our older members, are struggling to afford these high payments.”


State retirees, enrolled in Medicare, are not subject to the annual deductible, which is now $500 for a non-Medicare individual and $1,000 per family. Deductibles at the local level vary, depending on municipality and insurance plan.


Copayments can also vary between Medicare and non-Medicare plans, as well as differing by plan. However, state law prohibits cities and towns from making unilateral changes in out-of-pocket costs, beyond the levels set by the GIC, without negotiating with local retirees and employees.


Retirees, enrolled in Medicare, have lower out-of-pocket costs due to the fact that the federal government is the primary insurer. Medicare enrollees qualify for the program at age 65, if they have at least 40 quarters under Medicare and/or Social Security. All public employees first hired after March 1, 1986 are subject to mandatory Medicare coverage and have paid the 1.45% Medicare payroll tax.


Currently, both the Joint Committee on Public Service and the Joint Committee on Healthcare Finance are now examining Mass Retirees sponsored bills that received public hearings in July. The bills include legislation capping out-of-pocket costs, prohibiting post-retirement increases in retiree insurance premium contribution splits and ensuring that retirees have a strong voice in the process at the GIC, as well as at the local level.

“Healthcare cost containment and reform continues to be a major focus here in Massachusetts, as well as around the country. Last year, efforts to pass new cost containment measures fell short at the end of the session. It appears that work is now underway between the chairwomen of Healthcare Finance, Senator Cindy Friedman (D-Arlington) and Representative Jen Benson (D-Lunenberg) to craft a new bill,” says Association Legislative Director Shawn Duhamel. “Beyond our own bills, we anticipate these issues are also being discussed as part of the bigger issue of healthcare reform on Beacon Hill.”

Relief for Non-Medicare Retirees


As noted earlier, out-of-pocket costs for retirees not enrolled in Medicare are often considerably higher than those paid by Medicare retirees. Regardless of age or length of retirement, non-Medicare retirees must enroll in the same insurance plans as active employees.


Without federal subsidies, these plans often have both higher monthly premiums and higher out-of-pocket costs for non-Medicare retirees.


“The vast majority of healthcare related complaints we receive are relative to cost and most of these members are not eligible for Medicare. They continue to witness their insurance costs increase, while their pension gets smaller. And remember, these retirees are not eligible for Social Security and are living on very fixed incomes,” says Duhamel. “Finding relief for these retirees has been difficult, that is until recently.”


What started as a small pilot program by Blue Cross Blue Shield of MA in 2017, has grown into a potential solution for lowering retiree healthcare costs. Working with municipalities, BCBS found a provision in federal law that allows non-Medicare retirees to buy into Medicare as a group. This provision has allowed communities, most recently Newburyport and Taunton, to buy access to Medicare for their non-Medicare retirees – with the municipality paying all late enrollment and other penalties assigned by the federal government.


Once enrolled in Medicare A&B, the retiree would have the same costs as all other Medicare enrollees, namely the Medicare Part B premium along with their share of the Medicare supplement plan.


“The key here is preparation, with which BCBS have done an excellent job. I should also note that state law requires that the municipality pay any additional fees or penalties due beyond the Medicare Part B premium.”


Now that the transition to Medicare has proven successful in several communities, Mass Retirees has approached the state GIC about implementing the plan. At the state level, more than 30,000 retirees are not eligible for Medicare enrollment.


“We’ve formally requested that the GIC explore the feasibility and have received word from Dr. Roberta Herman (GIC Executive Director) that it is under review. We believe this plan would not only help reduce costs for our current non-Medicare retirees, but would also save money for the state by having the federal government help cover our retirees,” added Duhamel. Further information on our legislative program, as well as efforts to transfer retirees into Medicare will be available in the November edition of the Voice.