Health insurance premiums under the state’s Group Insurance Commission are increasing for FY25. While increased costs are most certainly unwelcomed news, the fact that rising healthcare costs would result in higher monthly insurance premiums has been anticipated for months.
What had been unknown until recently, was how the GIC would respond to rising costs. Would the 17-member Commission opt for cost shifting the burden onto enrollees by increasing copayments and deductibles? Or would the state decide to absorb the lion’s share of the higher costs by increasing insurance premiums?
Thankfully, the Commission chose the latter option, rejecting the option of higher copayments and deductibles and instead voting to increase premiums.
“No one is happy that insurance premiums are going up. From the public comments of the Commissioners and staff, as well as through private conversations, it is evident that that GIC is very concerned about the impact of higher costs on enrollees. They are also concerned about what can be done in both the short and long-term to gain control over costs, without cost shifting or diminishing the quality of benefits,” said Mass Retirees Chief Executive Officer Shawn Duhamel. “It is also important that we publicly credit GIC Executive Director Matt Veno and his staff for their cautious and thoughtful approach. Concern for the impact on retirees is top-ofmind and very much appreciated.”
For state retirees and active employees, the decision to address rising healthcare costs through premiums means that the Commonwealth will cover at least 75-80% of the higher monthly premium. State retirees’ share of the monthly premium varies depending on the date of retirement (90/10; 85/15; 80/20), with recent retirees paying 20% of the monthly premium. Active employees contribute either 20 or 25%, depending on the date they were hired.
As we reported in the March edition of The Voice, the GIC’s decision not to increase out-of-pocket costs for FY25 represents the 7th consecutive year without an increase in copayments or deductibles. However, the prices charged for specific prescription drugs will vary depending on retail pharmacy and general market price fluctuations – similar to any other product that we purchase.
Following several years of health insurance cost increases of roughly 5%, the average increase across the GIC’s 8 non-Medicare plans is 9.5% for FY25. Thankfully, the news for Medicare enrollees is a little more positive across the 4 Medicare plans with an average increase of 4.1%.
To be clear, the growing price difference between Medicare and non-Medicare plans speaks volumes as to why the GIC must initiate a path forward for a Medicare Buy-In program for the 10,000 or so non-Medicare eligible retirees now insured under the GIC’s non-Medicare plans. The GIC is aware of Mass Retirees strong desire to see a Buy-in plan implemented in 2024, which would bring financial relief to both non-Medicare retirees and the GIC – all while maintaining excellent quality health insurance.
Healthcare cost increases are being driven by a few different factors. In recent years, medical inflation has begun to sharply rise once again. This comes after more than a decade of relative calm that came following the passage and implementation of the Affordable Care Act.
One major driver of higher costs is the continued escalation in prescription drug spending, which continues to account for a growing share of the GIC’s overall budget. Within the drug spend increase is also the high cost of new potentially life altering medications. For instance, new weight loss drugs that have recently come to market account for some $60 million in projected new FY25 costs to the GIC for non-Medicare insurance plans – which equals 7% of prescription drug spending.
New and expensive treatments place the GIC and other insurers in a difficult bind. They can either refuse to cover the new treatments, which is not a popular option for those enrollees who can benefit or approve the drugs for coverage and incur the new costs. Thankfully the GIC has opted to cover these new medications, but it cannot be overlooked that it comes with a high price tag.
(Editor’s Note: With FDA’s approval of Wegovy for patients at risk for heart disease and cardiac events, Medicare has approved coverage of the drug for the same patients. Wegovy still will not be covered by Medicare if only being used for weight management. For non-Medicare enrollees, the GIC can cover weight loss drugs, like Wegovy.)
We should also point out what most members already know, the GIC does not set nor control drug prices. While one function of CVS Health as the GIC’s pharmacy benefits manager (PBM) is to negotiate pricing deals, the prescription drug marketplace remains a free market where manufacturers largely call the shots in terms of pricing. Even the state government has little direct say over drug pricing. Only the US Congress has the legal authority to truly rein in drug costs, but so far has failed to provide immediate relief.
Another key driver of costs is hospitalizations and ambulatory care. And the push by many Massachusetts hospitals to increase reimbursement rates, whether justified or not, only adds to the financial stress placed on health plans.
We should point out that the health plans provided by the GIC are almost all self-insured plans. What this means is that the Commonwealth assumes the risk and directly pays insurance claims. Under the self-insured model, the role of the insurance company is that of plan administrator and, therefore, they do not benefit from higher premiums.
In addition, there is very good news to share when it comes to he retiree dental plan through MetLife. The current rates of $29.27 (Individual) and $70.54 (Family) will remain unchanged for FY25. Remember, this is a retiree-payall plan which receives no subsidy from the state. This fact presents a challenge in keeping the monthly premiums affordable, while maintaining meaningful benefits.
We also understand that some retirees are having difficulty finding dentists who are part of the MetLife network. This challenge has more to do with the nature of dental insurance in general and the ongoing tensions between dentists and insurers than it does with the specific benefits offered by MetLife. These challenges will likely exist regardless of the insurance company involved.
Members enrolled in a GIC plan should have received your Benefit Decision Guide in late March. Open Enrollment now runs from April 3 to May 1, 2024. During this time enrollees can make changes to your coverage – if you choose. If you do not want to change plans, there is nothing you need to do. Remember, you can access your coverage information online through MyGICLink.