Closer Look at Joint Purchasing Arrangements
Over the past year and a half, we have become increasingly concerned about rising healthcare costs, both for our members and the Commonwealth and its local government entities. We are once again at a crisis point, where access, affordability and quality are at risk and without hard conversations and decisions the outcome will be catastrophic for retirees and employees. Without strong partners and options for local governments, they will be left with subpar options guided by groups that do not serve the interests of the public sector. It is important that we continue to use our voice to highlight those partners and educate our membership about the increasingly complicated healthcare space.
Quite often members hear us speak of “municipal health insurance” in the context of the Public Employee Committee (PEC) and the retiree representative on that committee or what bargaining options provide protection for retirees when it comes to “municipal health insurance”. What gets lost at times is how a municipality, school district or other local unit purchases insurance for employees and retirees.
WHAT IS A JPA?
When we think of health insurance we think about the carrier or what “plan” we have, meaning we automatically think Blue Cross Blue Shield, Harvard/Tufts (Point32), or Wellpoint. However, there is a bit more to it. A key component is how the public employer purchases those plans and which carriers they select and for that there are several ways that can happen.
One of those options is through a joint purchasing arrangement (JPA). The largest JPA in the state is the Group Insurance Commission, insuring approximately 460,000 lives. The GIC is governed by Mass General Laws Chapter 32A and is overseen by a 17-member commission, including a retiree representative and labor representatives. At the local level, a JPA is established pursuant to Mass General Laws Chapter 32B section 12. This section allows for 2 or more governmental units to join together to negotiate and purchase benefits.
There are approximately 12 JPAs throughout the Commonwealth. As we noted, the GIC is the largest, followed by the Massachusetts Interlocal Insurance Association, MIIA. JPAs play a critical role in providing stability for municipalities, in particular when factoring in the current healthcare environment. One such JPA is the Mayflower Municipal Health Group (MMHG), located in Plymouth. Like the partnership the Association has with the GIC and MIIA, Mass Retirees views the Mayflower Group as an important partner in the municipal health insurance space, and we recently had an opportunity to spend time with Plymoth County Treasurer Tom O’Brien and the administrative team to share insights.
MAYFLOWER GROUP: WHO ARE THEY?
The Mayflower Municipal Health Group (MMHG) is a self-insured joint purchasing arrangement that was established on July 1, 2008. As one of the foremost JPAs, MMHG has 33 governmental units that participate in the health insurance program with 7,500 subscribers and over 12,800 members. Along with medical the MMHG offers dental, life and vision insurance to the participating members.
Participating units are not required to enter into multi-year contracts and there is no administrative fee, with all of the expenses included in the rates. A key feature of MMHG is the centralized administration office for processing all enrollment applications, invoicing/ collecting premiums, maintaining financial information, reviewing invoicing, providing wellness programs, tracking members turning age 65, answering benefit administrator questions, and other administrative functions. This centralized administration removes the administrative burden from the participating entities, saving personnel costs.
Like many JPAs, MMHG has a General Board that governs the group and is comprised of representatives from each of the 33 governmental units with each unit having one vote. The board has the authority to approve a new member joining the MMHG, vote on the final rates every year, and vote recommendations made by other Committees.
Another hallmark of MMHG is the Steering Committee. MMHG has a nine-member Steering Committee with six members that are elected from the General Board. The remaining three members of the Steering Committee are appointed and include one from the Massachusetts Teachers Association, one from the Professional Fire Fighters and one retiree appointed from the Plymouth County Retirement Board.
MMHG is the first and only joint purchase arrangement to have this representation on the Steering Committee. The Steering Committee is empowered to review annual rate renewals, negotiate health coverage renewal contracts, negotiate funding, and other financial arrangements. Retiree and organized labor representation on the Steering Committee ensures that all stakeholders have a voice and have shared investment in decision-making.
Along with the General Board and the Steering Committee, MMHG also elects a Finance Committee and has an elected Massachusetts Certified Treasurer who provides quarterly financial reports and attends Steering Committee meetings to provide monthly updates. Notably, Plymouth County Treasurer Tom O’Brien serves in that role.
A key feature is the award winning wellness program overseen by the Wellness Committee, who meets quarterly to discuss program offerings that include member-based interaction with a focus on members’ individual responsibility for their health and well-being.
While protecting employee benefits with comprehensive plan design options, low premiums has been the foundation of the work done by the MMHG. We see this accomplished through strong leadership and a collaborative environment between stakeholders. As a result, the fiveyear average rate increases between FY21 and FY25 is 3.15%. The working relationships that the structure has established will be vital as the employers, employees and retirees in the group attempt to navigate the storm we see on the horizon.