GIC and the cities and towns (2)…
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I heard Massachusetts House Speaker Sal DiMasi speak last Friday about the legislation passed earlier this year that would give cities and towns in Massachusetts the ability to enroll in the state’s Group Insurance Commission (GIC) program. With decisions due this past Monday (October 1st), he mentioned that only a handful of communities had made the commitment to join the GIC. He said that he would propose extending the timeline to the end of October to give more cities and towns and their employees a chance to make what he considered to be the “right” decision. I blogged on this issue previously, and said I thought it would be hard for union officials and city and town leaders to come to terms on this in time to meet the October 1st deadline. So far, that seems to be true, which is too bad. While the timeframe is short (even with an extension) - the savings opportunities are huge. My own hometown of Swampscott would save $800,000 on the town side by joining the GIC, and town employees, on average, would see their own premium contributions drop significantly ($300 to $500 for individuals and $1,000 to $2,000 for families) by joining the GIC. But people should be careful about dallying for too long. The Speaker also echoed a point of view that I’ve picked up from many other state officials when I’ve asked them about the timeframe and the difficulties associated with the decision making process. Their response goes something like this - “How come our plan, which is one of the best in Massachusetts, isn’t good enough for them?” I got the impression listening to him speak that if more cities and towns - and their unions - don’t do what he considers to be the right thing on a voluntary basis, the process may be different - and a little less voluntary - next year.
Fine with me. Accomplishing this through bargaining (with a supermajority union buy in) could take years. The law is badly flawed.
While the law may be flawed in that a super-majority is required of the unions, let’s not minimize the monumental change associated with this decision. Municipal unions in this state have enjoyed for decades the ability to negotiate plan design, cost sharing, premium contribution and even carrier selection. You’re now asking members to give up everything except premium contribution.
Are the GIC plans good enough? Of course…it is the state and legislators (and their families) are covered by these health plans. That’s really not the point. The point is, that you’ve got to be a first-rate Pollyanna to think union members are going to jump in head first after only a few weeks of discussion (remember…August really doesn’t count around here).
Finally, does anyone really think the GIC could handle tens of thousands of new enrollees all at once? And, for some cities and towns, it probably doesn’t make sense to join the GIC.
Let’s not jump to conclussions about whether the law is working, or not, based on the first few months.
Charlie,
I’ve been reading your postings about the GIC and cities and towns, including your hometown of Swampscott. A municipality’s decision to make any significant benefit change in employee health care should take a very thoughtful, considerate approach. Right now, for those communities considering the GIC, no one can guarantee which carriers will be offered, what benefits will be offered and at what cost to the town and employee. Without this basic information an awful lot is left to guesswork. A “Hurry! Buy Now!” sales pitch should always be taken with a grain of salt. With this in mind, I’m sending this letter to every community who is considering their health care options. Thought your readers would be interested too.
By the way, speaking of hometowns………mine (Watertown) has already taken steps to gain the savings seen in the state’s health plans. Watertown seems to have done their homework and knew the carriers, benefits, and costs before changing. And they’re not locked in for three years!
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To the Editor, October 4, 2007
The cost of health care for Massachusetts’ cities and towns has been getting a lot of attention lately (Oct. 2). Because the fiscal pressures on our communities are so substantial, towns are considering new health insurance options such as joining the state-run Group Insurance Commission.
Recent public reports have boldly promised substantial savings for any city or town that joins the Group Insurance Commission. In fact, some reports state that billions of dollars can be saved simply by joining the GIC. These types of claims require closer examination. Just a quick review of the state’s benefit plans can explain a lot.
The benefit plans offered through the GIC are simply not at the same level as those offered today by most municipalities. How health care is accessed by state enrollees and who pays for that care is not the same either. The GIC does a great job for state employees and actually may be a solution for some municipalities. The GIC is to be commended for the new and innovative steps they have taken to address cost and quality issues.
But municipalities should examine all available options to save on health insurance costs. For some communities, joining a larger pool of employees, like the GIC, has its advantages. There are currently more than a dozen very successful Joint Purchasing Arrangements across Massachusetts. The Massachusetts Municipal Association offers a highly successful program called Massachusetts Interlocal Insurance Association. These JPAs also have a proven successful track record of cost and quality initiatives and are worthy of review.
For those communities who want to retain local autonomy and realize savings similar to the GIC, please take a look at Municipal Blue. With input from municipal leaders, Blue Cross Blue Shield of Massachusetts has developed a new package of benefits designed specifically for Massachusetts’ municipalities. Municipal Blue can provide immediate cost savings without relinquishing local control of health care benefits and costs. Coalition bargaining is not required and you have the freedom to select the benefit plans appropriate for your community. Remember, the law is very clear … joining the GIC is at least a three-year commitment. The purchasing of health insurance is a very important decision that will significantly impact communities and tax payers for years. Please review the GIC, JPAs, Municipal Blue and all other options carefully. Your independent consultant or broker can help with professional advice.
For more than sixty years, BCBSMA has been the largest and most trusted insurer of government employees and retirees in Massachusetts. We thank you for that privilege and look forward to continuing our partnership.
John Coughlin
Vice President, Select Markets
Blue Cross Blue Shield of Massachusetts
Many people I’ve spoken with feel that there appears to be no time to evaluate and/or understand the GIC. In my opinion there are many people who don’t have a clear sense of what is going on and rather sit still and do nothing. Paralysis by analysis? Not sure. Personally, I felt the timeline given was a bit quick and the extension is not much of a help either. I’m not sure if there is a clear understanding of the decision making process and how slow and/or flawed this process can get. It would be great to have a reasonalble timeframe with a complete breakdown of the pros and cons regarding the GIC.
Tim - I share your observation about being too quick to declare this new law a failure or success based on such a small window of opportunity. Nonetheless, as someone who stated previously that I do think this is an option for some communities - and not others - I’m surprised there hasn’t been more take up so far. Cities and towns say this issue is killing them financially, and for many of them, this would be an ideal way to save money without having to lay off staff (union and non-union alike), save money, and retain services. I would have expected more - even with the tight timelines.
John C. - First of all, thanks for reading the blog and writing a post to it. While I normally don’t publish pseudo-advertisements on this site, I’ll let this one go because you do raise a number of important issues for cities and towns in Massachusetts. And, truth be told, Harvard Pilgrim is one of the carriers offered by the Group Insurance Commission, and BC/BS of MA is not - at least not yet. This gives us each - from a corporate perspective - a slightly different view on what’s good or bad for cities and towns, and whether or not joining the GIC is the right thing to do.
That said, I’ll stick to my over-arching message on this stuff - which works no matter where I work. Small to mid-sized communities - ones with less than 500-1000 lives that don’t belong to a purchasing collaborative - should give the GIC a very close look. Managing and overseeing a health benefits plan is a lot of work, and most small towns don’t have the time or the focus to invest in this activity, and even if they do, they all struggle to offer more than one option. The GIC offers numerous options, manages the program hard, and has a wide variety of carrier choices to go along with a wide range of plan designs.
Is it the right choice for every community? Of course not, but it’s worth remembering that most Massachusetts communities fall into the small to mid-sized category, and most have had tremendous trouble managing their health benefit expenses to a level they can afford. John asks “What’s the rush?” I say the opposite. There is real money to be saved here - and the GIC offers a range of options that work for hundreds of thousands of publicly unionized workers and their families. They can work for many cities and towns in MA, too.
Charlie - If speaker DiMasi was serious about allowing towns and cities to move their health insurance into the GIC, then why did they allow language that mandates 70% union approval of any move? Unions for towns and cities are still living in the days of BCBS indemnity products with $5 copays at taxpayers’ expense. Compare this to towns being forced into the MA state pension fund if they show a poor track record over a number of years. I would suggest similar language that looks at what towns and cities are paying for their employee health insurance premiums and if it is a certain percentage over the cost of the GIC employee policies then they would have to roll into the GIC. I know it is not an “apples to apples” comparison but you could reasonably compare what they are currently paying versus what they would pay in the GIC. Unions and BCBS should not be able to hold taxpayers hostage for their own benefit by forcing unreasonably high premiums on to the backs of property owners.
Five towns (Millis, Holbrook, Groveland, Saugus and Winthrop) and three regional school districts (Gill-Montague, Hawlemont and Mohawk Trail) will be joining the GIC. That is actually pretty impressive for a law that wasn’t enacted until July 25, 2007. Many more cities, towns and regional school districts kicked the tires on the GIC; most decided that it did not make financial sense because joining the GIC would actually cost them money.
People who want to make joining the GIC mandatory have not done their homework. The idea sounds attractive but can only be evaluated one community at a time. No one has made this “do your homework argument” more persuasively than Dolores Mitchell, the GIC’s Executive Director. Why can’t the Legislative Leadership actually listen to people who know what they are talking about on this issue???