MAY 2008: Following the announcement in February that all existing health plan contracts will be extended for at least another year, the state’s thirteen-member Group Insurance Commission (GIC) approved the new health insurance rates for Fiscal Year 2009.

GIC officials announced an average increase of 6.5% for seven Medicare and ten non Medicare plans carried by the state. No changes are expected to take place with pharmacy copayments.

The new rates take effect on July 1, 2008, but will be assessed in retirees’ June pension checks. Only those retirees and survivors, who receive their health insurance from the state GIC, are eligible for these plans. The individual rates paid by each member depend upon when you retired and whether or not you are a state or local retiree.

In addition to the 66,000 state retirees and survivors insured by the GIC, there are also over 10,000 retired municipal teachers, along with some 12,000 municipal retirees now enrolled in the state’s health care plans. This number is expected to grow now that local governments can, by local option, join the GIC.         See related article on GIC Municipal premiums, page 9.

While the overall increase for the GIC plans is 6.5%, the number most important to retirees is the increase in the Medicare OME Plan, which for 2008 is 5.7%. As of July 1, the OME plan (with CIC coverage) will be $45.40 (pre 7/1/94 retirees 10%) and $62.84 (post 7/1/94 retirees 15%).

The coming 5.7% increase for the OME plan follows a year (2007) in which the price actually decreased 3.7%. In 2006, the price of the OME plan had increased 5.2%. At present, some 44,351 state retirees and survivors are enrolled in the OME plan, along with 4,427 retired teachers.

In a significant development, Harvard Pilgrim Healthcare will begin offering its Medicare Enhanced plan to retirees living outside of Massachusetts. Until now, the GIC Indemnity Plan and OME were the only option for out-of-state retirees. Harvard’s Medicare rate is $36.02 (10%) and $54.02 (15%).

“We are not happy to see any increase in insurance premiums, but we are also realistic about the world we live in today. Prices are going to go up, it is just a matter of  how much,” said Association President Ralph White. “State and national trends are still running between 8% and 10% increases for 2008. The 6.5% increase is a $65 million dollar increase on the state budget appropriation.”

Managed Care Grows Traditionally, retirees and longtime active employees have relied on the Indemnity Plan as the insurance plan of choice. While this still holds true for retirees, a shift amongst active employees toward less expensive, but more restrictive, managed care plans is being witnessed.

“Over the past five years we’ve seen more retirees choosing to stay with their PPO or HMO after they’ve retired,” says Association Insurance Coordinator Cheryl Stillman. “It is really a matter of personal preference and what you get use to. These days most active employees are in a managed care plan, so they become accustomed to that type of coverage. Brand loyalty is a really big deal with people.”

Currently, 24,230 retirees and active employees are enrolled in the non Medicare GIC Indemnity Plan. This is down from 24,430 in 2007 and 25,160 in 2006. In 2004, 26,516 retirees and employees were under the plan.Whether this downward trend will continue remains to be seen.

The Indemnity Plan will see an increase of 6.5% in 2008, with individual premiums at $106.49 and $142.48, respectively. Family coverage is $247.23 and $330.84.

Through FY07, 80% or 54,997 retirees are enrolled in the OME and non Medicare Indemnity Plans combined. For active employees, just 33% or 26,955 are in the Indemnity Plan.

Meanwhile, enrollment in the various managed care plans offered by the GIC continues to grow with new hires, as well as some new retirees opting for the less expensive coverage. Particularly popular are the PPO plans, which are a more flexible managed care plan. Some 44,510 employees and 5,523 retirees are enrolled in PPOs. HMO membership totals just 9,891 employees and 5,397 retirees.

Beyond Premiums

In the past, state and local officials have celebrated the lowering of insurance premiums, while at the same time increasing the out-of-pocket expenses for retirees and employees by raising copayments and deductibles.

As mentioned earlier, for the coming year there is no planned increase in the prescription drug copayments. GIC officials, prompted by Executive Director Dolores Mitchell, have indicated that the state’s drug copayments are high enough. The last increase took place in 2003.

However, doctor visit copayments for non-Medicare plans and the tier structure have been changed. Beginning on July 1, there will be three tiers for office visit copayments and two separate tier structures for primary care and specialist visits. The GIC has categorized physicians into tiers based on their efficiency at treating patients.

Also, outpatient surgery copayments have been raised from $75 to $100.  Copayments for inpatient hospital stays were raised by $50, bringing the rate for most plans to $250 per admission.

“It is very important for our members to pay close attention to the details of the plan that they are enrolled in. You cannot shop by monthly premium alone,” said Association Legislative Liaison Shawn Duhamel.

“We were glad to see the GIC only make a few small changes to the copayment structure. The tiered structure for doctors still is a major concern to us, but we are pleased that drug copayments held steady,” continues Duhamel.

“Far more needs to be done to address the underlying cost of healthcare. Simply shifting around the cost does not help anyone.

“Legislation, filed by the Senate President (Therese Murray), is a very good step in the right direction. It prohibits gifts between drug companies and doctors, while promoting better efficiencies in the system.”