MAY 2006 - Enrollment In State Plan Possible - Desperate to resolve the local health insurance cost dilemma, which has been crippling city and town budgets, labor leaders and municipal government officials are attempting to reach an agreement on legislation that would help pave the way for local retirees and employees to become insured under the state's Group Insurance Commission (GIC), which could possibly lead to significant cost savings for all parties.

Lower Costs

Interest in streamlining the process by which municipalities can join the GIC was heightened once it became evident that the overall premium costs per enrollee are far less expensive at the state level than those experienced locally. Research, provided by the Metro Area Planning Council (MAPC), demonstrates that many local communities are paying as much as 60% more for insurance than the GIC.

The MAPC, which is headed by Executive Director Joel Barrera, provides logistical support and research capabilities to the Task Force. Revere Mayor Thomas Ambrosino serves as vice-chair of the Task Force and has been a driving force behind the discussions.

"Joining the GIC is not a one-size fits all solution to municipal healthcare costs. But a number of communities may be able to save a considerable amount of money by joining the GIC," explained Ambrosino. "This is one area where we seem to have broad agreement. If it makes sense to encourage GIC enrollment, then I think we should try and streamline the process as best we can to help encourage cost savings."

Under current law, two major hurdles are in place that lead to the GIC being an unattractive option for most communities. The first is a requirement that contribution rates mirror the state rates for active and retired employees (85/15 or 90/10). Second is a prohibition on local retirees and employees from participating in the GIC's coveted "Pool 1."

In purchasing healthcare benefits, the GIC (along with most other insurance groups) pools their enrollees together as a joint purchasing group, which in turn increases negotiating leverage with insurance companies and lowers costs. "Pool 1" contains most state retirees and employees, totaling over 200,000 lives. Currently, the 74 school districts participating in the Retired Municipal Teacher program and any other local entity belonging to the GIC are enrolled under a separate pool (Pool 2).

Despite the GIC's best efforts, the savings generated under "Pool 2" are less than that achieved by the larger "Pool 1". As a result, the costs for those enrolled under "Pool 2" are greater.

At this point in the negotiations it has been agreed by the GIC that the contribution percentage of the local employees and retirees would continue to be a local practice. The GIC would not require an 85/15 or 90/10 split as a requirement for state participation.

The Pool problem was also resolved for the time being when the GIC agreed that all employees and retirees would be grouped in Pool 1. By having access to Pool 1, local communities can, in most cases, significantly lower their health insurance costs.

Proceed With Caution

"Although we agree in principle with expanding the role of the GIC if it would benefit our local government members, we are proceeding with caution," said Association President Ralph White.

"At this point in the negotiations, it has been proposed that two representatives of municipal labor unions, along with two local government representatives, would be added to the Commission, increasing its makeup from eleven to fifteen members. The majority of the Commission members would still be controlled by the governor and the governor would continue to name the retiree member - a person not of our choice. The governor's control of the retiree designee simply can't continue.

"Also, the RMT proposal bothers us. While in most cases, retired teachers have a better deal under the state plan than their counterparts locally, under the Working Group proposal they could lose their 85/15 or 90/10 benefit. It's always been our Association's policy never to endorse a new program if it would have a negative impact on a minority of our members. The RMT issue would have to be resolved to our satisfaction before we would agree to proceed."

"Health insurance is the biggest issue at this time at all levels of goverment in Massachusetts and sometimes what looks good in principle might not prove to be good for our members," added Association Legislative Chairman Bill Hill who agrees with the "caution" watchword.