At its annual rate-setting meeting in March, GIC officials announced that the average increase across the eight non-Medicare insurance options offered by the state is 5.04%. When factored in with the Medicare plans, the increase drops to 3.78%. Across Massachusetts, the average increase in many private sector plans has once again registered in the double digits, with some larger firms reporting 14-15% increases.

Over the past three years, the GIC has, by and large, been able to keep increases far below both state, as well as national averages. In FY’07, the GIC “beat the market” with an average increase of 7.5%  and, over an eight-year period, registers an average increase of 8.8%.

By comparison, over the past nine years, Blue Cross/Blue Shield of Massachusetts, Harvard Pilgrim Health Care, and Tufts each have an average annual increase of more than 10% across their plans.

“Of course we would rather see the rates decrease, but given the current state of our healthcare system, we are pleased with the job the GIC is doing to hold the rates in check.” said Association President Ralph White. “To its credit, the state has never tried to implement the high deductibles and copayments that are being placed in some public and private sector plans in order to reduce costs. All those measures do is shift the burden onto the backs of retirees and employees.

“While we do take issue with some GIC policies, overall the state continues to offer excellent insurance coverage and an affordable price. That is something that we will continue to fight to maintain.”

Indemnity Plan Stable

Governor Deval Patrick has filed the first budget in recent memory that does not propose contribution rate increases for state retirees.    With the overwhelming majority of members insured through the GIC Indemnity Plan, it comes as welcome news that contribution rates will remain stable for these retirees (10%  for those who retired on or before July 1, 1994 and 15% for those retiring after that date).  Nearly 25,000 retirees and survivors are insured under the basic Indemnity Plan, with another 43,658 enrolled in the Option Medicare Extension (OME) plan.

Rates for the basic (non-Medicare) Indemnity Plan will rise 5.02% beginning July 1. The OME plan will see a decrease of -3.7%.

As a result of a $17 million dollar surplus in the state employee/retiree trust fund, the GIC unanimously voted to provide a monthly premium subsidy of approximately $2.20 per person to lower the costs for retirees and employees for FY08. The premium subsidy is likely to continue the following year, but at a rate of $1.10 per month. (Ed. Note: Under federal law and tax code, the GIC is restricted in how it distributes surplus monies.)

Surpluses in the employee/retiree trust fund are a result of actual insurance claims coming in at a lower rate than had been anticipated at the beginning of the fiscal year. As a self-insured plan, both the Commonwealth and retired/active state employees benefit when costs are lower than expected. Under a traditional insured plan, the insurance company profits from the savings.

Retired municipal teachers (RMT) and elderly governmental retirees (EGR) are not enrolled in the self insured plans under the GIC’s Pool 1. Therefore, the premiums for RMTs and EGRs are not included as subsidized rates.

“Our hope is that the GIC will one day pool all of its enrollees together as a single purchasing group. Under current law, the GIC cannot self insure for municipal retirees, which is the reason why there are two pools,” explains Association Legislative Liaison Shawn Duhamel. “Legislation, which would allow municipalities easier access to the state-run plans, is currently moving through the legislative process. This proposal should help to lower the costs for many local retirees, as well as for those teachers and others currently enrolled under the GIC.”

“And no, we haven’t given up on the state again paying its share of the Medicare Part B,” White added. “Losing that longtime obligation under Jane Swift, while the GIC Commissioners stood mute, still sticks in my craw. I know this wraps up this article on a sour note, but I also know that our members will never let me forget.”