Health Care Protections Sought

MARCH 2010 VOICE: There is growing concern, shared by Association and public officials alike, that recent increases in copayments and deductibles may place a severe financial hardship on retirees who suffer from chronic medical conditions.

When the state's Group Insurance Commission (GIC) voted to close its mid-year deficit through increasing most copayments and deductibles, it did so without placing a cap on the maximum annual individual out-of-pocket cost. While the mid-year increase in costs only applied to non-Medicare plans, the higher costs still impact thousands of retirees and employees.

"When you start to add up the costs of an office visit, tests and prescription drugs, the annual price can easily run into thousands of dollars for anyone with chronic medical problems," says Association Insurance Coordinator Cheryl Stillman. "I speak with many retirees who are frequently in the hospital and must take multiple prescriptions each day. Their monthly costs can soar into the hundreds without blinking an eye.

"Considering that the average state pension is roughly $24,000 and less than $18,000 locally, I don't know how many retirees are able to make ends meet. What ends up happening is that they don't seek the medical treatment they need, which then results in a more serious and costly medical problems."

While the new GIC copayments and deductibles may reflect a trend in the private sector, where it is now popular to offer plans with high out-of-pockets costs and lower premiums, one key provision is missing. Most high deductible/copayment private sector plans set annual out-of-pocket maximums, while the GIC does not.

Health Reimbursement Accounts

As we reported in the January edition of the Voice, legislation is now pending that would allow municipalities, participating in the GIC, to create local Health Reimbursement Accounts (HRA). These federally recognized trust funds use monies, set aside from savings generated by joining the GIC, to reimburse out-of-pocket costs that exceed a pre-determined threshold.

Representative Robert Spellane (D-Worcester), who is the House Public Servie chairman, is said to be actively considering the proposal and may favorably release the bill from the Committee before budget deliberations begin this spring.

GIC officials have previously opposed the measure, citing concerns over "fairness" among the GIC enrollees and alleging that cost could rise as a result.

"Our goal is to simply give local communities a tool to protect the most vulnerable members who suffer from chronic illness or injury, while also keeping employer paid costs down. It is unfair and simply wrong to force such high costs onto retirees, without any limit, said Sen. Ken Donnelly. "I am working closely with the Senate Leadership, as well as with the Public Service Committee, to find a solution to this problem. We cannot keep raising out-of-pocket costs without regard for the people most impacted."

Association officials are also working with Donnelly and the Public Service Committee to ensure that state retirees and employees are also afforded protection from rising out-of-pocket costs.

One potential solution being explored is to create an out-of-pocket maximum that would cap the annual amount of copayments and deductibles borne by any individual.

"This would not absolve members from paying copayments and deductibles, which are part of the design of today's insurance plans. What this would do is cap the amount paid over the course of a year, so that no one is unfairly burdened as a result of being chronically sick or hurt," explained Association Legislative Liaison Shawn Duhamel. "Right now, I can't speculate on where the cap would fall. It is something that needs to be negotiated."