Those, insured through the GIC, range from state retirees, to retirees of the former counties, to local retirees who retired prior to the formation of local insurance plans (EGRs), and finally to retired teachers whose local school district has voted to join the GIC (RMT). Rates for each group vary depending on the pool to which they belong.

Following on the heels of an increase in the GIC’s copayment and deductible fee schedules, word that Indemnity Plan rates have jumped as much as 17% for the non Medicare plan and 8% for Medicare (OME) is not welcome news. According to the GIC, the initial rate requests, submitted by many of the insurance providers, were far too high and were negotiated down.

“Last year we were well under all of the national and state averages with our rate increases. Unfortunately, the market has caught up with us,” said GIC Executive Director Dolores Mitchell.

For the past three years, the GIC had been able to hold rate increases for the Indemnity Plan in check. Last year, the eleven-member commission was able to keep the GIC Indemnity Plan to a 5% increase. Many retirees actually ended up paying less.

When retirees pay higher prices, it also means that the Commonwealth itself must absorb its share of the price increase. As our members know, the state contributes either 90% or 85% (depending on date of retirement) of the health insurance premium.

“We have been fortunate over the past few years to have avoided the large increases that have hit most other plans in Massachusetts. Nationally, the continuing rise in health care costs is a significant problem,” says Association President Ralph White. “No one is happy to be paying higher rates. This is a national problem, from which the Commonwealth and local governments are not immune.”

For instance, in 2001 the expected national average increase for indemnity plans was 18.3%, 14% for HMOs, and 14.20% for PPO products. Indemnity plans had previously increased an average of 8.4% in 1999 and 15.1% in 2000.

While the GIC has witnessed sharp price increases in recent years with its offering of HMOs, the agency has been successful at holding increases under the Indemnity Plan to well below the national average. In 1999 the increase for the GIC Indemnity Plan was roughly 2.2% and in 2000 5.3%. Last year the Indemnity Plan increase was 5%.

Exactly what is behind the rate increases is a subject of many debates amongst health care experts. Most observers point to three main factors: continued increased prescription drug costs averaging 15-20% a year, rising costs of medical products and testing, and sharp increases in utilization of medical services.

“Technology plays a role in increased costs. For every new test and procedure there is an increased cost that gets passed on,” explains Association Legislative Liaison Shawn Duhamel. “Despite everything that has been done to control costs, the prices are still going up. We’re not shills for the GIC. There just wasn’t any wiggle room left when we saw the numbers.”

Despite higher costs for insurance coverage, members should not shop for their health insurance simply by looking at the price. Out of the nine plans offered by the GIC, the Indemnity Plan remains the insurance of choice for most retirees.

Through May 10, 2002, the GIC will be holding health fairs throughout the state to afford retirees the opportunity to change their coverage if they so choose. The fairs also offer a great opportunity for retirees to speak directly with GIC and insurance plan officials regarding their coverage.

Members have also been contacting the Association in reference to other insurance plans that may be available through the federal government or private sector vendors. While the Association strongly discourages anyone from dropping their state/local insurance coverage, there may be some benefit to enrolling in one of the plans offered to veterans, strictly as a backup.

Members, who are veterans, are aware that they can receive medical care through the VA. Many members, who live near a VA hospital or clinic, use the facility for routine medical care and prescription drugs, while maintaining their state insurance for major medical problems.

Those members who are retired from the military, may avail themselves of the TriCare health insurance plan. This plan may also serve as a supplement to the state or local insurance and is available only to military pensioners.

“There are options that exist to help offset some of the medical costs that we now face. However, members should stay away from any plan that requires them to drop their GIC insurance,” said White. “In this market, we all have to be on our toes and pay close attention to the type of care we are purchasing.”