Greg Roach's Berkshires Blog
Monday, December 08, 2008
  What Don't I Get About the GIC?!?
Speaker of the Massachusetts House, Sal DiMasi predicts that local aid to cities and towns is going to be slashed. One solution, making joining the Group Insurance Commission easier:
House Speaker Salvatore F. DiMasi said state aid to local cities and towns will be cut by up to 10 percent next year, a major drop-off that will likely cause layoffs and major cutbacks in municipalities across Massachusetts.

To lighten the blow, DiMasi is planning to propose legislation to eliminate a major union-backed provision that prevents municipalities from joining the state health insurance program without union approval.

Under current law, cities and town officials must earn the backing of 70 percent of local union members before they can join the state’s Group Insurance Commission. DiMasi argues that the provision has prevented municipalities from joining the state system, whose larger size provides more cost savings through bargaining power with insurance companies.

Collectively, cities and towns could save between $436 million and $64 million in fiscal year 2013, according to an estimate by the Massachusetts Taxpayers Foundation. But so far, only 17 municipalities and 19 school districts have joined out of the nearly 500 cities and towns and regional school districts that are eligible.
The HUGE irony here is that it is the unions of North Adams that want to join the GIC, but it is the city administration that is preventing this. Most cities in the state would love to be in this position, but not North Adams. Why?

What don't I get? I can only think of a few reasons why Mayor Barrett absolutely refuses to go this route, even though the city is going to have to slash its budget, and most of those reasons are not particularly flattering.

Help me out here. What is the logic behind staying with Blue Cross? Seriously. Somebody must know.

(Learn more about the GIC by clicking here for their website.)

It's been conveyed to me that the public sticking point on the GIC is that the municipal employees wanted to keep some of the GIC savings by reducing their share of the insurance premium to a level on-par with neighboring communities (they currently pay a higher percentage than most). This splitting of the savings seems reasonable on its face. If this is accurate, I am left wondering if there is yet another underlying issue that raised the objections of the mayor.

First let it be clear that what I say here, I speak for myself, not the North Adams School Committee. And the school district does not have a part in this negotiation. It is a city negotiation with all employee unions.

Here are some things I know and/or have been told about the GIC issue.

· The unions have attached to the GIC implementation proposal an increase in the city’s share of the health premium coverage from 70% to 85%. As I understand it, much of the $1.5 million dollar cost savings advertised for the unions is due to this I do not believe the city would share in this advertised $1.5 million cost savings if its share would increase to 85%. I do not think you’ll see the city negotiate unless the share stays at 70/30 – especially with the impending 5-10% cut in state aid to local cities and towns next year.
· I am told (by others outside the city), but have not verified, that out-of-pocket expenses with the GIC (prescription, emergency care co-pays, etc) are considerably higher than Blue Cross Blue Shield.
· I attended the 2008 Mass Association of School Committees Conference in Hyannis last month, including an insurance workshop, presented by a highly respected superintendent of schools from the eastern part of the state who has been able to control his school employee insurance premiums to nearly no increase in the past three years (mostly through wellness initiatives). It was said in that workshop that the GIC does not have a wellness plan built into the health insurance offering. 80% of increased insurance premiums are due to insurance claims (per this presenter). It is his belief that the GIC will be a “huge white elephant” for the participating municipalities in the commonwealth 5 to 10 years down the road, with rapidly escalating costs (and he has relayed that opinion to Tim Murray, Lt. Gov).
· Boston Benefits Partners, the North Adams unions’ consultants, are directly associated with the GIC, both in consultants previously employed by the GIC and in doing consulting work for the GIC currently (this information you can get online). This does not mean their information is incorrect, but does question their motivation. I don’t know how all the insurance premium comparative costs shake out. But it would be wise for any negotiations or further discussion of the GIC to use a different consulting resource.

The first point (premium share) is likely the primary issue from the city’s standpoint. The third point (the forecasted “white elephant”) should be of most concern to all parties considering the GIC. Personally, I would rather see the focus be on a well thought-out wellness plan that encourages prolonged good health and results in greatly reducing claims – which would translate in most importantly improving the health of the individuals but also in keeping health costs much more under control. Given the health cost burden on everyone today, I would think the city and the unions efforts would be better served working together on this very important issue.
John- Thank you for the great comment. I will post this on the front page.
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