School Committee's Position on the GIC

With all the concerns and confusion in regard to the GIC (Massachusetts Group Insurance Commission) over the past few weeks, the North Adams School Committee feels it important to make clear its position on the GIC, specifically as it relates to health coverage for the North Adams School District’s faculty and staff. A letter detailing our position was sent on January 22 to the North Adams Teachers Association and all school district union presidents with a request that they share this information with their board members and their membership.

The North Adams School Committee has independently reviewed the GIC current and anticipated health insurance offerings, and after having done so, it is our opinion that the GIC alternative is worthy of consideration in evaluating its health insurance coverage and the costs associated with this coverage. However, it is the position of the North Adams School Committee that this is not the right time to make a change to the GIC. The reasons for this position are the following:

There is a direct correlation between the premium charged by a health insurance plan and the out-of-pocket costs. The greater these out-of-pocket co-pays and deductibles, the lower the premiums can be set. There is clear evidence that lower premiums of the GIC are offered at the expense of higher out-of-pocket expenses, in regard to co-pays, co-insurance and deductibles. This can potentially be of considerable expense to the individual and family.

There is a requirement to lock in a contract with GIC for either a three-year or six-year term. With GIC, you relinquish local control of health benefits and costs over a multi-year period.

Blue Cross Blue Shield, the current and long-time health insurance provider for the city and the school district, is not part of the GIC health insurance offering. One of the primary stated reasons Blue Cross Blue Shield has chosen not to be involved is because of the GIC physician tiered system of handling out-of-pocket insured expenses. The GIC rates individual physicians on a tiered rating system of excellent, good or “standard”. An insured will pay more if your physician is rated among one of the lower ratings (80% are within the lower ratings of the GIC). Even some of the insurance providers within the GIC refuse to abide by this tiered system, and the implications of this are unknown.

The GIC likely makes financial sense for some cities and towns and not for others. It cannot be ignored that there have been many cities, towns and unions that have chosen not to go with the GIC for their own reasons. This includes the Chief Financial Officer of the city of Lowell who has said that the GIC would cost the city more money to receive fewer benefits. The town of Nahant’s own analysis showed there would be no savings if it joined the GIC. The Hampshire County Insurance Group says they may lose between $12.8 million and $18.5 million over three years if it joined the GIC. In Newburyport, town officials determined that the GIC would cost $100,000 more than a comparable Blue Cross Blue Shield plan.

The GIC does not track claims experience by member community. Without access to municipality-specific claims experience, one cannot accurately assess how claims are running versus the rates being charged that municipality and its employees by the GIC. Even worse than making it impossible to make an informed decision as to whether or not the GIC is a good deal for a given municipality over time, the lack of specific claims data effectively will render it impossible for a municipality to obtain competitive price quotations, or perhaps any quotations at all, from outside insurance carriers as those carriers also will be unable to assess the risk. This may make it impossible for us to go back to Blue Cross Blue Shield or to another insurance carrier if we want to do so. There are independent insurance consultants that strongly advise caution in considering the GIC because of this claims experience-tracking issue.

The primary driver of health insurance rates is the claims history of the group. Contrary to Blue Cross Blue Shield and many other insurance carrier options, the GIC has no apparent wellness plan built into its insurance offerings. An estimated 80% of insurance premium rate changes for any insurance product are due to insurance claims. The fewer the claims, the lower the premiums. It is believed by some independent insurance analysts that with no wellness program, the GIC insurance premiums are destined for significant increases over time.

The GIC health plans do not offer an Employee+1 option; only individual or family plans. For those who have Employee+1 plans with Blue Cross Blue Shield (which is many of the North Adams faculty and staff), you would have to choose a family plan with the GIC or only cover yourself individually.

Next to wages, health insurance is the largest cost of the total compensation package of its members, and decisions to make significant changes to insurance coverage and/or insurance carrier offerings need to be made carefully and with all the independent information that is available. As Dolores Mitchell, Executive Director of the GIC, has stated publicly, the local option to join the GIC is not a panacea. It is the position of the North Adams School Committee that there are too many unknowns to make such a major move to the GIC.