GIC Public Hearing

1. GIC Public Hearing February 3, 2010

3. Health Care Costs Skyrocket Again and Again and Again Kaiser Family Foundation “2009 Employer Health Benefits Survey”: From 1999-2009 health insurance premiums +131% versus: Wages +38% Inflation +28%

4. GIC FY10 Budget GIC’s FY10 Appropriation: $1.42 Billion (did not include money for new enrollees) Benefit Changes Effective July 1, 2009 – increased copays/added tiered hospital copays Premium contribution changes made by legislature: 20%/25% based on date of hire – became effective 8/1/09 Municipalities 7/1/09: 13,500 additional insureds Transportation/Sheriffs (mid-year): Over 4,800 additional insureds Projected FY10 deficit: $35 million Hired on or before June 30, 2003: 20% Hired after June 30, 2003: 25% FY09 appropriation is for Pool I. Original appropriation changed during the year because of 9C cuts and supplemental appropriations. Ending balance of the FY09 appropriation including the $372 million from the SBRTF was $1.260 billion. The FY10 Appropriation of $1.33 billion is about 5.5 % higher than FY09.  Hired on or before June 30, 2003: 20% Hired after June 30, 2003: 25% FY09 appropriation is for Pool I. Original appropriation changed during the year because of 9C cuts and supplemental appropriations. Ending balance of the FY09 appropriation including the $372 million from the SBRTF was $1.260 billion. The FY10 Appropriation of $1.33 billion is about 5.5 % higher than FY09. 

5. Claims have exceeded budget 9 of last 12 monthsClaims have exceeded budget 9 of last 12 months

6. Why Are Claims Skyrocketing? Provider prices going up Increased utilization – members getting more services More members

7. One Plan’s Examples

8. Key Indicators In December 21 inpatient claims over $100K; average is five per month In 2009: 3,193 members with total claims for the year of $25K or over These members = $243 M in claims Two diagnostic categories accounted for 40% of these dollars Cancer = 30% End Stage Renal Disease = 10% Outpatient rates increased for multiple services over the same period Infusion / Injections +59% Durable Medical Equipment +21%* Physical therapy +12%* *Consistent with increased outpatient surgical procedures

9. Provider Costs Continue to Soar Attorney General’s Report 1/29/10 Provider payments tied to market leverage: largest hospitals and physician networks, brand-name recognition, and geographically isolated 10 hospitals get 10%-100% more than other 55 for similar work 2008 Boston Globe Spotlight found similar disparities

10. In the Forefront of Tackling Differences in Provider Quality and Costs Pay Lower Co-Pays for Physicians with the Highest Quality and Efficiency Scores ? ? ? Tier 1 (excellent) ? ? Tier 2 (good) ?Tier 3 (standard) Hospitals also tiered in some plans Began in 2004Began in 2004

11. Closing the FY10 GIC Budget Gap Commissioners vote – active health care users asked to pay half of deficit Effective February 1, 2010: Increased copays of $5 across most services New calendar year deductible: $250/individual and $750/family

12. Share of Costs: GIC and Enrollees FY01-FY09

13. To Help Mitigate Cost Increases Extended HCSA Open Enrollment period to December 18 Increased HCSA Maximum to $5,000 Fee Reduced to $3.60 10581 enrolled in HCSA (vs. 7501 last year); 1757 (vs. 1664 last year) in DCAP Salary of $35,000 – contribute $1500 to HCSA – save $450 in taxes10581 enrolled in HCSA (vs. 7501 last year); 1757 (vs. 1664 last year) in DCAP Salary of $35,000 – contribute $1500 to HCSA – save $450 in taxes

14. Long Road to Final FY11 Appropriation Projected < $3 Billion Structural Deficit Governor Filed House 2 January 28 Legislature acts late spring Governor has chance to veto, reduce appropriation and/or use 9c authority Enough $ for GIC? Don’t know $1.241 appropriation 1108-5100 (GIC) $2,383,106 1108-5200 (Premium and plan costs)$1,149,670,231 1108-5350 (EGRs) $526,7879 1108-5400 (RMTs) $79,936,000 1108-5500 (Dental and Vision) $8,175, 000 1108-5201 (Muni) $905,259$1.241 appropriation 1108-5100 (GIC) $2,383,106 1108-5200 (Premium and plan costs)$1,149,670,231 1108-5350 (EGRs) $526,7879 1108-5400 (RMTs) $79,936,000 1108-5500 (Dental and Vision) $8,175, 000 1108-5201 (Muni) $905,259

15. What Does This Mean to the GIC Budget? Probably Won’t Be Able to Roll Back February 1 Benefit Changes Options: Do nothing and run out of money = possibility of no health insurance in the spring Add limited network plan options Freeze or drop plans Request change in premium contribution from legislature (e.g., salary-based premiums)

16. What is Definite? Pharmacy Benefit Manager for UniCare members out to bid: carrier selected February 12 Prescription Drug Benefits for UniCare members effective July 1: Two generics move to Tier 2 – Pantoprazole (Protonix) and Lansoprazole (Prevacid) Over-the-Counter Prevacid covered at Tier 1 copay

17. RMT Premium Contribution Rates Effective July 1, 2010 Rates for Retired Municipal Teachers in the GIC RMT Program (62 towns/school districts) adjusted for first time in 21 years 10% or 15% contribution, depending on date of retirement

18. New Groups Joining the GIC in FY11 7,800 – 16,800 members Town of Brookline Town of Hopedale Wachusett Regional School District Merrimack Planning Council MassDOT (Turnpike Local 127 and Tobin) MBTA (specific unions) Remaining Sheriffs Departments’ union employees – in November 610 sheriffs departments (Suffolk/Bristol) 2773 – turnpike local 127, tobin and MBTA not subject to Evergreen 5100 municipal 7000 MBTA subject to Evergreen probably not coming in610 sheriffs departments (Suffolk/Bristol) 2773 – turnpike local 127, tobin and MBTA not subject to Evergreen 5100 municipal 7000 MBTA subject to Evergreen probably not coming in

19. Dental Benefits for Managers and State Retirees Potential enhancements both programs Determined February 12

20. What’s Next? Commission determines health plan benefits February 12 Rates voted March 3 Annual Enrollment April 12 – May 10 Changes Effective July 1, 2010

21. Weigh Your Options Consider Limited Network Plans – save $$$ After enrollment: find out a physician’s ranking before you choose – and save $ Next November: consider joining the Health Care Spending Account program

22. GIC Resources to Help You Choose Benefit Decision Guides (delivered by annual enrollment) Website: mass.gov/gic 15 health fairs: schedule on website in next few weeks

23. What You Can Do to Control Health Care Costs Be an informed consumer – weigh your options Practice good health habits Get off the couch Eat healthily Don’t smoke Wash your hands frequently with soap and water Use retail clinics instead of the emergency room for minor medical needs Be prepared for your doctor visits – see our website for tips