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GIC cuts benefits in midyear

Insurance group points to fiscal year deficit

By John Laidler
Globe Correspondent / January 17, 2010

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A midyear cut in benefits by the Massachusetts Group Insurance Commission is drawing concerns from some union members in municipalities that have joined the state health care system.

The benefit trims, which the commission said are needed to avoid a deficit in the system, apply to all 330,000 people served by the GIC, including the municipal subscribers and their family members now enrolled in the system. The reductions take effect Feb. 1.

“It just doesn’t seem like it’s fair,’’ said Bill Cross, president of the Saugus firefighters’ union, referring to the benefit changes, which include the addition of a calendar-year deductible of $250 per member to a maximum of $750 per family.

“Every year you have a chance to pick a plan. When you sign up, you try to figure out what the cost will be and pick a plan that best fits your family. To come up with a midyear increase like this - it’s just mind-boggling,’’ Cross said.

In addition to the new deductible, the benefit changes include $5 increases in copayments for visits to primary care physicians and specialists. The commission said the changes have a bright side: Premiums will fall slightly as of Feb. 1.

A 2007 state law allows cities and towns, regional school districts, charter schools, and regional planning councils to join the GIC as a way of lowering their spiraling health care costs. In this region, Groveland, Melrose, Saugus, Swampscott, Wen ham, and Winthrop have all joined.

Ed Collina, president of the Melrose firefighters’ union, said of the cuts: “What is alarming about this is that they just arbitrarily at their November meeting decided to put these changes in effect in February. The GIC kind of blindsided everyone.’’ He said the cuts also represented “a huge cost shift onto the employees.’’

Still, Collina said he is hopeful that, as the commisison has said, the cuts may be only temporary. And he said of his members, “For the most part, most people are positive about the GIC.’’

Dolores L. Mitchell, executive director of the GIC, said the benefit cuts were needed because, based on expenditure levels, the system was facing a “rather substantial deficit’’ this fiscal year.

“We didn’t do it cheerfully; we did it because we had to,’’ she said.

Mitchell said that on infrequent past occasions when the GIC has faced a deficit, it has been able to cover it through funding in a state supplemental budget. But “given the state’s fiscal situation, the likelihood of a supplemental budget being filed - much less passed - is almost nil.’’

Even with the benefit reductions, Melrose Mayor Robert J. Dolan said he continues to believe firmly - as mayor and a GIC subscriber - that joining the state system has been a major plus for Melrose.

“I think it’s been absolutely outstanding,’’ he said.

Melrose’s enlistment in the GIC, which took effect last July 1, will save the city an estimated $1.5 million in the first year and about $1 million next year, according to Dolan. And he said he and other employees are paying $100 less a month for their coverage.

Saugus Town Manager Andrew Bisignani similarly believes Saugus made the right decision when it enlisted in the GIC in January 2008.

“Without the GIC, my opinion is that Saugus would have been in an extremely severe financial crisis,’’ he said, estimating that the town has saved “several million dollars’’ as a result of joining.

Even with the recent benefit cuts, he said, the GIC is still “a very good deal’’ for the town and its employees. “I haven’t heard many complaints about it, because most people are appreciative for having the benefits to begin with.’’

Several local officials from the area said, however, that the benefit cuts could make the GIC, at least for now, a less attractive option for municipalities. Currently, 17 cities and towns belong to GIC, along with six regional school districts and three regional planning commissions. As of July 1, there will be four other municipal or regional members, including the Merrimack Valley Planning Commission.

“I think it’s had a chilling effect on communities throughout the state,’’ Beverly Mayor William F. Scanlon Jr. said of the benefit cuts.

He said it is because of the cuts that his priority in controlling health care costs is advocating for adoption of legislation that would allow cities and towns to change the design of their health plans without having to bargain with unions. (Municipalities also have to bargain with unions to join the GIC.)

Salem Mayor Kimberley L. Driscoll said the GIC benefit cuts “certainly highlighted to both local leaders and employees that once you are in the GIC, you don’t have a lot of control over what happens, which means it might be harder to get an agreement’’ with employees to join the GIC.

Mitchell acknowledged that the benefit cuts might make the GIC less enticing to some communities. But she noted that Brookline voted to join after the cuts were announced. “So it depends upon what a community’s situation is, what kind of rate increases they have been paying.’’

Danielle J. Chaplick, municipal coordinator for the GIC, said one reason not more communities have joined the system is because it can often take time to build consensus with unions about the value of enlisting. Mitchell said some communities may be waiting to see the outcome of the legislation allowing them to change the design of their plans.

“We are trying to be good neighbors and will continue to work hard to ensure smooth transitions for those entities that agree to join,’’ Chaplick said.