“Yozell has provided intelligent, resourceful, creative solutions that have consistently produced better benefit programs at reduced costs.”
Richard Orton
Human Resources Vice President
Vanasse Hangen Brustlin, Inc
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Law puts Blue Cross on offensive
10/26/2007
By Jeffrey Krasner, Boston Globe Blue Cross Blue Shield of Massachusetts' lucrative business of selling health insurance to municipalities and unions is under attack since a law was enacted in June allowing cities and towns to join the health insurance plan for state employees. At least eight municipal health plans have signed on to the state plan, known as the Group Insurance Commission, or GIC, ahead of a Monday deadline for 2008 enrollment. Blue Cross is fighting back with a publicity offensive that asserts its plans for municipalities can save them as much money as the GIC. The stakes are high because rising health insurance costs for public employees at the local level are stretching already-tight budgets, and municipal officials are considering all options for controlling spending. The GIC, which covers about 280,000 state employees and dependents, usually keeps its annual premium increases beneath the double-digit range that has been the norm for Massachusetts health insurers over the past seven years. Saugus town manager Andrew Bisignani said he will begin offering healthcare coverage to employees through the GIC Jan. 1. He expects to save between $1 million and $2.5 million a year, a significant amount for a town with an annual budget of about $68 million. "It's been horrendous," Bisignani said of rising insurance costs. "Our premiums have been going up 20 to 25 percent a year. We're looking for a way to stabilize the cost, keep the premiums down, and have a more experienced administrator of the health plans." But John Coughlin, vice president of select markets for Blue Cross Blue Shield - the state's largest health insurer with about 3 million members - said cities and towns should reconsider his company's Municipal Blue plan. In letters to the editor and op-ed pieces sent to newspapers throughout the state, he urges communities to consider joining together to create larger pools of employees. He also criticizes the quality of the GIC's health plans. "The benefit plans offered through the GIC are simply not at the same level as those offered today by most municipalities," he wrote. In an interview, Coughlin said Blue Cross plans are offered in about 90 percent of the state's cities and towns, and that it has about 65 percent of the market in those communities. He said working with Blue Cross to lower premiums could be an alternative to switching to the GIC for cities and towns, and might help them avoid fractious negotiations with unions that represent town employees. Before a town can join the GIC, it must secure a 70 percent approval vote from its combined teacher, fire, police, and other unions representing town employees. Such votes - which ask individual unions to give up the ability to negotiate their own health benefits package - can be contentious. The GIC asks health plans to bid on its business each year. For the past eight years, Blue Cross hasn't participated in the bidding process, said Dolores Mitchell, longtime executive director of the GIC. "I called them up and asked them to bid," she said. "They really don't say why they don't." The GIC offers municipalities several options for employee health insurance, including plans from Harvard Pilgrim Health Care and Tufts Health Plan. Blue Cross plans have lower copayments and deductibles, leading to lower out-of-pocket expenses for members. But the greater use of "cost sharing" methods featured in GIC offerings usually leads to lower premiums than commercial plans like Blue Cross. The GIC has also been an innovator in controlling healthcare costs. For instance, it spurred insurance companies to start offering reduced copayments for lower-cost generic drugs. In addition to Saugus, the towns of Winthrop and Groveland, three school districts, and two other municipal groups have opted for coverage under the GIC since the law allowing such coverage took effect. The number of groups joining was limited by tight deadlines: extensive paperwork had to be completed by Oct. 1. The deadline was later extended to the end of the month. "Next spring you'll see a couple dozen cities and towns starting the process," said John Brouder, a partner in Boston Benefit Partners, a consultant to companies and municipalities on healthcare benefits. "The real interesting thing is to see how many people sign up in October 2008," the deadline for 2009 coverage under the GIC.
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