GIC bill signed into law

Governor Deval Patrick has signed into law a bill that would allow -- but not require -- teachers and other municipal employees to receive their health insurance through the state Group Insurance Commission. The MTA was a key member of a coalition of labor groups, retirees, municipal officials and business leaders that spent nearly two years developing and advocating for this local-option measure. The bill, Chapter 67 of the Acts of 2007, was signed on July 25.

"This is a very significant law," said MTA President Anne Wass. "It provides a new option for Massachusetts cities and towns which in some cases may provide a way to save money while providing employees with a choice of health insurance plans which they may find acceptable. Key to our support is that the new law gives local unions a say over whether to join the GIC."

Leading the effort to win passage of the GIC bill were Rep. Rachel Kaprielian (D-Watertown), House floor manager, and Sen. Richard Moore (D-Uxbridge) Senate floor manager, along with Public Service Committee Co-Chairs Rep. Jay Kaufman (D-Lexington) and Sen. Benjamin Downing (D-Pittsfield). They worked closely with members of the Municipal Health Insurance Working Group, chaired by John Hamill, chairman of Sovereign Bank.

MTA staff will be working with local associations to help them figure out whether entering the GIC makes sense for them. There will be information sessions throughout the state, and guidance will be provided on how to analyze the costs and benefits of making the change.

The soonest a municipality could apply to enter the GIC would be Oct. 1, 2007, for entry on July 1, 2008. The next opportunity to apply will be in October 2008. (The new law allows Saugus to enter at any time.)

What is the GIC?

The GIC was established in 1955 to provide health insurance and other benefits to state employees and retirees and their dependents and survivors. For example, all MTA higher education members receive their health insurance through the GIC, as do members of the state Legislature. The GIC also covers all Springfield employees and retirees, including teachers and teacher retirees. Springfield entered the GIC last year under special regulations promulgated by the GIC in response to the city's fiscal crisis.

Insurance rates charged to GIC subscribers may be lower than rates charged to municipalities and their employees, in part because the large number of subscribers allows the GIC to negotiate better terms with insurers.

Two years ago, the MTA successfully fought attempts in the Legislature to deny local public employee groups any say over entering the GIC. Under the new law, no municipality may join the GIC without approval of the local public employee unions and retirees, who will be represented on a Public Employee Committee established under existing law (Chapter 32B, Section 19) that governs coalition bargaining around health insurance. Seventy percent of the PEC must support an agreement to enter the GIC.

Ninety percent of the votes on the PEC are proportional to the number of employees in each local bargaining unit eligible for health insurance, with retirees comprising the remaining 10 percent.

By law, there are no formal negotiations over plan providers or plan design at the local level if a municipality enters the GIC. However, the MTA will have a seat at the table in determining what plans and what level of benefits the GIC will provide for state employees and for municipal employees who transfer to the GIC.

The GIC currently offers a variety of plan options, including an indemnity plan, a preferred provider organization plan and several health maintenance organization plans.

In each community that is considering the GIC, the local association needs to be very careful in analyzing available options and in comparing benefits, co-payments and deductibles, as well as overall premium costs. In some cases, the GIC option will benefit employees, and in some cases it will not.

A provision in the new law that gives preK-12 local associations that opt for the GIC the continued right to negotiate the health insurance premium split was supported strongly by the MTA. Currently, those premium splits range from 90/10 to 50/50.

Rep. Kaprielian said she became involved in this issue when she sat on the Hamill Commission and learned that rate increases for the GIC plans were often half as large as those in many municipalities.

"We saw GIC plans with a 5 percent increase at the same time some cities and towns were paying 16 to 18 percent more for their insurance," the state representative said.

"I've been in the GIC for 13 years and I have a lot of constituents who are state employees, and I've never heard a negative comment from my constituents about the GIC," she said. "I think some municipalities will want to get in as soon as possible, especially in cases where there is a big differential in rates. In other cases, I understand there will be a wait-and-see approach on this, which is appropriate. Public employees have to be at the table. That's important."

Kaprielian and other experts on the GIC have been holding a series of community forums on the new law this summer and will continue to do so in the fall. The MTA will hold its own series of regional meetings targeted to local association leaders this fall and has scheduled a workshop on the GIC for the Summer Conference in Williamstown. It will be on Tuesday, Aug. 7, at 1:45 p.m.