"Answer The Myths" Of Health Insurance Savings

It sounded so tempting: Belmont could save nearly a million dollars in employee health care costs by switching to the insurance plan run by the state.

That initial information on the Group Insurance Commission (GIC) appears too good to be true, leading to questions of what was taking town officials so long to join the health care arrangement.

But Belmont Town Manager Thomas Younger told the Board of Selectmen Friday, Sept. 10, he needed to "answer the myths" being spread around town on the true nature of the state-managed plan.

While the savings would appear to be a boom for the town facing a looming deficit, Younger told Selectmen that careful analysis reveals the "devil's in the details" when contemplating joining the GIC.

The primary role of the GIC is providing health insurance and other benefits to state, housing and certain other authorities' employees, retirees, and their survivors.

The GIC also provides health-only benefits to employees, retirees, and their survivor from towns and cities that opt into the system.

But according to Younger – who is a member of the GIC through his wife's employment ­– not only would it be extremely unlikely that the town could reach the required 70 percent acceptance level from the town's employee unions but the advertised savings in joining the plan all but disappears on closer inspection.

Younger told the Selectmen that most municipalities would like to have the opportunity to participate in the plan.

"But we can't unilaterally do that," said Younger noting the bargaining component to the agreement.

While Belmont would save $856,000 in a change, according to Cook and Company, the town's health care consultant, Younger said he had to "put some caveats on" that figure.

Younger said the initial savings is unreliable since towns must make concessions with unions to gain their acceptance. And those givebacks will come at a price.

He points to the experience two years ago in Weston where the town went from a 90 percent to 10 percent employee/management split paying for health care – similar to Belmont's split recently ­– to a negotiated 85/15 split "to go into the GIC."

An increase of five points in the town's contribution, for example, from 80 to 85 percent (what unions generally asked for in these talks, said Younger) would reduce the town's savings by $480,000 to a new figure of $375,000.

Joining the state-run insurance plan would also require the town and its employees to give up their rights to challenge any insurance changes during its three-to-six year commitment.

Younger said if the state decides to impose a 20 percent increase in premiums, hike co-payments or change the benefits midway through the contract "the town does not have a say."

But what occurred in February of this year has all but put a virtual knife in the back of the plan. Due to the state's  budgetary difficulties, the GIC was forced to increase premiums by 12 to 16 percent while decreasing benefits in the existing plan.

"There is now a fear among employees" of these unilateral changes, said Younger.

Another reason Belmont town officials and employees have for rejecting the GIC is that the present town-run plan is doing "a very good job," said Younger.

In the past year, as the GIC premium increase is in double digits, Belmont increased health premiums by five percent with the same coverage and has more than $4 million in its trust fund to pay for future increases.

Selectmen were also quick to note the potential of coming away on the losing end of the financial equation.

"The difference between the town increasing by five percent and GIC going up double that would bleed (the savings) over time where there's no savings," said Selectman Mark Paolillo.

Younger said it appeared that many of the municipalities which quickly joined the system in the past five years were "in very serious financial difficulties" and used the savings to sure up their town finances rather than switching to a more fiscally effective plan.

He said that is a major reason why only 15 municipalities have joined the system since it was open to cities and towns.

In the end, the selectmen joined Younger in setting aside the state's plan.

"I'd be very skeptical that this would be accepted," said Chairman Ralph Jones.