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Council, members deliver testimony on GIC bill

The Providers' Council and two member organizations presented testimony on Tuesday, October 25 on House Bill 1191, An Act Relative to Access to Health Insurance for Human Service Providers and their Employees.

Providers' Council President & CEO Michael Weekes (left), Advocates, Inc. HR Director Christine Pearson (center) and Road to Responsibility President & CEO Chris White discussed how the bill could help human services organizations throughout Massachusetts.

The Providers' Council testimony is linked here, and is also available below.

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To:    Senator Anthony Petrucelli, Chair
         Representative Michael A. Costello, Chair
         Joint Committee on Financial Services
From: Michael Weekes, President/CEO
Re:     Testimony in support of House Bill 1191

Chairman Petrucelli, Chairman Costello and members of the Joint Committee on Financial Services, thank you for the opportunity to submit testimony on House Bill 1191, legislation that would allow human services providers to seek health insurance through the state's Group Insurance Commission in an effort to increase access to insurance products while controlling costs and minimizing extreme year-to-year percentage increases.

The Providers' Council is a statewide association of home- and community-based human services organizations that provide an array of services to one in ten Massachusetts residents on behalf of the Commonwealth. The Council is the state's largest human services association, and we are in support of legislation, including this bill, that would make it possible for low-paid direct care workers to have more affordable health insurance options where costs do not increase exponentially from year to year.

Health insurance and the human services sector

As the cost of health insurance continues to rise across the state, affording coverage has become increasingly difficult for our sector's low-paid workforce. Due to fixed state contracts human service organizations hold with the state and the absence of a Salary Reserve, these direct care workers who help Massachusetts' most vulnerable on behalf of the Commonwealth have not received any type of annualized salary increase from the state since FY 2008.

While human services salaries have remained stagnant, the cost of health insurance continues to increase significantly every year for our members' workers, with some of our member organizations reporting annual proposed increases of 24 to 34 percent from year-to-year. The Providers' Council, therefore, is seeking solutions to help these low-paid direct care workers have access to affordable health insurance options. By allowing these employees access to the Group Insurance Commission, the state would provide an opportunity for these dedicated caregivers to receive more affordable care for themselves.

The bill would allow community-based human services organizations that contract with the state to provide care and other essential services access to the Group Insurance Commission, where costs are lower and increases are smaller from year to year.

Projected benefits of joining the GIC

As human services organizations and employees would purchase the products from the Commission, we do not believe this bill would have a material fiscal impact on the state. In fact, as our expenses are reimbursed by the Commonwealth, allowing access to the GIC would be likely to permit an increase in funding to direct care services.

In our testimony, the Council will discuss what it views as the three major benefits of making our workforce eligible to join the Group Insurance Commission:

•    Lower cost of health plans
•    Lower year-to-year percentage increases
•    Greater variety of plan choices

Lower cost of health plans

By examining our members' rates, as well as those of the GIC, the Council has found that the Group Insurance Commission - because of its incredible size and the stability of its pool - receives more favorable rates for similar health plans. Our members have assisted us by providing some of the rates for their plan.

One member, based in the MetroWest region, reported individual rates at $619/month with family rates at $1,652/month. Another, based in the Southeast part of the state, had individual rates at $507/month and family rates at $1,331/month. Finally, a member based on the South Shore had individual rates at $643/month and family rates at $1,362/month. Many of these plans also contain deductibles that have been added to help decrease monthly costs.

Plans for the Group Insurance Commission, which are available online at the Executive Office of Administration & Finance website, range below these costs, even when considering the plans where the state only pays 75 percent of the cost (compared to the 80 percent of costs it pays for employees hired before July 1, 2003). There are many lower-priced options on the table, including the Fallon Community Health Plan Direct Care, the Harvard Pilgrim Primary Choice, Health New England, NHP Care and Tufts Health Plan Spirit. The average costs for these five plans are $470/month for individuals and $1,155/month for families. A State House News Service story on the GIC, in fact, said the GIC's "six limited network plans offer premiums that are on average 20 percent lower than plans with broad networks."

If taking the average of the costs for the three plans we obtained from our members, you arrive at figures of $590/month for an individual and $1,448/month for families. These numbers mean an individual would save about $120/month and a family may save $293/month - numbers that add up to $1,440 and $3,516 over the course of a year, respectively.

This represents an enormous cost savings for our low-paid employees - individuals who make up the safety net of our state and care for the most vulnerable people in Massachusetts on behalf of the Commonwealth. Surely, we must find a way to contain health care costs for this important group of workers - many of whom may truly be a paycheck away from becoming a client of a human services organization themselves.

Lower percentage increases of health plans

We have continually heard from our members that generating and maintaining affordable health insurance options is a priority for organizations and employees alike. While most human service employers do offer group health insurance, the market rates are often prohibitive to workers who make about $12 per hour. One of the largest problems, however, is the year-to-year increases that our members and others face from health insurers.

The average weighted base insurance rate increases for small-group health insurance last year were between 9.4 percent (Neighborhood Health Plan) and 25.2 percent (Fallon). Other carriers also had extremely high increases - 18.7 percent for Health New England, 17.6 percent for BCBS HMO Blue and 16.1 percent for Tufts. Increases were slightly down for 2011, but many of our carriers still have increases of more than 8 percent (Neighborhood, Fallon, BCBS HMO Blue, Tufts, Harvard-Pilgrim and UnitedHealthcare of New England).

These numbers are simply statistics, but look at some of the stories behind the numbers, as told by our members:

•    One member received notification of a 24 percent increase this year, meaning their rates could increase by as much as 50 percent over the last two years and have doubled over the last five years. According to this member, health insurance costs are now the second largest expense line item after salaries.

•    Another organization received a proposal for a 34 percent health insurance increase between 2010 and 2011, which would have cost the agency more than $1 million. In an effort to contain cost, the agency had to add a deductible for employees, and it was able to keep the increase to 16 percent - still far larger than desired.

Sadly, these stories are not unique. They are simply two of the organizations in Massachusetts who provide care on behalf of the Commonwealth, but continue to see higher premiums, added deductibles and exponential increases in health care year after year. 

The GIC meanwhile, continues to minimize year-to-year increases to its membership due to the stable pool it covers and the large amount of individuals who use it. In March 2011, the GIC was able to announce its plans average only a 2.4 percent increase - an incredibly low figure, especially compared with the 6.4 percent average increase in premiums nationally and the higher increases seen in Massachusetts.

The GIC simply allows for smaller year-to-year percentage increases than plan providers receive from carriers when they are considered on their own. It is another reason why our members seek to join the GIC - the stability offered by the Group Insurance Commission would allow providers  to better budget and plan for the upcoming year without receiving "sticker shock" upon seeing the proposed increase from the health insurance carrier.

Greater variety of plan choices

While it is unclear if workers in the human services sector - who work at organizations that contract with the state to care for the most vulnerable residents in our society - would choose from one of the already-established classifications or see a new one created, we believe these employees would be able to choose from a greater variety of plans and find one that better fits their needs.

Employees currently work at organizations that almost always only offer one health plan. While tiers do exist (i.e. pay a deductible and have a smaller premium), most are only offered insurance through one carrier, limiting their choice. If members' employees were to be eligible for the GIC, they may have many different options from which to choose. This would allow them to receive better health care, as they could carefully select a plan that would be best geared toward their unique needs.

We believe allowing employees more choices when dealing with health insurance can only help create a healthier human services workforce that is providing care to one in 10 Massachusetts residents. Allowing these low-paid workers access to the Group Insurance Commission would help them find a plan that works for them and still have money to spend on other necessities like shelter, clothing and food.

Conclusion

Allowing low-paid human services workers to access the lower-cost and more stable health insurance plans of the Group Insurance Commission is a win-win-win proposal that benefits employees, agencies, the state and its most vulnerable residents.

•    Employees receive a high-quality - but lower cost - health insurance product with much more variety in the plans they can choose from. They also receive more rate stability, and they would not be subject to huge price swings from year-to-year.

•    Employers - who have had no choice but to pass their high-percentage increases onto employees or add a large deductible - now increase affordability for their dedicated staff, while allowing better planning from year-to-year with smaller percentage increases.

•    Residents of the Commonwealth benefit from having a healthier workforce that cares for their friends, family and neighbors - and they benefit without being asked to pay higher taxes. While the bill would not have an overall financial impact on the Commonwealth, the lower premiums would permit scarce funding dollars to be directed toward services.

The solution is not only pro-workforce - but it is also pro-client. We ask for your favorable consideration of House Bill 1191. The benefits of the bill are immense, and the bill requires no additional state appropriation. We would be happy to discuss this bill with you more in the future. Thank you for your time.