City of Somerville

Agenda Item

Requesting to amend the city's health insurance benefits by transferring to the Group Insurance Commission (GIC).


Department:Mayor’s OfficeSponsors:
Category:Mayor's RequestPurposes:Miscellaneous Mayor's Request

Official Text

To the Honorable Board:


I respectfully request that your Honorable Board vote to amend the city's health insurance benefits pursuant to GL c 32B s. 21 for the purposes of providing health insurance coverage to its subscribers by transferring their coverage to the Group Insurance Commission (GIC).


My staff will be available to answer any questions you may have.


Thank you for your consideration.


Respectfully submitted,


Joseph A. Curtatone


Meeting History

Jul 14, 2011 7:00 PM Video City Council Regular Meeting
Jul 21, 2011 6:30 PM  Finance Committee Committee Meeting

Mr. Buckley and Mr. Haraden explained the proposal before the committee. At the present time, Somerville’s health plans are self-insured with Blue Cross/Blue Shield, Tufts and Harvard Pilgrim. Eight different plans are offered, providing health insurance coverage to 2,779 city employees. Projections indicate that the cost for prescription drugs will increase 9% - 12% in 2012 and premiums for HMO’s, PPO/POS’s will increase 11 % - 17%.

State legislation was passed that allows the city to transfer to the Group Insurance Commission (GIC), (or to make changes to cost sharing plan design features that are no greater than those in the GIC plan with the highest subscriber enrollment), with approval from the Board of Aldermen. The city would be required to calculate and discuss the first 12 months’ savings with the Insurance Advisory Committee (IAC) and then meet with the Public Employee Committee (PEC) to provide a description of the proposed changes, an estimate of the first year’s savings, (which must be 5% greater than plan design changes), and a proposal to mitigate or cap the impact of the proposed changes. A capped amount of 25% of the City’s first year’s savings will go towards subscriber mitigation.

The PEC and the City then have 30 days to negotiate, with employee contributions still being subject to collective bargaining. If an agreement cannot be reached by that time, a three member panel will issue a binding decision within 10 days. The panel would be comprised of 1 member appointed by the City, 1 member appointed by the PEC and 1 member selected by both parties (or by Administration and Finance if a selection cannot be agreed upon in 3 days).

Provisions in the State’s FY-12 budget allow the City to offer a healthcare Flexible Spending Account (FSA) and a Health Reimbursement Arrangement (HRA) to employees. The City could enter into the GIC as early as January 1, 2012 and in order to do so, it is required that all employees and retirees be transferred for a minimum three year commitment. No changes can be made to retiree contributions until July 1, 2014.

Chairman Heuston requested that the following information be provided to the committee:

· the names of the union members on the PEC,

· the names of the members of the IAC,

· the amount of the savings to the City and to individual subscribers and

· a listing of Tiers, by hospital and provider.

Jul 27, 2011 6:00 PM Video Finance Committee Committee Meeting

Mayor Curtatone discussed issues pertaining to the switch to the GIC health plans, including the city’s claims history, and stressed the need to control escalating health care costs in order to remain on a sound financial management path. Mr. Haraden again reviewed aspects of the GIC plans, including the up-front deductible schedule and when they would be allowed to be increased. According to Mr. Haraden, the savings to employees and retirees would be greater under the GIC as opposed to a plan design option. Ms. Kloos told the members that the Personnel Department will be handling the dissemination of information and that staff would be available to respond to any questions. Additionally, information has been posted to the city’s website. In order for the city to commence under the GIC on January 1, 2012, the Board of Aldermen must act on this measure by September 1, 2011 and Alderman Desmond requested to know the ramifications to the city if this issue is not acted on by that date.


Several individuals spoke in opposition to the issue, citing the following concerns:

· Would prefer to try a plan design,

· The GIC plan would be unaffordable to some individuals,

· Higher deductibles and co-payment amounts

· Problems expected to be encountered by retirees

· Better to negotiate changes to existing plans

· Blue Cross/Blue Shield not among the GIC plans offered,

· The lack of savings to subscribers,

· Burdens of those with chronic illnesses,

· Giving up control of one’s own health care,

· The lack of information and negotiations,

· GIC’s tier system

There were no speakers in favor of the measure. The public hearing was closed.

Alderman White requested that union representatives provide information regarding the path taken by City of Boston regarding joining the GIC and how plan design might be an alternative.

The committee requested the Administration to provide the following information:

· A grid showing the costs and savings to retirees (Alderman White),

· Data showing the difference in out of pocket expenses between the current plan and the GIC plan, for both current employees and retirees (Alderman Roche),

· Listings of non-Medicare retirees and Medicare retirees, a listing of those individuals covered by Blue Cross/Blue Shield and information about other communities’ experiences (Alderman Connolly),

· The mechanism for the city to get out of the GIC (Chairman Heuston).

Chairman Heuston asked that the Administration respond to the concerns expressed and submit those responses to the Finance Committee.

Aug 4, 2011 6:00 PM  Finance Committee Committee Meeting

Chairman Heuston read a communication from Alderman Gerwirtz, who stated that she is disappointed with the process (regarding the GIC proposal) and that she would be out of state when the next meetings are held on this matter.

Mr. Shapiro submitted a letter regarding the “Rule of Necessity” and reviewed the provisions of the State Ethics Commission’s Advisory 05-05, dealing with this rule. This rule may need to be invoked in order for members of the Finance Committee and/or the Board of Aldermen to vote on the GIC proposal.

Mayor Curtatone explained a discrepancy in the deadline date and told the members that the process has not been rushed, however, in order for the city to realize a savings of $2.3 million, the proposal must be acted on by October 1, 2011. Solicitor Wright reviewed the process timeline and the steps necessary to achieve the October 1st deadline.

Ms. Kloos explained how information is being provided to active and retired employees and stated that there are approximately 3,000 current employees and 1,600 retirees eligible. Mr. Haraden reviewed the savings of the GIC option versus a plan design option and spoke about deductibles, co-pays, rate increases and mitigation for subscribers to help offset costs.

Aug 9, 2011 7:00 PM  Finance Committee Committee Meeting

The committee continued its discussion of moving the city’s health care into the GIC. Questions still remain as to the effect of the GIC on retirees and how all subscribers would be affected financially. A second request was made by Alderman Roche for data showing the difference in out of pocket expenses between the current plan and the GIC plan for a typical family and for senior citizens.

The committee was not satisfied with the level of responses provided to previous questions and Mr. Haraden explained that municipal data is not available and that commercial data is different. His data was compiled based on a period of 12 months. A suggestion was made to examine the use of subpoena power, or a public records request, to compel the GIC to release the requested information.

Solicitor Wright addressed the need to have this issue voted on this week, however, Alderman White stated that he would not vote for the proposal unless the Office of Administration and Finance provides a written explanation of why the deadline is this week.

The members had questions regarding preventive coverage, co-payments, ambulance costs, mental health coverage, the enrollment period and when rate hike are allowed. Additionally, the committee requested a history of rate increases, deductibles and co-pay amounts under the GIC.

Alderman White asked the Administration to look at the Home Rule Petition passed by the City of Cambridge, allowing it to treat retirees differently and he asked that a fund be established to assist qualified individuals with paying health care costs. He also requested that real life comparisons be provided, (e.g. cancer treatment), to show what the difference in out of pocket expenses would be for those people.

Ms. Kelly explained the information that is being given to employees and retirees, (essentially that premiums are going down but co-pays are going up), and Ms. Kloos reported that 57 people have attended information sessions, to date. The personnel office is guiding people through the transition process and has found that the concept of deductibles is difficult for people to understand.

Aug 11, 2011 7:00 PM Video City Council Special Meeting

Discharged from the Finance Committee.

AYES:John M. Connolly, Bruce M. Desmond, Dennis M. Sullivan, William A. White Jr., William M. Roche, Maryann M. Heuston, Walter F. Pero, Robert C. Trane
ABSENT:Thomas F. Taylor, Sean T. O’Donovan, Rebekah L. Gewirtz