Four thoughts for the GIC

Is Partners gaming the system with Neighborhood Health?

MANY OF US ARE BREATHING a sigh of relief with the hope that the Group Insurance Commission will vote to rescind its initial January 18 decision to accept the staff report and recommendation which, if carried out, would lead to over 100,000 state and municipal workers and their dependents having to switch health insurance plans next July.

Much of the press coverage has focused on the outcry of current GIC beneficiaries (mainly active workers but retirees as well) who would lose their often longstanding relationships with their health plans.  For active workers, this means being forced to divorce three longstanding and high-quality health plans – Harvard Pilgrim Health Care, Tufts Health Plan, and Fallon Health Care – and switching to the Indiana-based for-profit UniCare, the Partners Healthcare-owned Neighborhood Health Plan, or Health New England.

This is happening because the GIC, working with consultants, is hoping to streamline its carriers to reduce administrative burdens, find savings in administrative and medical services costs for covered governmental workers and dependents, and build more intensive health plan relationships.  The GIC commissioners and staff should be encouraged to pursue these type of goals on behalf of state and municipal workers and retirees—as well as taxpayers.

But when decisions are not fully vetted and use an algorithm that employs factors that can be “gamed,” good intentions aren’t enough. Understandably, the GIC process and decision have led to an outcry among state workers, their unions, and other state officials that has resulted in the GIC scheduling a meeting on February 1 where the agency may well vote to rescind its initial decision.

As a health policy watcher, it’s interesting to see the intensity of the outcry from people wanting to maintain their health insurance company relationship. Who knew there was such love and affection for health insurance plans?

Actually I think it is explainable, especially when Tufts, Harvard Pilgrim, and Fallon are all top-rated nonprofit plans who stand out among their peers nationally. State workers, like the rest of us, no longer see health care delivery organizations as the “good guys” who will always be there to protect our interests.  Instead, GIC members increasingly view their insurers as their agents, who are needed to help fight back against both high costs and fragmented care. Even if the workers view their current insurer less fondly, many may prefer dealing with a health insurance plan they know rather than starting from scratch with one they don’t.

I write today not as someone who has ever been or will likely be a GIC beneficiary. Instead, my main interest is a fuller exploration of the substance of the GIC plan decisions, including some examination of their potential impacts on the affordability of the overall commercial market for health insurance in our state. Even for those of us who don’t obtain their health plan coverage through the GIC, there is plenty to worry about here in terms of overall impacts on the commercial health care market, particularly since the GIC represents the largest book of commercial business in the state.

I invite the GIC Commissioners and others at Thursday’s meeting to discuss the following four issues:

  1. The $20 million in estimated first-year savings from changing plan administrators seems small in comparison to the reportedly hundreds of millions of dollars that the GIC estimates it will save over three years from planned pharma benefit manager changes. The minutes of the January meeting seemed to indicate that even with the prospect of significant pharma savings, there was at least some worry about vendor changes by the commissioners tied to possible consumer impacts of some formulary or tiering changes, or initial prescription rejections in the transition phase.  But these consumer impacts seem small in comparison to the potential for more significant dislocation that could result from people having to abandon their insurers, some of whom GIC beneficiaries have been working with for decades. At a minimum, as the commissioners reportedly only received notice of the changes in insurance company offerings the day prior to the January 18 meeting, wouldn’t it be wise for them to have more time to adequately consider and discuss the cost benefit aspects of this decision with at least certain subsets of  GIC beneficiaries—such as those with chronic disease challenges?
  2. While I appreciate the GIC is trying to secure cost savings in both administrative services and medical spending, most of the savings comes on the medical spending side based on the staff presentation. What is the basis for assuring that such medical spending savings will in fact materialize?  Is that estimate based solely on the repricing of services? How will GIC be assured that savings will continue beyond the first year or so?
  3. It is possible that Partners, as the owner of Neighborhood Health Plan, helped its subsidiary win the selection by giving it very favorable provider rates as compared to what it gives competitor insurers?   A review of the selection factors the GIC used to select health carriers shows price was given the biggest weight, and price is where Neighborhood Health excelled. While at first blush these developments seem to be positive—at least for GIC and its members—I sit here worrying that Partners may just make-up any administrative subsidies or provider discounts to Neighborhood Health by raising provider rates for the rest of the commercial market.  The GIC may be slightly better off short-term, the rest of us in the commercial market actually could be made worse off in terms of higher Partners prices translating into higher premiums.  At the end of the day, Partners’s total commercial take would be the same, but now it has also been able to boost its owned insurance company which is trying to make the pivot away from covering Medicaid lives, to covering the commercially insured. (Partners could also end its discounts to Neighborhood Health after a year.)
  4. To date, UniCare, has only a commercial presence in Massachusetts through its GIC plan offering. Ideally, I’d like health insurance plans to develop more intensive integrated care management relationships with providers across many lines of business, but UniCare doesn’t seems ready for that role. Also, why strengthen UniCare, while concomitantly weakening our other established, high quality insurers who can use their greater numbers of covered lives from GIC business to have more leverage in commercial rate negotiations with providers across all lines of business—especially with our more powerful and high priced hospitals and systems.  Finally,  will overall Massachusetts employment be better off by bringing administrative fees (and perhaps related jobs) to a for-profit, primarily out-of-state insurer whose main employment base is in Indiana, while at the same time causing possible job loss for our Massachusetts insurers?

I hope when the GIC Commissioners reconvene on Thursday they can explore some of these issues and get answers to these questions. I realize that some of the issues of concern here are broader than the interests of the GIC alone, but I think a governmental agency such as the GIC needs to consider its decision in this broader market context.

Meet the Author

The Thursday meeting should be an interesting one.

Paul Hattis is an associate professor of public health and community medicine at Tufts University School of Medicine.