Plan with low rate hikes for health coverage has fewer choices

By Sean P. Murphy
Globe Staff / March 8, 2011

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At a time when most health insurance companies are raising premiums by 10 percent or more, the Group Insurance Commission, which insures about 185,000 state employees and their families, last week showed them all up by limiting 2011 increases to just an average 2.4 percent.

But to achieve that goal, the GIC is counting on thousands of subscribers to give up their present plans for much cheaper ones that limit their choices of doctors and medical facilities. The GIC has even offered to let members skip three monthly premium payments if they agree to make the switch.

For example, the cheaper plans would restrict members to only one of Boston’s academic medical centers for treatment, rather than allowing members to choose from among several such facilities.

Dolores L. Mitchell, the GIC executive director, said the migration of about 10,000 members into one of the half-dozen so-called limited-network plans would lower overall insurance cost by about $31 million. Those savings would be split between the state and employees, she said.

“It’s a win-win situation,’’ she said.

Mitchell said premiums for the limited-network plans are about 20 percent lower than standard plans.

The GIC has offered limited-network plans for years, but fewer than 10,000 of GIC’s 350,000 members have joined so far. Last year, the GIC added new limited-network plans offered by Harvard Pilgrim Community Health and Tufts Health Plan, but those plans, too, attracted limited interest.

To help jump-start migration to the less costly plans, the GIC, beginning April 9, will require every subscriber to pick from among the GIC’s 19 plans, which include preferred-provider organizations (PPO) that allow wide choice and health maintenance organizations that allow moderate choice but charge higher premiums than the more restrictive limited-network plans.

Any subscriber who fails to designate a plan in the one-month period ending May 9 will be dropped from their present plan and automatically enrolled in the cheapest — and most limited — plan on the GIC menu.

Mitchell said the GIC was conducting a “full-court press’’ of outreach to members to make them aware of the choice they must make.

Still, she said, thousands are expected to default into the cheapest plan.

For those who pick PPO or HMO plans, the premium increases are pegged at about 8 percent.

Mitchell said two other factors have allowed GIC to hold premium increases lower than other plans. Utilization of medical services overall is down at the GIC and nationally, she said. Mitchell also said the GIC conducted tough negotiations with insurers over how much GIC should pay them to cover GIC members.

Sean Murphy can be reached at