GIC No Offers — File 191787

GIC FOR THE HEALTH OF OUR CITY Top quality benefits that provide significant budget relief Mayor Joseph A. Curtatone August 11, 2011

Why the Group Insurance Commission? High quality health care at a lower cost

The GIC will • Provide less costly overall health care for participants today and in the future • Maintain high quality of health care – 4 of top 10 plans in the nation • Deliver $75 million in cumulative savings over 6 years • Provide multi-year mitigation funds to help employees and retirees in need

GIC Profile • Proven program founded 1955, includes nearly 400,000 participants • Guards against spiraling health care costs • Mission – to deliver high quality health care at reasonable costs • An insurance pool, not an insurance plan • Includes 4 cities, 15 towns, 11 regional and charter school districts

Total First Year Savings City $5.2 million Employees & Retirees $4.1 million Total $9.3 million

Runaway Health Care Costs • Total health care costs have tripled since 2001 • Health care costs are now $9 M more than net state aid $- $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 Health Insurance Cost Net State Aid Net State Aid vs. Health Care Costs

It takes the tax bills of four two-family homes to pay for one employee’s family plan = One Family Insurance Plan

GIC = High Quality Health Care • All 4 commercial plans ranked in top 10 of 239 • Two Medicare options ranked in top 10 of 166 • Same plans used by all state employees and elected officials • Employees/retirees retain right to keep their doctor

GIC = Savings for Employees • Employees and retirees overall will save $1.83 million per year in premiums • Average savings of more than $650 a year per subscriber • Co-pays and deductibles are higher, but weekly premiums are significantly lower

$39M $ 41.8M $44.9M $48.1M $51.6M $55.4M $29.8M $31.5M $33.4M $35.3M $37.3M $39.5M 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 50,000,000 55,000,000 60,000,000 2012 2013 2014 2015 2016 2017 Total City Plans Total GIC Total Health Care Costs Over 5 Years Future Fiscal Impact • $75 million in cumulative savings over 6 years • Superior buying power City Plans vs. GIC

$75 million = - 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 80,000,000 GIC Savings Compared to Current Spending

Employee Contributions Over 5 Years $7.8M $8.3M $8.9M $9.6M $10.3M $11M $6M $6.3M $6.6M $7M $7.4M $7.7M - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 2012 2013 2014 2015 2016 2017 EE City Plans EE GIC City Plans vs. GIC •Employees & retirees save $15 million in contributions over next 6 years

Mitigation Benefits More than $2.3 million to be dedicated to: ▫Retirees ▫Low-income subscribers ▫Subscribers with high out-of-pocket costs

Addressing Concerns • GIC does not include Blue Cross/Blue Shield ▫Other plans rated higher ▫BC/BS now may have incentive to join • Higher costs for higher utilization ▫Mitigation ▫More flexible plans Top Ten U.S. Health Insurance Plans 1. Harvard Pilgrim Health Care 2. Harvard Pilgrim Health Care of New England 3. Tufts Associated Health Maintenance Organization 4. Grand Valley Health Plan 5. Capital Health Plan 6. Geisinger Health Plan 7. Fallon Community Health Plan 8. Health New England 9. CIGNA HealthCare of New Hampshire 10. Group Health Cooperative of South Central Wisconsin — U.S. News 2009-10

GIC Double the Savings of Plan Design $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 GIC Plan Design Total Projected Savings City Projected Savings Employee/Retiree Projected Savings Projected Out of Pocket Costs

Good Government Meets Good Health Care • GIC offers sustainable health insurance • Top quality at lower overall costs for employees/retirees and City • Predictable costs helps future budgeting