Interesting Wrinkles in New GIC Study

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A new study, published by the Rappaport Institute and Collins Center, examines Springfield’s experience with the transition to GIC. The author, Bob Carey, provides a lot of interesting details. My observations:

1) High Out-of-Pocket — one of the typical objections to the GIC is their (deliberately) high out-of-pocket costs. It turns out that Springfield had moved to a new health insurance plan two years earlier that had some of the highest out-of-pocket costs I have seen. That made GIC a lot more palatable to municipal workers.

2) Shedding 5% of Insureds Helps to Cut Costs — By tightening criteria (e.g. no more coverage for the Symphony) and requiring documentation (thereby reducing fraud), Springfield reduced the number of subscribers by 5%.

3) HMO Brand Equity Helps — HMOs are (usually) the cheapest of health insurance options (relative to PPOs and Indemnity). For eastern Massachusetts, GIC’s HMO choices are not that well-known (Health New England, Neighborhood, Fallon), which has the effect of driving subscribers into PPOs (offered by Harvard and Tufts). In Springfield, Health New England offered an HMO in the pre-GIC system, so was a known quantity during GIC enrollment.

4) Inclusive Limited Networks — GIC’s limited network products (Health New England HMO and Unicare Community Choice Plan) are almost always the lowest priced. In Springfield, these limited network plans allow access to the major teaching hospital in the community. This is not the case with limited network plans in eastern Massachusetts. Thus, Springfield’s proportion of enrollees in (lower priced) limited network plans is higher than GIC’s distribution.

It is a very interesting piece of work. Certain aspects of Springfield’s situation can and should be replicated by other communities. Other aspects are unique to that community. I encourage you to give it a read.