Thousands of public employees will see an average premium increase of 7.5% in the coming fiscal year under rate changes that state health plan overseers approved last week, with open enrollment just a little under a month away.
The Group Insurance Commission approved fiscal year 2027 premiums for various plan types on a 10-5 vote on Thursday, with some commissioners frustrated over the expected strain on state workers’ wallets. A divided commission had previously voted to eliminate coverage for costly GLP-1 drugs for weight loss as part of cost-cutting efforts.
“While these rates are not what we hope for our members, we do understand that there are pressures within the larger community,” board Chair Valerie Sullivan said. “I’m confident that moving forward, we will have innovation, and we will work together to drive down health care costs.”
GIC staff in December predicted premiums could climb by around 9% to 13% for the fiscal 2027 plan year. The lower weighted average of 7.5% across all plans is a result of benefit changes that commissioners approved, including scrapping coverage for GLP-1 weight loss drugs and implementing a copay assistance card program.
“We recognize that this is still a substantial increase to our members, and it will be felt,” said Margaret Anshutz, the GIC’s director of health policy and analytics.
She said most GIC members pay “only a portion of the premium cost, with the state picking up the largest share of the premium as part of our members’ benefits package.” The employer-employee premium split depends on when a worker was hired, if they’re an active employee or retiree, and whether they work for the state or a municipality.
Among active state workers, the most common split is 80%-20% for those hired before July 1, 2003, and 75%-25% for those hired on or after that date, a GIC official said. There are more than 61,000 subscribers in the 80/20 split, and more than 82,100 in the 75/25 split, according to Anshutz’s presentation.
The GIC has been leaning on the state for emergency appropriations. The agency is currently awaiting $300 million in supplemental funding that it needs by mid-April, according to Jennifer Hewitt, the GIC’s chief financial officer.
The average 7.5% premium increase assumes that people enrolled in GIC coverage stay in their current plans, said Executive Director Matt Veno. He encouraged members to shop around for different, potentially cheaper options once open enrollment kicks off on April 1.
Anshutz said premium increases are driven by pharmaceutical spending and provider consolidation within large medical systems.
Breaking down premium increases, Anshutz said about 96,500 members will see an increase of 4%-5%. About 49,600 members will have an increase of 7%-8%, and nearly 52,000 members will experience an 8%-9% increase. More than 12,000 members will see premiums rise by 12%-17%, according to her presentation.
For non-Medicare products, the average premium increase is 8%. The lowest rate increase is 4.1% for the Wellpoint Total Choice plan, and the biggest jump is 13.6% for MGB Complete HMO. Anshutz said the cheaper plans tend to have smaller provider networks and lower deductibles.
Board Vice Chair Bobbi Kaplan said that even the smallest rate increase would wipe out the salary boost that state workers received this year.
“And certainly the 13% increase is triple the salary increases that our members have received, so I just want to put it in perspective,” said Kaplan, who voted against the rate changes. “Although I appreciate the premium increases are less, nonetheless, they still negatively impact our members, many of whom are also losing their GLP-1 medications for weight loss.”
Commissioner Dean Robinson asked GIC staff how they arrived at a 7.5% increase, given the removal of GLP-1 drugs that represented a “significant” share of drug growth costs.
“GLP-1s have taken a lot of heat deservedly for how much they cost,” Anshutz, who acknowledged those drugs are “very effective,” said. “They’re not the only story in the pharmaceutical market in terms of drug cost increases.”
The GIC at the start of the year rolled out a new contract with Vida Health to become the agency’s sole prescriber for GLP-1 drugs, with the aim of curbing spending. More than 11,000 members have enrolled with Vida since Jan. 1, said Erika Scibelli, the GIC’s deputy executive director.
The GIC is now contemplating next steps for the contract, such as winding it down for July 1, keeping the contract to allow Vida to prescribe GLP-1 drugs through direct pay, or maintaining a short-term contract that would function as an “off-ramp” for members, Scibelli explained.
The GIC intends to “communicate the transition plan to GIC members as early as possible, and hopefully before March 31,” Scibelli said.