One of the most important subjects in the conversation about municipal health care has been the risk of high out-of-pocket costs. Some municipal employees have been concerned that shifting into the state’s Group Insurance Commission or a plan like the Group Insurance Commission would raise their out of pocket costs. They have been especially concerned about the potential for very high costs in the cases of severe health events.
The Group Insurance Commission has been working for some time to provide data to illuminate this question. They just released a study which I am pleased to post at this link. The study shows that:
- The average GIC family had out-of-pocket expenses of $1,075 in Fiscal 2010.
- Roughly 63% of the over 155,000 GIC families had expenses less than that.
- Ninety percent had total expenses under $2,300.
- Under one percent had expenses over $5,000.
- Of those with high out-of-pocket costs, over $5,000, almost all had under $10,000 and the highest had a little over $18,000.
- The out-of-pocket costs have increased since FY2006, when the average expense was $752.
These facts give some support both to those who are concerned about migrating municipal employees into the GIC and to those who support rapid migration. It suggests that most GIC families have relatively modest out-of-pocket costs, but that there are risks of higher costs. It is likely that the final proposal for municipal health care reform (which we’ll see any day now) will include some mechanism to limit very high out-of-pocket costs, perhaps through an option for employees to arrange some kind of health reimbursement fund.
Because there are different ways for employees to incur higher out-of-pocket costs, the exact parameters for a protection against out-of-pocket costs are not easy to define. High costs can be driven by large family size (there is one family of over 10 members in the data), very severe health events (23.8% of those with out-of-pocket costs over $5,000 had a member with a health event costing over $100,000), optional choices to use out-of-network providers (especially for mental health or substance abuse), and needs for services which are not entirely covered by GIC insurance, such as some nursing facilities.
The data from Fiscal 2010 is probably reasonably representative. One concern about the data is that on February 1 of 2010, seven months through the fiscal year, the GIC implemented a deductible of $250 per calendar year for each covered individual. Fiscal 2011 data might look slightly different — some of the lowest utilizers might show higher costs for a full year as they ran their deductible down. However, all the high utilizers, those we are most concerned about, almost certainly had already exhausted their deductible by the end of the fiscal year. For Fiscal 2012, the new federal health care legislation will come into effect. It eliminates copays for preventive care. The low utilizers spend most of their money on preventive care, so they may actually see lower out-of-pocket costs.
The GIC staff is continuing to study the issue and there may be proposals forthcoming at some point that would address the risk of high out-of-pocket costs for all GIC employees.