Health Insurance for Vineyard Towns Costs Millions; Plans Seen as Outdated


Two outmoded health insurance plans no longer offered by most cities and towns in Massachusetts are the cause of dramatic increases in spending on health insurance for employees in Dukes County, including five of the six Island towns and public schools.

Over 75 per cent of public employees and government officials on the Island who receive health insurance opt for one of the two plans, which are significantly more expensive than other plans offered, and were taken off the market about 10 years ago, except on a renewal basis.

\"Employees assume that because they cost the most, they give the best coverage,\" said Noreen Mavro Flanders, the county treasurer and chairman of Cape Cod Municipal Health Group, which buys health insurance for Dukes and Barnstable counties. But she said that does not hold true for indemnity plans, which have been largely replaced by preferred provider organizations (PPOs) and health maintenance organizations (HMOs) - managed care plans that cover preventative care and have no maximum payout.

But government employers on Martha\'s Vineyard are behind when it comes to educating their employees about the best health insurance plans, according to a spokesman for the Massachusetts Municipal Association.

\"There are still some groups that have them [the outdated and expensive indemnity plans used on the Vineyard], but they are not common,\" said Ann Ludlow, who manages the purchasing group MIIA Health Benefits Trust that buys health insurance for about 70 cities and towns in the state.

\"Bargaining with the unions is required to make benefit changes, and if that\'s not successful, then that can be an impediment,\" she said.

Town budgets are expected to be extremely tight in the upcoming fiscal year, with a number of Island finance committees calling for level funding from town departments. Meanwhile, Cape Cod Municipal Health Group is projecting a ten per cent increase in health insurance costs on the Vineyard, although new rates are not set in stone by insurance providers.

Health insurance costs are projected at roughly $2.3 million in Vineyard Haven, $2 million in Edgartown, $1.8 million in Oak Bluffs, $440,000 in Chilmark and $389,000 in West Tisbury for the fiscal year that begins July 1. Aquinnah has not projected its health insurance costs yet, but a 10 per cent increase would bring the cost to $159,000.

Records show that in the last six years, health insurance spending has increased 151 per cent in Chilmark, 138 per cent in West Tisbury, 130 per cent in Vineyard Haven, 124 per cent in Oak Bluffs, 116 per cent in Edgartown and 74 per cent in Aquinnah.

All government employers on the Island - except Aquinnah - offer one of two Blue Cross indemnity plans: Master Health Plus or Master Health with student coverage, which cost nearly $20,000 and $19,000, respectively, for an employee and his or her family for one year. For a single person the cost of the two plans is roughly $8,000 and $7,500. The maximum payout on both plans is $2 million.

The other health plan options are PPOs and HMOs from Harvard Pilgrim and Blue Cross, which cost about $15,000 for a PPO and $13,000 for an HMO for one year of family coverage.

Most government employers on the Vineyard pay 75 per cent of employee health insurance. Exceptions include the Martha\'s Vineyard Land Bank, Dukes County, the Martha\'s Vineyard Commission and some personal service contracts, which contribute 90 per cent.

Health insurance costs - which represent an increasingly large chunk of town operating budgets - are often viewed as fixed costs.

This is not the case in Aquinnah and West Tisbury, where town officials have taken steps to eliminate indemnity plans from the package of health insurance offerings.

\"The indemnity plans are somewhat anachronistic in the sense that they don\'t offer any incentives for people to have their care managed or limited, the way that managed care plans do,\" said Sarah Kuh, program director of the Vineyard Health Care Access Program. \"I think part of the reason the indemnity plans are so expensive is because it\'s the patient choosing any provider and any care they want, without any physician management of that care - like you would get through a primary provider organization or a managed care organization.\"

The Aquinnah selectmen voted last May to eliminate the indemnity plan from the list of plans offered by the town, saving the town about $15,000 this fiscal year, according to town coordinator Jeffrey Burgoyne. Aquinnah is the only town whose health insurance expenditures have decreased for the last three years, records show.

\"I do openly advocate that the indemnity plan is no longer the best plan,\" West Tisbury treasurer Katherine Logue said. \"I think that West Tisbury has been ahead of the curve for a while in terms of encouraging people to look at all of the options and making them aware of all the options.\" She said about 12 employees still use the indemnity plan in West Tisbury.

Other towns have made similar attempts to phase out the indemnity plan, but with less success.

\"We had seminars and tried to encourage people to swap over to the less expensive plans,\" Tisbury treasurer Timothy McLean said. \"It\'s really a hard sell, but we\'re trying to move in that direction - and we have union contracts coming up this year.\"

Nearly 77 per cent of the health plan subscribers in Tisbury, or 120 people, still use the indemnity plan. Mr. McLean estimates that the town would have saved at least $250,000 this year if those employees switched to the Blue Cross PPO.

The savings would be even more dramatic in Edgartown, where 93 per cent, or 155 people, still use the indemnity plan, according to records from Cape Cod Municipal Health Group. In Oak Bluffs about 66 per cent, or 117 employees still use the indemnity plan, and in Chilmark 26 people still use it. At the regional high school, 88 per cent or 136 employees still use the indemnity plan. At the Martha\'s Vineyard Public Charter School all employees use it and in the Up-Island Regional School District, 73 of 78 employees use the plan.

Eliminating the indemnity plans would translate to a savings of well over $1 million Islandwide in a single year.

The Cape Cod Municipal Health Group has discussed eliminating the indemnity plans, Mrs. Flanders said. If this happened, towns and other government employers would have a grace period to negotiate the change with unions and employees. If the negotiations were unsuccessful, they would withdraw from the health group, she said.

\"There has been lots of talk about it, but nothing is definitive yet.\" Mrs. Flanders said.