GIT Reaches A Golden Landmark
California CPA November 2009
Finding affordable health insurance is not a new problem.
In 1959, California CPAs—especially those with smaller firms—were finding it difficult to obtain health insurance, so CalCPA entered into an agreement that has resulted in affordable health insurance for tens of thousands of California CPAs, their employees and families.
Today, the Group Insurance Trust offers a broad range of self-insured offerings, including eight PPO medical plans, three HSA plans, as well as dental and vision plans. It also sponsors two HMO medical plans and group long-term disability and group life insurance products offered by other insurance companies.
As GIT celebrates 50 years of service to CPAs, California CPA sat down with Susan Young, GIT executive director, and Gale Case, GIT board of trustees chair, to learn how GIT is still providing solutions half a century later.
Who can benefit most from GIT plans?
Gale Case: The plans are valuable to firms of various sizes because of the quality of coverage provided and favorable premium costs. Also, in most cases, GIT provides the only group coverage available to solo practitioners.
What is your competitive advantage? How do you provide value to CalCPA members?
Susan Young: We offer a large portfolio of affordable health and welfare plans designed to meet the needs of firms of all sizes. The ProtectPlus program has had average rate increases of only 7 percent for the past six years, and that’s a real value when compared to the California small-group marketplace that has seen rate actions averaging from 9 percent to 14 percent in each of those years.
How has GIT changed over the years?
GC: In its early years, an administrative committee, which was part of CalCPA’s Members Insurance Plans Committee, oversaw GIT. In 1983, the administrative committee became a stand-alone entity that oversaw GIT’s activities until the inception of the board of trustees in 1997. A trust secretary and staff oversaw GIT’s day-to-day activities.
During the mid-1990s, GIT lost the ability to continue its business due to unintended consequences of California state legislation, namely AB 1672. After several years of hard work by GIT, CalCPA leadership and government relations staff, GIT won the right to begin operating as a multiple employer welfare arrangement (MEWA)—essentially a type of insurance company, though with certain statutory and regulatory differences.
GIT hired its first full-time executive director (John Phillips, a long-time CPA member of the administrative committee) in 1997 at the time the MEWA was formed. He served through the end of 2006. Today’s executive director, Susan Young, is a highly experienced insurance professional who has contributed her industry insights since assuming her duties Jan. 1, 2007.
A major development in the life of GIT occurred in 2008 when it became the first and only MEWA in the nation to achieve an A.M. Best rating (B++, a higher rating than many new applicants achieve).
What have been some of GIT’s challenges?
SY: Legislative changes. As mandated changes have gone into effect, additional costs have had to be factored into the overall cost of the program. Also, changes in the Anthem Blue Cross provider network have created challenges over time. As some providers have opted out of the network, members have been faced with finding a new doctor—and that’s never a pleasant experience.
How do you keep your premium increases so much lower than the competition?
SY: We operate with no profit motive and there are no stakeholders to pay. We work hard to find the most cost-effective ways to administer the program. One example is the savings to our members and to the plan created through our contract with Anthem Blue Cross to adjudicate claims, plus utilization of the Blue Cross network, with its negotiated discounts through the provider network. For example, nearly 55 percent of the nearly $78 million in billed provider charges for 2008 was written off in provider discounts.
GIT’s executive director has always been a CPA. Now it’s an insurance professional. How has that affected the program?
GC: GIT has been served well by each of our chief officers. Susan has brought in-depth insurance industry experience to the role having previously owned and managed general insurance agencies, as well as having worked for Blue Cross.
Since she has come on board, GIT’s sales have significantly improved, greater clarity has been achieved in its working relationships with some third-party administrators and the A.M. Best rating has been achieved. Overall, the addition of professional insurance industry experience has been very positive for GIT—and its customers.
What changes to the program do you foresee?
SY: I see a greater emphasis on preventive benefits, wellness education, disease management and prescription drug management. We need to hone in on the areas where costs are skyrocketing and find ways to reverse the trends. By focusing on health, wellness education and early detection of disease, we may be able to manage care at the early stages of disease before claims escalate to high-dollar amounts and help bring the costs of the program down. One of the ways we are doing this in 2010 is to lower the co-pay on generic drugs from $15 to $10. We hope that will encourage members to elect the generic equivalent versus the more expensive brand name drug. If members can spend less out of pocket for their necessary prescriptions, they may be more inclined to continue the course of treatment and ward off more serious health consequences.
How do you feel national health care reform may affect GIT’s plans?
GC: It remains to be seen what legislation, if any, emerges from Congress. GIT will be affected, as will other medical insurance companies. One likely change appears to be the elimination of pre-existing condition provisions. Other specific coverage requirements may be adopted as well. Hopefully, the federal government will not set itself up in business as a competitor, which could have a devastating effect on the private insurance marketplace.
What do you see as the next big trend in health care plans?
SY: We’re already seeing a migration to the consumer-driven plans (high deductible health plans like HSA-eligible plans combined with a tax-advantaged account) from the traditional plans of HMOs and PPOs. Traditional plans are still the majority of health plans offered today, and HSA plans offer the lower-cost option while maintaining broad coverage. It’s an enhancement to traditional coverage.
With an HSA, employers reduce premiums and employees control the savings account and choose how they will spend the funds. There’s an incentive for employees to be smart medical consumers. ProtectPlus rolled out a new HSA plan this year and now offers members three high deductible HSA-eligible plan choices—$1,500, $2,500 and $2,850.
As the costs of traditional HMO and PPO plans continue to rise and renewals average in double digits, we will see more and more employers looking at HSA plans as a viable option in the near future.
What is one thing you would want CalCPA members to understand about GIT?
GC: GIT is governed by CPAs for CPAs. It does not attempt to make a profit as a commercial enterprise. It exists for the benefit of CalCPA members and their families, and your fellow CPA trustees work hard to make sure it stays that way.
What are the major factors driving health care costs?
GC: Among the contributors are the facts that doctors and hospitals tend to get paid based upon procedures performed, rather than health outcomes achieved. Another factor is the perceived need to practice defensive medicine, ordering all conceivable tests in the hope of avoiding malpractice claims if things go badly. Both of these factors lead to the use of multiple tests, a lot of high-cost technology, etc. Also, anyone who has recently spent time in a hospital knows they don’t tend to be the most efficient or cost-effective places. Hospital emergency rooms provide a lot of services that should really be taking place in a doctor’s office. This is a high-cost way of meeting patient needs.
Is there anything firms or individuals can do to help control health care costs?
GC: A primary point to remember is that health care costs money. There really is no free lunch. Someone has to pay when the services of the health care profession are used. The fact that most of the bill may initially be paid by some medical insurance plan doesn’t overcome the fact that consumers ultimately pick up the tab. Medical insurance merely spreads risk over a pool of insured persons so that when really catastrophic illnesses occur, the individual affected is not wiped out financially.
Sharing the costs of coverage as fairly as possible between employers and employees, avoiding use of health care resources—except when truly needed—getting regular physical exams and the use of generic drugs all help control health care costs.
Learn more about GIT online.
