After uproar, state rescinds plan to limit health insurance options for public workers

Robert Cusick, center, a union retiree, attended the Group Insurance Commission meeting Thursday.Pat Greenhouse/Globe Staff

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The state agency that oversees health benefits for hundreds of thousands of public employees, retirees, and their families on Thursday abandoned a plan to limit coverage options, bowing to the demands of angry workers but largely leaving unanswered the question of how to rein in costs that are squeezing the state budget.

The about-face capped a tumultuous two weeks for the Group Insurance Commission, which came under attack soon after making the surprise changes to public workers’ health insurance carriers. The move relieved workers but also raised the prospect that some future changes — such as higher out-of-pocket expenses — might be required to control costs.

“Every time we get a pay raise, it’s absorbed by the increases in health insurance. I fear that they will jack the rates up a lot,” said Thomas Nigrelli, president of the Association of County Employees, reflecting the worries of other workers around the state.

“There’s still a real fear for me about cost hikes,” said Janelle Quarles, an employee at University of Massachusetts Boston and president of the Classified Staff Union there.

The Group Insurance Commission, in an 8-5 vote on Jan. 18, decided to cut costs in part by eliminating popular commercial health plans from Harvard Pilgrim Health Care, Tufts Health Plan, and Fallon Health. The change would have forced about 200,000 state and local employees and their families to move to coverage under three lesser-known health insurers.

Public workers, labor unions, and elected officials blasted the move, which they said came with little or no warning. Many people — including Governor Charlie Baker — said the commission’s process was flawed and caused mass confusion.

Following the backlash, commission officials said that they would reconsider their decision. On Thursday, commissioners voted unanimously to reverse course and keep all six commercial health insurers that are currently available to teachers, firefighters, bus drivers, social workers, and other public workers who get their benefits through the state.

The decision means that public workers will continue to have access to six commercial plans when they renew their coverage for July 1: Harvard Pilgrim, Tufts, Fallon, Neighborhood Health Plan, UniCare, and Health New England. Retirees with Medicare plans will be able to choose from four insurers.

Rates will be set in the coming weeks.

A motion passed to reconsider the Group Insurance Commission’s January 18 vote that limited public employee health plans. Pat Greenhouse/Globe Staff

Commissioners acknowledged Thursday that they needed to communicate better with public workers after the blowup.

“We have to build trust with our constituents, and it has to start now,” said Valerie Sullivan, chairwoman of the commission.

But Sullivan and other commission members appeared torn about how the commission should respond to concerns from the public. They said their role is to offer high-quality benefits while reining in the premium and out-of-pocket costs that so many workers have found hard to bear.

The commission’s initial plan, which included cutting the three popular insurance carriers, would have saved an estimated $20.8 million in the first year for public workers and the state. By nixing that plan, they are expecting to save much less, about $1 million.

The taxpayer-funded Group Insurance Commission has an annual budget of some $2 billion and is the largest purchaser of health insurance in the state. Its initial plan to eliminate some insurers resulted in one company raising the prospect of layoffs.

“It’s important that we don’t lose sight of what the goal of the GIC in this process was. . . . We were trying to make sure we got the most out of the money we were spending,” said Eileen P. McAnneny, a commissioner and the president of the Massachusetts Taxpayers Foundation.

GIC commissioners are appointed by the governor. A minority of them represent labor unions.

The commission has been in the process of selecting health insurers for several months. Commission officials said they long discussed the possibility of “consolidating” insurance carriers. But they didn’t release specific details until shortly before the Jan. 18 vote. That rankled public workers and union officials, who said they needed more time to digest the changes.

Labor representatives were in the audience as the commission met Thursday morning in the State Transportation Building in downtown Boston.

“We’re certainly happy with the outcome of the vote,” said John Drinkwater,

legislative director of the Massachusetts AFL-CIO. “Our members had been living with quite a bit of uncertainty. . . . It does lift a weight.”

The commission has not yet explained precisely what benefits will be covered and exactly how much workers and retirees will have to pay. Those details are expected in the coming weeks.

“I just want to make sure my deductibles and copayments don’t go up,” retiree George Krauskopf said before Thursday’s meeting. “I still have health insurance, but it’s even more important because my income is fixed.”

Commission officials said they’re continuously working to keep coverage affordable. But they indicated that goal will be harder to accomplish now after scrapping their original plan, which would have saved costs in part by eliminating some carriers.

Union officials say the commission should not try to slash costs for the state by requiring workers to pay more out of pocket.

“There’s got to be another way to save without shifting more onto workers or placing an unreasonable burden on them,” Drinkwater said.