General News
Monitoring the GHI-HIP merger
Jan 17, 2008 12:59 PM
New York’s GHI and HIP have sent a letter to subscribers announcing public hearings in New York City and Albany regarding their conversion from “non-profit” to “for-profit” status. Last year, the two health-care providers announced that they were joining forces to create the state’s largest single health plan. The following explanatory article should help answer members’ questions and concerns.
By Arthur Pepper
Executive Director,
UFT Welfare Fund
In November 2006, following years of discussion and a review by both federal and state agencies, GHI and HIP — two health plans offered by New York City to employees and their dependents — officially affiliated under a common corporate parent, EmblemHealth, Inc.
Most importantly, all through the process both GHI and HIP have pledged to their subscribers to keep to the mission of affordable and quality health care.
The following is a brief explanation of why these two health plans decided that joining into one larger organization was the most effective way for them to deliver quality, affordable health care.
The national health-care scene continues to change rapidly as larger health plans buy smaller ones. GHI and HIP are no exception. GHI purchased Wellcare of New York, an HMO, and HIP purchased Vytra, also an HMO. And now they have become a single organization.
Although GHI and HIP offer very different types of plans and different products, they have worked together before on joint projects. For many years, GHI processed some of HIP’s claims because of the former’s strength in its processing department.
Competition is the key to these mergers and acquisitions. Buying power provides the competitive edge in purchasing health care and offering quality, affordable health care to subscribers.
GHI and HIP each has about 2 million subscribers. Combine those numbers and the 4 million subscribers provide substantially more power when bargaining the cost, for example, of a hospital stay.
Ultimately, these savings are passed on to subscribers in the form of premium stabilization.
Also, both of these plans have certain individual strengths such as information technology and internal networks that each can utilize and in combination will provide a broader range of options to all of the participants.
While all of these transactions are ongoing, the most important question for our members is: How will this affect me and my access to coverage?
The chief executive officers of both GHI and HIP have publicly committed to the heads of all the municipal unions to continue to offer quality and affordable coverage to the employees of the City of New York. The New York State Department of Insurance has also provided oversight provisions as part of the agreement to the merger. An oversight committee will report to the State Insurance Department and offer guidance to the merged organization regarding standards of fairness and compliance directly affecting consumers. This includes the network and plan offerings by the new organization.
The process of bringing these companies together will be ongoing and subscribers in each plan will not see any immediate changes in their benefits or the way they access their care.
As part of the process, GHI and HIP are also moving ahead to convert to “for-profit” status rather than their current “not-for-profit” designation. As a “not-for-profit” entity there are statutory restrictions that limit the accumulating of revenue that can be used for improvements such as updating claim processing systems. For instance, under the GHI program, currently any money realized at the end of the year is returned to the city program as a dividend which helps to keep the benefit costs stable.
The choices and offerings of health plans have always been a joint effort between the City of New York and the Municipal Labor Committee. The MLC and the various health and technical union representatives meet frequently to review the plan offerings to all in-service and retiree members and will continue to monitor this merger and the way it affects the care available to our members through these plans.
