Section 16. Upon acceptance of this section as hereinafter provided, the appropriate public authority of the governmental unit shall enter into a contract, hereinafter described, to make available the services of a health care organization to certain eligible and retired employees and dependents, including the surviving spouse and dependents of such active and retired employees, on a voluntary and optional basis, as it deems to be in the best interest of the governmental unit and such eligible persons as aforesaid, provided:—

(1) that the total monthly premium cost to be paid by the governmental unit is to be paid under the terms of a contract to a carrier and not paid directly to a health care organization. For purposes of this chapter such a contract shall be deemed to be a contract of insurance;

(2) that the health care organization maintains fair and non-discriminatory formulas for the payment of all vendor's services and that such formulas result in the same relative charges to all fiscal intermediaries or carriers with whom the health care organization has an agreement; provided, however, that any difference in relative charges which may result from the application of a rate of payment approved under section five of chapter one hundred and seventy-six A shall be deemed to comply herewith.

The appropriate public authority shall negotiate such a contract of insurance for and on behalf and in the name of the governmental unit for such a period of time not exceeding five years as it may in its discretion, deem to be the most advantageous to the governmental unit and the persons insured hereunder.

All persons eligible for the insurance provided under section five shall have the option to be insured for the services of a health care organization under this section but shall not be insured for both. Eligible persons, having elected coverage under this section by making application as provided in section six, shall pay a minimum of ten percent of the total monthly premium cost or rate for coverage under this section, and the governmental unit shall pay the remainder of the total monthly premium cost or rate; provided, however, that nothing in this chapter shall preclude the parties to a collective bargaining agreement under chapter one hundred and fifty E from agreeing that such eligible persons shall pay a percent share of such total monthly premium cost or rate which is higher than said ten percent; provided, further, that such eligible persons shall in no event be required to pay more than fifty percent of such total monthly premium cost or rate. Such payment by the insured shall be made to the governmental unit as provided in sections seven, seven A, nine A, nine B, nine C, nine D and nine E, as may be applicable.

The governmental unit shall require under the terms and provisions of such insurance contracts an accounting at least annually of the payments made to providers of services on behalf of each person so insured; and, the extent and range of health care services shall be a matter of continuing analysis and study by the governmental unit for the purpose of maintaining a reasonable relationship between the total monthly premium cost or rate and the schedule of health care services provided.

Any dividend or its equivalent derived from insurance contracts issued pursuant to this section shall be applied as provided in sections eight or eight A whichever may be applicable.

The appropriate public authority may adopt such rules and regulations as may be necessary for the administration of this section.

This section shall take effect in a county, except Worcester county, city, town or district upon its acceptance in the following manner:—in a county, except Worcester county, by vote of the county commissioners; in a city having a Plan D or Plan E charter by majority vote of its city council, in any other city by vote of its city council approved by the mayor; in a town by vote of the board of selectmen; in a regional school district by vote of the regional district school committee and in all other districts by vote of the registered voters of the district at a district meeting.