It’s time for health reform, not politics

From The Beacon, June 2009, Vol. XXXV, #6

For years, the MMA and local officials have been aggressively advocating for strong, real and meaningful reform in the area of municipal health insurance. The truth is that Massachusetts can no longer afford the status quo, and cities and towns need real, workable reform.

The call for reform has not been answered so far, primarily because the state is fearful of any modification that would upset municipal unions. This must change.

In its version of the fiscal 2010 state budget, the Senate has given initial approval to a deeply flawed measure that would be a giant step backward for cities and towns. The proposal is so defective that it is actually much worse than no reform at all.

The problem is that too many people see municipal health reform as a political issue, and they try to cobble together a kind of political compromise instead of understanding the substantive challenges and the need for real change. But this is not a political issue, this is a reform issue.

The Senate measure is based on a political “split the baby in half” compromise issued last month by a legislative committee studying municipal relief measures. The commission’s plan (now an outside section of the Senate budget) would continue to require cities and towns to collectively bargain for union approval to make any changes in their health insurance plans, continuing the double standard that frees the state from any bargaining responsibilities, but gives local unions veto power over basic and long overdue changes.

Even worse, the plan would make a major change to Proposition 2½ by reinstituting a form of binding arbitration, which was repealed by the voters in 1980 because the process was unfair and unaffordable to municipalities and local taxpayers. From the municipal perspective, this is not a compromise or middle ground, but an unwarranted concession that strengthens union control.

Binding arbitration would effectively remove elected and appointed municipal leaders from the final decision-making process and place all authority in the hands of an unelected, unaccountable arbitrator who could impose unaffordable requirements on cities and towns and essentially control all aspects of health insurance at the local level. In the end, local legislative bodies could reject arbitrator awards by a two-thirds vote, but then the community would be punished with a state-imposed cut in local aid. There is no way to see this hammer-handed approach as anything other than binding on a community. Instead of giving municipalities more control and flexibility, this proposal goes in the opposite direction, increasing union leverage and stripping away local discretion. This is not acceptable, and is not reform.

The Senate plan also relies on a totally unworkable dollar benchmark system that is seriously flawed – a single dollar benchmark would discriminate against communities in eastern Massachusetts and many border communities, require communities to end subsidies for retirees and drive up retiree premiums because of the mandate to lower costs for active employees, and dismantle cost-savings initiatives or plans that many communities have developed, especially in communities where the local taxpayer contribution is less and the employee contribution is more.

The benchmark is a simplistic approach to a complex issue, and would trigger widespread problems. The most effective solution is to give communities plan design authority, which would allow communities to adjust their plans (increasing co-pays and deductibles, and instituting tiered network plans, for example) while avoiding the flaws of the benchmark system.

The Senate framework is faulty in that it continues to exempt the state from collective bargaining, but mandates that municipalities engage in full collective bargaining over even the simplest of changes, meaning that local taxpayers would always pay more in total cost than the state for identical health plans because of the concessions required to get unions to support any changes, even if communities only want to develop the same plans that the state offers its employees.

In short, the plan included in the Senate budget would fail to provide the relief that cities and towns need, and would be a major step backward for municipalities and local taxpayers.  The proposal is indeed worse than no reform at all.

State leaders must recognize that the most effective way to achieve real savings while avoiding the many problems listed above rests in a simple solution: allowing cities and towns to update their insurance plan designs to reflect the benefits that state employees receive. Overall, parity would provide the easiest solution, which would mean removing plan design from collective bargaining. This flexible approach would ensure savings for taxpayers in every corner of the state, avoid the punitive and unworkable approach that the Senate has put forward, and still guarantee that municipal employees would receive health insurance benefits at least as generous as the state offers its own employees.

We can’t afford the status quo. We can’t afford to go in reverse. We can’t afford to allow politics to trump real reform. That’s why the Legislature should reject the political approach (which won’t work anyway) and embrace true reform that will work for all cities and towns.

The taxpayers of Massachusetts deserve nothing less.