Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
Dear Representative,
The Commonwealth and our communities are facing a new fiscal reality. Cities and towns are already laying off thousands of teachers, police officers, firefighters, public works employees and other key staff due to the recession and reduced state aid. This crisis will deepen and devastate the basic services that the people of Massachusetts need and deserve, and force thousands of additional layoffs, unless the Legislature and Governor provide cities, towns and local taxpayers with immediate and meaningful tools, resources and relief. The most important priority for relief and reform is municipal health insurance.
MUNICIPAL LEADERS OPPOSE THE MUNICIPAL HEALTH INSURANCE PROVISIONS IN THE SENATE’S FISCAL 2010 BUDGET BECAUSE THE SENATE PLAN WOULD FAIL TO PROVIDE THE RELIEF THAT CITIES AND TOWNS NEED AND WOULD BE A HUGE STEP BACKWARD FOR MUNICIPALITIES AND LOCAL TAXPAYERS. IN FACT, THE PROPOSAL IS CLEARLY WORSE THAN NO REFORM AT ALL! The MMA and local officials have been aggressively advocating for strong, real and meaningful reform in the area of health insurance for years. Any reform measure must improve the current system and ensure that local taxpayers will see relief. Unfortunately, the health insurance provisions attached to the Senate’s fiscal 2010 budget would not provide relief and would make the problem worse for many communities.
We understand that this issue is difficult for many legislators because municipal unions are opposing the reforms that are necessary. But the fact is that these reforms would continue to ensure that municipal employees would receive health plans that are identical to or better than the plans that state employees and legislators receive. The natural response on the part of state officials is to seek a political solution that appears to find a middle ground. But the Senate plan, no matter how well-intentioned, fails to deliver the reform that is needed and instead would create a rigid and costly framework that would make the situation worse for communities across the state.
The Senate budget provisions would make a major change in Proposition 2½ by reinstituting a form of binding arbitration, which was repealed by the voters in 1980 because the process was unfair and unaffordable to municipalities and local taxpayers. The plan 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. This flies in the face of Proposition 2½. It is not acceptable, and is not reform.
Further, the Senate plan is based on a dollar benchmark system that may look good on paper, but in the real world is totally unworkable and would unravel much of the good work that many communities have been able to achieve. Statewide benchmarks would actually force communities in eastern Massachusetts, or anywhere near more-expensive hospital networks, to develop health insurance plans that provide lower benefits than what state employees receive. Further, the plan would force many communities to raise the cost of their retiree plans, or would dismantle plans in communities where benefits are more generous but taxpayers pay a smaller share and employees pay a higher share.
The fundamental problem is a blatant double standard in the law that harms municipalities and drives up costs for local taxpayers, with the state imposing mandates on cities and towns and exempting itself from these same requirements. State law mandates that cities and towns must receive union approval before making any changes to modernize their health insurance plan designs. This gives unions veto power over all vital cost-saving options. But the state exempts itself from all such collective bargaining requirements with state unions.
State employees receive their health insurance through the Group Insurance Commission. The GIC is an 11-member board that is controlled by the Executive Branch. The GIC makes all of the decisions regarding plan design: who the carrier will be and what the co-pays will be for office visits, emergency room visits, in-patient hospital stays, out-patient surgeries, diagnostic tests, and pharmaceuticals. The decisions are final and not subject to collective bargaining.
The percentage of the premium to be paid by the employer and the percentage to be paid by the employee is determined each year as part of the Commonwealth’s budget process. Again, the decision is final and is not subject to collective bargaining.
The state has made a conscious decision to use co-pays and tiered networks to drive down the premium cost. This decision has been successful. From 2001 to 2005, state health insurance costs rose 29 percent. Because municipalities lack this fundamental ability to update plan design (the co-pays, deductibles and networks), their costs rose 63 percent.
State law requires municipal government to operate under an entirely different system. The most important difference between the state and the cities and towns is that state law mandates that health insurance for municipal employees is subject to collective bargaining for both plan design and the contribution percentage. This system has saddled cities and towns with health insurance plans that are generally more expensive than those offered to state employees because the co-pays are significantly below what the state requires of its employees. Finally, in order to increase co-pays, municipal government must get the approval of all of its bargaining units. Thus, cities and towns are doubly disadvantaged by first being required to collectively bargain any change and then by the requirement that they have to get all of the bargaining units to agree to any change. The result of all of this is the fact that municipal co-pays are very low compared to the state and private sector employers and therefore municipal health insurance premiums are higher.
But, of course, the municipal unions oppose an end to their extra bargaining control – even though no state employee union has ever had this power, and even though their opposition to reform will force the elimination of thousands of jobs for their union membership! Cities and towns want relief so they can prevent these layoffs.
FACT: The MMA has offered a reasonable proposal that would bring real fiscal reform and savings, and guarantee that municipal employee unions would continue to have more bargaining power over health insurance than state employee unions, and municipal employees would receive health insurance benefits that are as good as or better than what state employees receive.
Because time is so urgent, and the need for reform is so great, the MMA has provided a very modest compromise alternative that would continue to give municipal unions much more power and authority in this area than state employee unions enjoy.
The MMA’s compromise alternative is to use impact bargaining as a way to solve the problem. Under our plan, municipalities could increase co-pays and plan design elements up to the level that the state has for similar plans. Plan design changes of this sort would be subject to impact bargaining only. The parties would discuss what impact the changes in co-pays would have on employees. Impact bargaining is real bargaining, with both sides sitting down to reach agreement on how the changes would impact the employees, and to seek agreement on addressing those impacts. Under impact bargaining, communities have an obligation to bargain in good faith, the negotiations are focused on the impact of the changes that the community is putting forward, and unions can appeal to the state Labor Relations Board if they assert that the negotiations did not meet the impact bargaining standard. Communities would not be allowed to make changes to the employee-employer premium split or to change plans beyond the plan design elements that the state has for similar plans. These decisions would be subject to full collective bargaining.
Rather than bargain with the unions separately, a form of coalition bargaining would be used to expedite the matter. The parties would have 60 days to reach an agreement. If, at the end of 60 days, no agreement is reached, then the municipality could implement its decision regarding co-pays with the provision that the municipality would pay at least 50 percent of the co-pays for in-patient hospital stays and out-patient surgeries.
THIS FACT IS WORTH REPEATING: THE MMA PROPOSAL WOULD MEAN THAT MUNICIPAL EMPLOYEE UNIONS WOULD CONTINUE TO HAVE MORE BARGAINING POWER OVER HEALTH INSURANCE THAN STATE EMPLOYEE UNIONS, AND MUNICIPAL EMPLOYEES WOULD RECEIVE HEALTH INSURANCE BENEFITS THAT ARE AS GOOD AS OR BETTER THAN WHAT STATE EMPLOYEES RECEIVE.
The MMA strongly believes that this proposal is the fastest and most effective way to reduce health insurance premiums. Municipal government would still not have the authority that the state has to simply determine plan design, rather we would bargain with the unions on an impact basis. In addition, unlike the state, we would continue to bargain over the health insurance premium split. In the end, municipal employees would have far more opportunity to help shape their health insurance plans than state employees have.
Giving municipalities the tools to quickly adjust their health insurance plans will result in significant savings for municipal government. For many communities, increasing co-pays to what state employees pay would result in a savings of at least 4 percent of premium. Statewide, the health insurance savings would be in the millions and millions of dollars. Given the fiscal crisis that we all face, these funds would be used to save thousands of municipal jobs across the Commonwealth. All for the cost of increasing office visit co-pays from $5 to $15, for example.
In summary, the MMA plan is simpler, retains more bargaining rights for municipal unions than state employees have, protects against unanticipated problems cited above, guarantees greater savings for more municipalities and taxpayers, and protects municipal jobs, all while ensuring high-quality health insurance for all municipal employees.
We offer real reform to move forward and share our honest assessment that the Senate’s plan is unworkable and unacceptable to local government and would move us backward. This is the time to pass real reform, and reject plans that we believe would trigger greater problems, difficulties and higher costs for local taxpayers.
Thank you very much for your consideration and for your efforts in the other very important areas of municipal relief.
Sincerely,
Geoffrey C. Beckwith
MMA Executive Director