Dear Senator,

Cities and towns are being crushed under the burden of skyrocketing health insurance costs. Coupled with last year’s $724 million local aid cut, and an additional cut of $159 million in the fiscal 2011 budget, municipalities across the state are in fiscal crisis. This is the year to provide real reform and savings to cities and towns by giving local government the same plan design authority the state has to set health insurance plans. Plan design reform would save communities $100 million statewide, preserve thousands of key municipal and school jobs, and prevent even deeper cuts in critical local services.

Local officials have already been joined in this effort by leading groups including the Save Our Communities Coalition, Associated Industries of Massachusetts, the Massachusetts Taxpayers Foundation, The Boston Foundation, the Boston Municipal Research Bureau, Stand For Children, and the North Shore Chamber of Commerce.

Two weeks ago, we asked you to take no action on the issue of municipal health insurance plan design reform when you considered the Municipal Relief legislation, because the MMA and local officials have been engaged in discussions with statewide labor groups, with the hope of making progress over the coming weeks. Despite our best efforts and many meetings with good faith on both sides of the table, we have been unable to agree on a framework that provides taxpayers and communities the relief they need and deserve – savings that would be used to prevent more layoffs and service cuts. While this dialogue will continue, it important that the legislative process also engage in support of real plan design reform this year.

During the discussions, the MMA agreed on several key points that underscore our commitment to balanced and fair reform, including limiting plan design changes through the legislation so that all municipal and school employees would be guaranteed health plans that are the same or better than what state employees receive, meaning no municipal plan would have higher out-of-pocket costs (co-pays or deductibles) than the state. In addition, the legislation we seek would only strengthen the plan design authority of communities; any changes in the employee-employer premium share would still be subject to full collective bargaining, giving municipal unions more bargaining authority than state unions. Further, we offered that communities would negotiate with unions over 10 percent of the municipal savings, noting that the state does not negotiate with unions over any savings when implementing plan design changes.

Meaningful reform must produce real savings. We strongly disagree with labor’s position during our talks that plan design changes must be subject to collective bargaining, that 100 percent of the savings be subject to collective bargaining, that binding arbitration be mandated on communities, and that communities be required to adopt Section 19 of Chapter 32B, a failed statute that effectively gives unions veto power over all other health insurance matters in the future. There would be no meaningful reform with any of these provisions.

If the Senate decides to consider the issue of municipal health insurance reform during this week’s budget debate, we ask you to vote for real reform and against any provisions that would undermine the savings or impose unacceptable conditions on cities and towns that would be worse than current law. In particular, we ask you to:

Support giving cities and towns the same authority the state has to make basic plan design decisions outside of collective bargaining – we support limiting this authority so that no community could use this provision to enact co-pays and deductibles that are higher than state employees’ out-of-pocket costs;

Support reform to guarantee that cities and towns would have access to the savings so that they can protect against layoffs and service cuts – when cities and towns reduce their insurance costs, employees see a real savings because they save on their premium share, and, of course, cities and towns use the savings to prevent layoffs, protect services and balance their budgets;

Oppose any attempt to make plan design changes or negotiations over savings subject to binding arbitration – this would allow an unelected and unaccountable person to control the health care finances of every community. We’ve seen the result of what binding arbitration would bring in communities across the state, with an unaffordable 19 percent pay raise being ordered for some Boston employees in the midst of the worst recession and fiscal crisis since the 1930s; and

Oppose forcing communities to accept permanent coalition bargaining over all aspects of health insurance through Section 19 of Chapter 32B as a condition of plan design reform
– Section 19 is a failed model that has not worked because it gives one union the ability to block any and all health insurance changes in the future. Communities are seeking a targeted reform on plan design only, and Section 19 would clearly be a major step backward.

Over the past 10 years, cities and towns have seen their health insurance costs rise by over 150 percent. Health insurance is the biggest budget buster at the local level, accounting for as much as 15 percent of local budgets, squeezing out vital services and costing local taxpayers more and more every year. The state has been able to moderate the cost of employee health benefits by implementing increases in co-pays and deductibles, just as the federal government and every private employer has done. But communities have been blocked by the Chapter 32B bargaining mandate and are trapped in outdated plans that are too costly.

Communities are facing a true fiscal crisis. This is the time for real reform and real action. This is the year to pass plan design reform. We look forward to working with you and your colleagues on this vital priority.

Thank you very much.

Sincerely,

Geoffrey C. Beckwith
MMA Executive Director

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