Senate’s municipal health bill needs fixes

From The Beacon, June 2010, Vol. XXXVI, #6

After days of speculation and anticipation during the Senate’s deliberations on the fiscal 2011 state budget last week, the Senate narrowly voted to add a municipal health insurance provision to its budget bill. We applaud the Senate leadership’s determination to address the issue, but the measure must be improved to provide real relief for taxpayers and communities.

Local leaders have been calling for reform for years, and in the crossfire of growing pressure for action and labor’s steadfast opposition, the Senate is offering a plan that provides municipalities with plan design authority or the ability to enroll in the Group Insurance Commission, but also contains many serious drawbacks, including mandatory binding arbitration, adoption of permanent Section 19 coalition bargaining, and a provision that only guarantees that cities and towns would see 25 percent of any savings, with the rest up for negotiation and arbitration with employee unions.

The proposal now goes to the House-Senate budget conference committee, where the MMA will be seeking to improve the provision so that cities and towns have a guarantee of greater savings and do not have to face binding arbitration or permanent coalition bargaining.

Municipal leaders must weigh in with their legislators to make certain that the measure is amended to strike binding arbitration, strike the Section 19 mandate, and ensure that a significant majority of the savings goes to taxpayers and local budgets.

Cities and towns have been seeking health insurance decision-making parity with state government for many years. The state is able to adjust the design of health plans for state employees outside of collective bargaining and uses this power to update co-pays and deductibles to reasonable levels in order to hold down costs. But state law forces communities to seek union approval before making similar changes. As a result of this union veto power, local insurance costs have increased twice as much as the state’s costs over the past 10 years.

Communities now spend more than $2 billion a year for employee health insurance, and the skyrocketing cost of the current system is unaffordable and unsustainable. Dramatic reform is necessary. Otherwise, cities and towns will be forced to slash vital services and layoff thousands of teachers, police officers, firefighters and other key employees.

The Senate’s recognition that localities need plan design authority is encouraging. But several provisions seriously undercut the bill, and the overall result is a weakened reform that falls short.

First, the plan requires cities and towns to adopt Section 19 of Chapter 32B in order to make plan design decisions or enroll in the GIC. Section 19 establishes a permanent coalition bargaining obligation that requires the approval of a public employee committee on all future health insurance matters, including the premium split and all agreements regarding what to do with any savings from plan design changes. The public employee committee has weighted votes based on union membership, meaning the teachers’ union will have veto power over all negotiations and agreements in the future. Once adopted, Section 19 can only be revoked if the unions agree.

Real reform cannot force communities to accept permanent coalition bargaining. Section 19 is a failed model that has not worked because it gives unions the ability to block any and all health insurance changes and control this huge area of local budgets. For many communities, this requirement would be far too high a price to pay. The six communities that adopted the original Section 19 now regret it, as their rates are among the very highest in Massachusetts. This proposal permanently strengthens union leverage over health insurance matters, instead of providing collective bargaining relief.

Under the Senate plan, cities and towns would retain 25 percent of the plan design savings for the operating budget, employees would receive 25 percent of the savings, and the community and public employee committee would negotiate over the remaining 50 percent of the savings. No plan design change or transfer to the GIC could be implemented until an agreement is reached with the public employee committee.

Real reform must guarantee that taxpayers will receive a significant majority of any savings. Twenty-five percent is far too little. This plan is totally unbalanced and leaves the remaining 75 percent either up for grabs or guaranteed to employees. The state, meanwhile, has shared NONE of its plan design savings with state employees. This proposal would invite unions to go to binding arbitration, and would leave far too little of the savings to offset the massive local aid cuts of the past two years.

If the community and public employee committee cannot reach an agreement on how to divide the savings, the impasse would go to binding arbitration, and the arbitrator’s decision would be binding on the community unless rejected by an extraordinary two-thirds vote of the legislative body. Rejection of the agreement would prohibit the implementation of plan design changes or enrollment in the GIC under this new process.

Binding arbitration is unacceptable. 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 across the state, with an unaffordable 19 percent pay raise being ordered for Boston firefighters. This provision would give an arbitrator more power than two-thirds of the elected officials in any community. This is labor’s top goal in any legislation, but it is dangerous, costly and undemocratic.

The plan also stipulates that no change could be implemented for any group of employees covered by a collective bargaining agreement on July 1, 2010, until that agreement has expired. Very few contracts include language concerning plan design features, and thus this provision would unnecessarily delay any savings for years. In addition, there is seriously flawed language that requires any community in the GIC to hold employees harmless from the cost of any mid-year plan design changes (as occurred this year). These sections must go, too.

Reform demands more. The Senate plan needs to be improved by removing binding arbitration, eliminating permanent coalition bargaining, and guaranteeing immediate savings to communities and taxpayers.

The Senate plan is a start, but communities and taxpayers need strong, lasting and powerful reform. Without improvement, this measure falls short.