Business groups urge Legislature to enact ‘plan design’ change

A coalition of business groups, led by Associated Industries of Massachusetts and the Massachusetts Taxpayers Foundation, today urged the Legislature to help local government preserve essential services through efficient design of employee benefits.

The groups support allowing municipalities to change their health benefit “plan design” outside collective bargaining, as the state does for its employees. The change would save cities and towns an estimated $100 million in the first year and as much as $2 billion annually by 2020.

The business groups told legislators that the savings from plan design would “dwarf the benefit from all other pending municipal relief proposals.”

Since 2000, municipal health insurance costs have increased at double-digit rates, more than five times the rate of inflation, the business coalition reports. Health insurance costs are projected to consume 20 percent of municipal budgets by 2020, compared with just 6 percent in 2001.

The coalition argues that “maintaining the quality of local schools and other services is critical to the economic future of the commonwealth.” Exploding health care and pension costs, however, “are forcing cities and towns to curtail services and shed jobs in order to balance budgets.”

“Unless these employee benefit cost issues are addressed,” the coalition writes, “cuts and layoffs will intensify over the next several years.”

The coalition urged members of the Legislature and Gov. Deval Patrick to approve legislation to give communities authority over health care plan design before the Legislature adjourns its formal 2009-2010 session on July 31.

The coalition includes: Affiliated Chambers of Commerce Greater Springfield, Assabet Valley Chamber of Commerce, Boston Municipal Research Bureau, Cape Ann Chamber of Commerce, Cape Cod Chamber of Commerce, Chicopee Chamber of Commerce, Fall River Area Chamber of Commerce, Massachusetts Business Alliance for Education, Metro South Chamber of Commerce, NAIOP Massachusetts, National Federation of Independent Business-Massachusetts, North Central Massachusetts Chamber of Commerce, North Shore Chamber of Commerce, North Suburban Chamber of Commerce, Plymouth Area Chamber of Commerce, and the Tri-town Chamber of Commerce.