Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
THE PROBLEM: State Law is Forcing Local Taxpayers to Pay Millions More for Employee Health Benefits
Cities and towns are struggling under the crushing burden of skyrocketing health insurance costs for municipal employees. While health insurance costs are a problem for everyone, municipalities have been forced to pay much more than necessary because of a state law that gives public sector unions a veto over common-sense changes that would reduce the cost to taxpayers. Over the past ten years, cities and towns have seen their health insurance costs rise by over 150 percent, while spending on everything else from public safety to education to repairing our roads has increased by only 25 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. Local aid was cut by $724 million in the fiscal 2010 state budget, and cities and towns have laid off thousands of employees, cut services and increased their reliance on property taxes as a result. Without real health insurance reform, communities will continue to pay too much for employee health benefits, which will force even more service cuts and layoffs while local taxpayers pay millions more than they should.
THE SOLUTION: Real Reform to Give Local Government the Same Authority the State Has to Design Health Insurance Plans & Save Taxpayers $75-$100 Million
Cities and towns have worked hard to control health insurance costs as best they can, but they operate under Chapter 32B, a state law that reflects an indefensible double standard. Municipalities are required to negotiate and receive union approval to implement changes in their health insurance plans, while the state has exempted itself from this mandate, and routinely implements basic decisions on health insurance outside of collective bargaining, such as increasing co-pays and deductibles to lower the cost of their plans. The state must end this double standard by giving cities and towns the same authority to design health insurance plans outside of collective bargaining. This one reform is the most effective way to bring immediate fiscal relief to all cities and towns, and is urgently overdue. The MMA estimates that most cities and towns would be able to lower their health insurance costs by between 4 and 6 percent, or as much as $75 million to $100 million statewide. For example, the city of Boston could save over $1 million a month, and the city of Salem could save $1 million a year. This is real savings that taxpayers deserve.
THE BILL: H. 2509 Would Give Plan Design Control to Cities and Towns
The Massachusetts Municipal Association has filed H. 2509, submitted by Rep. Stephen Kulik, to eliminate the double standard in state law, and give cities and towns the same power the state has to implement necessary cost savings changes in municipal health insurance plans. Under the MMA’s bill, municipalities would be able to modernize their health plans outside of collective bargaining, with a guarantee that all municipal and school employees would still have health plans that are the same or better than what state employees receive.
THE BUZZ: It’s Time to Stand Up for Real Reform
Because this is a controversial issue, state officials have been reluctant to act on H. 2509, or have sought to redirect attention to weaker measures in an attempt to mollify the special interests fighting against reform and for the status quo. The lead opposition to the legislation comes from public sector unions who insist on keeping the unique and special veto power that they hold over municipal health plan changes, even though their opposition is costing taxpayers and forcing the elimination of teachers, firefighters, police officers and other union jobs. Municipal leaders are clear: this legislation is written with a guarantee that municipal and school employees will receive health benefits that are equal to or better than what state employees receive. This legislation will protect vital services from being crowded out by spiraling health costs. This legislation will protect jobs at the local level. In addition, under this bill, municipalities will still bargain with unions over any changes to the employee-employer share of health insurance premiums, which state employee unions have no say in at the state level. In short, this bill saves taxpayers money, protects municipal union jobs, guarantees equity with state employee health benefits, and still leaves municipal unions with more bargaining power than state unions. This is a balanced, meaningful and fair reform. More delays will hurt taxpayers, municipal employees and the public.
THE BACKGROUND: Why “Plan Design” Reform is Necessary
Almost all cities and towns participate in large regional or statewide insurance pools and buying groups, and achieve the savings that comes from bulk purchasing. The real issue in terms of cost and savings opportunities is in the area of “plan design.” This is because health insurance plans range in price based on the benefits that are offered. Plans that are designed with lower co-pays and deductibles for visits to the doctor, the emergency room, and for in-patient and out-patient procedures are more expensive than plans that have higher co-pays and deductibles. Unfortunately, state law requires cities and towns to get union approval for simple changes that would modernize health insurance plan designs (for example, moving from a $5 office visit co-pay to the $20 office visit co-pay that state employees and most private sector employees pay). On the other hand, the state has exempted itself from this system and a state agency (the Group Insurance Commission) makes these decisions unilaterally for state employee benefits, routinely updating co-pays and deductibles to reflect what most private employers do to keep costs down. If municipal leaders had the same authority as the state, they could quickly modernize their health plans to incorporate realistic co-pays, deductibles, and tiered networks (as the state and private employers do) and dramatically reduce health insurance costs for cities and towns and taxpayers.
Cities and towns are prevented from making plan design changes except through the agonizingly slow and ineffective collective bargaining process that requires the agreement of all unions before affecting any change, with negotiations often bogging down over what happens to the taxpayer savings. Plan design reform is far superior to the much weaker and limited option of having cities and towns negotiate with unions over whether to join the state’s plan, as there are many, many communities for whom the state plan does not work nearly as well, due to offsetting costs that depend on many factors, including the number of retirees, the percentage participation in indemnity plans, regional location, and other considerations.
The MMA’s analysis shows that if cities and towns are able to update their own health insurance plan designs to reflect the corresponding benefits that the state offers, many more municipalities would achieve immediate savings, the taxpayer savings would be greater, and there would be less of a cost shift onto employees.
The one sure way to win health insurance savings for cities and towns is to grant municipalities the basic management authority that the state now enjoys. We need meaningful reform now, and plan design control is the best way to achieve it.
THE BOTTOM LINE: Tell Your Legislators To Pass Plan Design Reform Now!
• Download Health Insurance Plan Design Fact Sheet (92K PDF)
• Press release: MMA calls for municipal health insurance reform
• MMA letter to legislators calling for municipal health insurance reform (144K PDF)
• Battle continues for health care plan design authority