Mayors make case for health plan design authority

The mayors of Boston, Melrose and Salem, speaking during a Nov. 10 forum at Suffolk University, laid out the case for giving cities and towns the authority to make changes in health care plan design outside of collective bargaining.

The mayors said the substantial savings from such a reform would allow them to preserve jobs in their communities. In Boston, the savings would total roughly $1 million a month, according to Mayor Thomas Menino.

Kimberly Driscoll, the mayor of Salem for the past five years, said the city’s union employees agreed to pay 25 percent of their health care premiums, up from 20 percent, early in her tenure, but the savings were not adequate to avoid layoffs over the long term. She eventually proposed a change in health plan design in order to realize more substantial savings.

“If we moved from a $5 co-pay to a $20 co-pay, we could save a million dollars [per year],” she said. “And the better news [for employees] was that their health insurance premium would actually go down.”

But all eight of the city’s unions rejected the proposal.

“It was completely disheartening,” Driscoll said.

As a result of not getting the union concession, she said, “We went through all of the cost-saving measures that cities are going through – not back-filling positions when people leave, laying people off, delivering less services in many ways, taking longer to respond to calls.”

This past year, Salem returned to the negotiating table. Six of the unions agreed to the proposed changes in health plan design, but two of the biggest did not.

“It frustrates the heck out of me,” Driscoll said. “I look at a simple change from a $5 co-pay to a $20 co-pay as meaning that I’ve got money for my operational budget that can be used to retain people.”

Driscoll said that the freedom to make changes in plan design is especially important for smaller communities, which have limited options for managing costs.

Menino said employee health insurance costs his city nearly $300 million, more than the entire budget for the police department. Because changes in plan design are subject to union approval, the overall percentage of health care costs absorbed by the city is 82 percent, compared to just 64 percent at the state level, he said.

Menino said he plans to file a home-rule petition to enable his city to create a board akin to the state’s Group Insurance Commission.

Melrose Mayor Robert Dolan, like Driscoll, emphasized that seeking concessions on plan design should not be construed as opposition to collective bargaining. Ultimately, he said, it’s about saving jobs.

In 2009, Melrose was the first municipality to join the GIC, after legislation was passed enabling cities and towns to do so. Dolan said the city has not had a single layoff in the past three years. The 2 percent pay increases the city typically is able to offer, however, don’t necessarily cover the annual increase in each employee’s insurance premium, he said.

Dolan, the president of the Massachusetts Mayors’ Association, said employee health insurance costs, in most communities, are outstripping the growth in revenue each year, forcing local leaders to cut into services.

“The business model for the majority of communities in Massachusetts is a failing business model,” he said.

The forum, part of Suffolk’s Moakley Breakfast Series, was presented by the university’s Center for Public Management, in collaboration with the MMA. Former Brookline Town Administrator Richard Kelliher, now a senior fellow at the Center for Public Management, served as the moderator.