MMA applauds 1st anniversary of Municipal Health Insurance Reform

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Landmark reform law will save cities, towns more than $175M in 1st year

The MMA today lauded the one-year anniversary of the landmark municipal health insurance reform law, calling the legislation the most significant reform to benefit cities, towns and local taxpayers in the past 30 years.

A recent analysis by reform stakeholders estimates that the first-year savings for communities and taxpayers will reach $178 million, far exceeding the initial $100 million estimate.

The MMA was the principal advocate for the reform bill, led negotiations with legislators and the governor, and was a member of the powerful coalition that organized civic, business and community leaders in support of the legislation.

Municipal health insurance reform, known as Chapter 69 of the Acts of 2011, was signed into law on July 12, 2011. Since it took effect, the law has been used to implement or leverage health insurance savings in 127 cities, towns and districts, yielding lower-than-anticipated health insurance costs. Another 33 communities have either adopted Chapter 69 or are scheduled to do so in order to pursue savings in the coming year.

“Municipal health insurance reform is the most powerful law to benefit cities and towns in at least 30 years,” said MMA Executive Director Geoffrey C. Beckwith. “The results of the past year demonstrate that the law is a major success in every corner of Massachusetts, saving taxpayers millions of dollars, preserving essential local services, and protecting the jobs of teachers, police officers, firefighters and key employees across the state.”

MMA President and Waltham City Councillor Robert Logan added, “In addition to the savings for taxpayers, it is important to note that municipal employees are benefiting from this law – union jobs are being protected, employee premiums are lower, and communities are sharing a portion of the savings with employees who are heavy users of the health care system. This is a outstanding reform that benefits everyone.”

According to an MMA survey, the overwhelming majority of communities have achieved savings by implementing changes in the co-pays and deductibles of their existing health insurance plans, and a handful of communities have joined the state’s Group Insurance Commission.

“As anticipated, most cities and towns can achieve much greater savings by updating their own insurance plans, and this reform law gives communities the flexibility and authority to do so in the best interests of their taxpayers and employees,” said Beckwith.

Chapter 69 is a local-option statute that allows local governments to update the co-pays, deductibles and plan design features of their health insurance plans up to the same level that state employees receive. In the past, communities could only make such plan design changes after receiving the approval of every municipal union. Under the new law, municipalities can implement the changes after a consultation process with unions, as long as up to 25 percent of the first-year savings are shared with employees.

The reform law was enacted after cities, towns and civic groups pointed out that the state can make these changes unilaterally with no consultation with state employee unions, and that the old system was causing municipal health insurance costs to skyrocket because it was virtually impossible to make any changes to hold down costs.

“On behalf of local officials in every corner of the state, we again express our appreciation to all stakeholders who contributed to this victory and the legacy of success it will bring across the Commonwealth,” said Beckwith. “We applaud the outstanding work by every participant to create a powerful reform plan that balances the needs of cities and towns, taxpayers, municipal employees, retirees and municipal unions.”

Beckwith noted that many public officials and organizations contributed to the passage of the reform law.

“Everyone agrees that the path to reform began when House Speaker Robert DeLeo and House Ways and Means Chair Brian Dempsey and Vice Chair Steve Kulik unveiled their powerful reform proposal in April 2011,” Beckwith said. “The full House overwhelmingly embraced the speaker’s bold and groundbreaking plan, and Senate leaders, including President Therese Murray and budget chief Stephen Brewer, then came forward with a comprehensive plan as well. After the Legislature embraced strong reform, the MMA negotiated with Gov. Deval Patrick and Secretary Jay Gonzalez on modest changes that preserved a very strong framework for reform and savings.

The MMA was one of many organizations that championed reform.

“There are many stakeholders who are responsible for this achievement,” said Beckwith. “The Massachusetts Taxpayers Foundation was there from the very beginning with steadfast support, and soon a broad and impressive coalition formed with strong backing and resources from The Boston Foundation, including the Metropolitan Area Planning Commission, the Boston Municipal Research Bureau, the Massachusetts Business Roundtable, Stand For Children, the Massachusetts Business Alliance for Education, Associated Industries of Massachusetts, and many others. This reform would not have been possible without the leadership of these outstanding groups.”