MMA statement regarding legislation to reform public retiree health benefits

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For immediate release
For further information, contact Geoffrey C. Beckwith at (617) 426-7272

Cities and towns are committed to providing quality health care benefits for their retired employees, and it is important to recognize that the current system must be reformed to make it sustainable and affordable for taxpayers, municipal workers, and present and future retirees. Without effective reform that provides meaningful savings now, the cost of the system will soon spiral out of control and consume a larger and larger share of local budgets, forcing cutbacks in essential services and increasing a property tax burden that is already too high.

The Massachusetts Municipal Association appreciates the initial steps toward reform that have been offered by the OPEB Commission and endorsed by Gov. Deval Patrick and others. There are many elements of the proposal that we strongly support, and we look forward to working with the administration, Legislature and all stakeholders to achieve reform this year.

We cannot endorse the full package offered by the commission for two reasons.

First, although the proponents are predicting that cities and towns could save between $9 billion and $12 billion over the next 30 years, almost all of this savings would be delayed by more than a decade. Only 5 percent of the savings would be achieved in the next 10 years, and 95 percent of the savings would not be realized until 2024 and beyond. Cities and towns cannot wait 10 years for meaningful savings – especially since municipal retiree health costs are expected to grow by at least 50 percent over the next decade. Retiree health reform must offer immediate relief, otherwise OPEB costs will expand and squeeze out education, public safety and other vital services from local budgets.

Second, the legislation would impose a three-year moratorium on any changes to the percentage contribution paid by retirees, and after that, it would permanently strip cities and towns of their existing ability to adjust the premium percentage for anyone who has already retired, even for those who receive generous pensions. This proposal would effectively eliminate the most important tool that cities and towns can use to carefully manage the cost of retiree health benefits.

Again, we applaud Gov. Patrick and the members of the commission for recognizing that Massachusetts must take steps to reform the retiree health insurance system. We look forward to working with all parties to build on the commission’s recommendations so that the final product provides communities and taxpayers with immediate and meaningful savings and provides employees and retirees with an affordable and sustainable system that provides excellent benefits.