MTF calls for changes to Senate’s ‘deeply flawed’ municipal health proposal

In a letter sent to legislative leaders today, the Massachusetts Taxpayers Foundation called a Senate proposal regarding municipal health insurance “so deeply flawed that it should not be included in the final budget unless it is dramatically improved.”

The Taxpayers Foundation raises many of the same concerns that have been raised by the MMA: that too little of the savings could be used for local budgets, that an arbitration requirement would be “cumbersome,” “expensive,” and potentially “egregious,” and that the proposal would place “unnecessary restrictions on a community’s ability to manage health care costs.”

“The major flaw in the Senate provision is that municipalities are guaranteed only 25 percent of the savings,” wrote Taxpayers Foundation President Michael Widmer in a letter to members of the House-Senate Budget Conference Committee. “This is a totally inadequate response to the fact that municipal health insurance costs have grown from 6 percent of municipal budgets in 2001 to 14 percent today and a projected 20 percent by 2020.”

In the waning hours of its fiscal 2011 state budget debate on May 28, the Senate narrowly approved an amendment that would give cities and towns greater ability to control soaring employee health insurance costs, but with numerous restrictions.

The Senate proposal would allow municipalities to make adjustments to “plan design” – such as increasing co-pays and deductibles – or enroll in the state’s Group Insurance Commission without going through the collective bargaining process. But cities and towns would be required to give 25 percent of the savings back to employees, and another 50 percent of the savings would be subject to negotiation between municipalities and their unions. If an agreement is not reached within 45 days, an arbitrator would decide how to apportion half of the savings.

Cities and towns would also be required to adopt Section 19 of Chapter 32B in order to make plan design decisions or enroll in the GIC under the Senate plan. Section 19 establishes a permanent coalition bargaining obligation that requires the approval of a public employee committee on all future health insurance matters, including the employer-employee premium share and all agreements regarding what to do with any savings from plan design changes.

With communities struggling under skyrocketing health care costs and significant local aid cuts, the MMA has argued that cities and towns should have the same authority the state does to change employee health benefits outside of collective bargaining.

The Taxpayers Foundation makes the same argument.

“We urge you to reject the Senate proposal and take decisive action to provide real relief to municipalities,” Widmer wrote. “It is essential that cities and towns be given unfettered powers over health plan design, consistent with the state, in order to protect municipal jobs and services.”

The Senate’s municipal health insurance proposal is now before a House-Senate budget conference committee, which is working out differences between the state budget bills passed by each branch. A final budget bill is expected to be adopted and sent to the governor before the beginning of the fiscal year on July 1.

• Download Massachusetts Taxpayers Foundation letter to legislators on municipal health insurance (28K PDF)