Senate OK’s ‘plan design’ provisions; issue goes to conference

Early this morning, the Senate narrowly adopted an amendment that would give communities authority over the design of municipal health insurance plans, or the ability to enroll in the Group Insurance Commission, without having to go through the collective bargaining process.

But the proposal includes many serious challenges, including binding arbitration, adoption of permanent Section 19 coalition bargaining, and a provision that only guarantees cities and towns 25 percent of any savings that result from health plan changes, with the rest up for negotiation and arbitration.

The proposal now goes to the House-Senate budget conference committee, where the MMA will be seeking to improve the provision so that cities and towns have a guarantee of greater savings and do not have to face binding arbitration or permanent coalition bargaining.

The Senate plan has the following criteria:

1. Cities and towns would be required to adopt Section 19 of Chapter 32B in order to make plan design decisions or enroll in the GIC under this provision. 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 (The public employee committee has weighted votes based on union membership and 10 percent for retirees, essentially meaning that teachers unions would have a veto power over all negotiations and agreements in the future under Section 19.) Once adopted, Section 19 could only be revoked with the agreement of the public employee committee. The decision to adopt this section would be made by the council with the approval of the mayor or city manager in a city, and by the board of selectmen in a town.

2. Once Section 19 is adopted by the community, cities and towns would be able to make plan design changes up to the actuarial level of the GIC’s out-of-pocket costs (co-pays and deductibles) in the GIC’s most-subscribed plan, or they could decide to transfer to the GIC, provided that 90 days notice is given to the public employee committee.

3. Cities and towns would retain 25 percent of the savings for the operating budget, employees would receive 25 percent of the savings (through health reimbursement accounts, premium reductions, a change in the employee-employer premium split, or lower co-pays), and the community and public employee committee would negotiate over the remaining 50 percent of the savings. No plan design change or transfer to the GIC could be implemented until an agreement is reached with the public employee committee.

4. If the community and PEC cannot reach an agreement after 45 days following their first meeting, then the matter would go to issue-by-issue last-best-offer binding arbitration, and the arbitrator’s decision (issued within 45 days) would be binding on the community unless rejected by a two-thirds vote of the legislative body. Rejection of the agreement would prohibit the implementation of plan design changes or enrollment in the GIC under this new process.

5. No change could be implemented until there is an agreement or an arbitrator’s decision.

6. No change could be implemented for any group of employees covered by a collective bargaining agreement on July 1, 2010, until that agreement has expired.

7. If a community has enrolled in the GIC, and the GIC makes any mid-year changes (as occurred this year), employees would be entitled to be protected from those changes (increased co-pays, deductibles or premiums) during the remainder of the fiscal year, meaning that cities and towns would have to make up the difference.

The MMA supports certain aspects of the Senate plan and commends Senate leaders for demonstrating a desire to take action on this key cost-control issue. But the association opposes the plan’s binding arbitration and Section 19 requirements and the exceedingly low level of guaranteed savings for communities and taxpayers. The MMA and municipal officials will be working hard with legislative leaders and the conference committee to improve the proposal.

The MMA argues that the binding arbitration component would allow an unelected and unaccountable person to control the health care finances of every community. (Binding arbitration has become a flashpoint in the city of Boston recently, following an arbitrator’s controversial award of a 19 percent pay raise for firefighters.) This provision would give an arbitrator more power than the municipal executive plus two-thirds of the legislative body in any community.

Forcing communities to accept permanent coalition bargaining over all future aspects of health insurance, by making acceptance of Section 19 of Chapter 32B a condition for plan design authority, would give unions (in particular the teachers’ union because they have such a high percentage of the vote) the ability to block all health insurance changes, effectively controlling this huge area of local budgets. For many communities, this requirement would be too high a price to pay in the long run.

Finally, the proposal only guarantees that taxpayers will see 25 percent of the savings from plan design changes, leaving the remaining 75 percent either up for grabs or guaranteed to employees. The state, meanwhile, does not need to share any of its plan design savings with state employees. This proposal would invite unions to go to binding arbitration and would leave too little of the savings to offset the massive local aid cuts of the past two years.