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August 22, 2006 - Senator Richard T. Moore (D-Uxbridge) joined major municipal organizations, public employee unions, and municipal retiree groups in announcing his support for creating a local option for municipalities to obtain relief from spiraling employee health insurance costs. The proposal would permit communities, with the support of municipal workers, to join the Group Insurance Commission (GIC). The coalition of organizations is asking the Legislature to consider and pass this critical reform in the next several months, perhaps even during the current “informal” legislative sessions.
“The rising burden of the health insurance costs has become a ‘budget buster’ for municipalities and for the wallets of their employees. During negotiations on health care access reform, the State Senate considered several options for easing the health costs experienced by local governments, but any system has to be sensitive to the needs of municipal workers as well. This proposal seems to address both,” Senator Moore explained.
“This proposal represents months of hard work and goodwill from major stakeholders in municipal government,” said John Hamill, Chairman of Sovereign Bank and the convener of the Municipal Health Insurance Working Group. The group has been meeting since September 2005 to try to find common ground on municipal health insurance reform. “We believe the proposal can reduce the direct costs of health insurance for municipalities and their employees, provide high quality health care options, and protect retirees in the future. This reform is a win-win situation for everyone, including taxpayers.”
The organizations supporting the proposal include the Metro Mayors Coalition, Massachusetts Municipal Association, Metropolitan Area Planning Council (MAPC), Massachusetts Teachers Association, AFT-Massachusetts, AFSCME Council 93, the Retired State, County & Municipal Employees of Massachusetts, and the Essex County Retirement Board. MAPC, the regional planning agency for Greater Boston, provided staff support for the coalition.
“This collaborative approach gives us a tool to help bring skyrocketing health care costs under control while also maintaining the quality of coverage,” said Anne Wass, president of the 102,000 Massachusetts Teachers Association. “It provides us with an excellent way to preserve – or potentially even enhance – health benefits, while also preserving collective bargaining, which we consider essential.”
Senator Moore expressed concern that public safety unions have yet to fully embrace the plan. “It’s going to be important for the coalition to address concerns of police and fire unions in order for the Legislature to move this proposal or some variation to enactment,” he said. “I certainly hope that their needs can be addressed, and that local decision-making will include all public employee groups,” he added, noting that, “during the current informal sessions, unanimous consent is required to pass any bill, so it’s critical that concerns of the public safety employee sector be addressed.”
“This is a great opportunity for cities and towns to get help with their budget-busting municipal health insurance costs,” said Ralph White, President of the Retired State, County & Municipal Employees Association.
Health insurance premiums have risen in double digits for most of the past decade, threatening the ability of many cities and towns to provide quality public services, eroding their ability to increase wages, and leading to lay-offs of municipal staff. Members of the Municipal Health Insurance Working Group recognized that the time had come to find creative solutions to these skyrocketing costs.
“We have a long way to go in this process, but this landmark proposal gives us hope that we can alleviate our health care crisis with creativity and efficient governance,” said Mayor Tom Ambrosino, Chairman of the Metro Mayors Coalition and a member of the Municipal Health Insurance Working Group.
The working group emerged from the work of the Municipal Finance Task Force that Hamill previously chaired. For a complete copy of the Task Force report and recommendations, see http://www.mapc.org/Municipal_Finance_Task_Force/Municipal_Finance_Task_Force.html.
“This proposal can save cities and towns millions of dollars, while providing municipal employees and retirees with high quality health insurance,” said Marc Draisen, MAPC’s Executive Director. “Often, the annual increase in health insurance premiums exceeds the increase in municipal budgets allowed under Prop 2 ½, leading to either lay-offs or overrides. That’s bad for everyone: cities and towns, municipal employees, and the public. So unions, mayors, town managers, and retiree leaders had a strong incentive to put this plan together.”
Highlights of the proposal:
• It would create a local option for cities and towns to purchase health insurance through the GIC. Analysis shows that the GIC’s high quality plans are generally significantly less expensive and provide more choices to employees and retirees than typical municipal options. Under the proposal, no community would be mandated to join the GIC.
• A decision to join the GIC would be made collectively among municipal leaders, public employee labor representatives, and retiree representatives. The proposal uses the existing mechanism called “coalition bargaining” to bring stakeholders together to make health care decisions.
• All decisions about contribution ratios – i.e., the percentage of health insurance costs that are borne by employees or retirees – would continue to be made at the local level. The GIC, however, would have responsibility for contracting with health care insurers and making plan design decisions. Municipal employees would be in the same insurance pool as all state employees, which currently covers more than 265,000 people in the Commonwealth.
• Municipalities would pay all costs associated with purchasing health insurance through the GIC, including a small administrative fee to the Commission. The proposal is structured to be self-financing and start-up costs for the Commonwealth would be nominal.
• As part of the proposal, the coalition seeks to expand the Commission by adding representatives of municipal management and public employee unions. These new additions would not change the balance of the Commission.
“This has been an important process that brought people to the table that don’t often talk together except as adversaries,” said Northampton Mayor Mary Clare Higgins, President of the Massachusetts Municipal Association. “Collectively, we have come together to propose creating a new tool that will help us contain health care costs on the local level while continuing to provide quality benefits to employees.”
The Municipal Health Insurance Working Group worked closely with Dolores Mitchell, Executive Director of the GIC, and her top administrators and attorneys in crafting the proposal.
The City of Springfield is on the cusp of becoming the first municipality in Massachusetts to join the GIC. The GIC issued emergency regulations allowing a community under a Financial Control Board to purchase health insurance through the commission. A GIC hearing on those regulations, which are already in effect, will take place on August 2. According to the Springfield Finance Control Board, the City of Springfield and its employees are expected to save more than $5 million annually by entering the GIC.
The Metropolitan Area Planning Council (MAPC), the regional planning agency for 101 Metro Boston communities, promotes inter-local cooperation and advocates for sustainable development across the region. More information about the Municipal Health Insurance Working Group’s proposal is available at www.mapc.org.
To learn more about Senator Moore’s legislation and his work in the Massachusetts Senate, log onto his web site at www.senatormoore.com
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