Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
Dear Senator,
Skyrocketing health insurance costs have been crushing local budgets and forcing cuts in essential municipal and school services. Fortunately, relief is on the way, if you vote to support the thoughtful and balanced municipal health insurance reform measure recommended by the Senate Ways and Means Committee in its fiscal 2012 budget proposal. On behalf of cities and towns across Massachusetts, we are writing to ask you to vote for the Senate plan as presented and to oppose any and all weakening amendments.
Last week, Senate President Therese Murray, Senate Ways and Means Chair Stephen Brewer, Ways and Means Vice Chairs Steven Baddour and Jennifer Flanagan, Senate Public Service Committee Chair Katherine Clark, and the members of the Senate Ways and Means Committee introduced a strong and meaningful plan to address the soaring costs of municipal employee health insurance.
The legislation proposed by the Senate President and the Senate Ways and Means Committee saves taxpayers money, preserves essential local services, protects municipal union jobs, guarantees equity with state employee health benefits, and still leaves municipal unions with more bargaining power than state unions. This is a balanced, meaningful, and fair reform that would allow cities and towns to save $100 million in avoided health insurance costs.
Communities are in fiscal crisis, and municipal health insurance reform offers vital relief that taxpayers deserve. Health insurance costs are forcing cuts in essential municipal and school services, and forcing the elimination of teachers, firefighters, police officers and other key employees from local budgets. Cities and towns will use reform to provide relief for local taxpayers, protect essential services, and preserve thousands of municipal jobs. We thank President Murray, Chairman Brewer and Senate leaders for presenting this plan, and we respectfully ask you to give it your full support this week during your budget deliberations.
THE SENATE PLAN OFFERS REFORM AND BALANCE
The Senate plan is a very focused and moderate proposal. The process established by the Senate Ways and Means Committee plan differs from the House framework, yet the bottom line is very close – cities and towns would be able to implement plan design changes or join the GIC in order to achieve real savings that would be used to protect services and preserve municipal jobs, all while giving municipal employee unions more collective bargaining power over health insurance than state employees. The reform proposal would also require all municipalities to enroll all eligible retirees into Medicare.
There are three major objectives that are central to real reform: meaningful savings for taxpayers, the flexibility and speed to allow implementation in fiscal 2012, and a voice, but not a veto, for labor. The Senate plan meets each of these objectives. Cities and towns would be empowered to act quickly to achieve meaningful savings in fiscal 2012 and would use this savings to protect services and preserve the jobs of municipal and school employees. The Senate plan is a balanced, meaningful, and fair reform that will make a major difference for every community across the state, and we respectfully ask for your support.
The reform in the Senate budget would simply allow cities and towns to update co-pays and deductibles in municipal health insurance plans, saving local taxpayers $100 million in avoided health costs. As you know from your own health plans, the Commonwealth has used its authority to make unilateral adjustments in co-pays and deductibles to hold down the state’s overall costs. However, communities are blocked from making the same changes unless they receive permission from their municipal unions. As a recent MTF/Boston Foundation report documents, this has caused municipal health insurance costs to spiral out of control, forcing cuts in education, public safety and other vital programs, and forcing the elimination of teachers, firefighters, police officers and other key employees from local budgets. As drafted, the Senate plan would save and protect municipal union jobs, and preserve vital and essential services for the citizens of the Commonwealth, all while guaranteeing equity with state employee health benefits.
• Municipalities would accept the new law on a local option basis by vote of the Board of Selectmen, or by approval by the Mayor and Council.
• The municipal executive would then propose a plan to modernize the design of employee health plans or join the state GIC, with a guarantee that all municipal and school employees would still have health plans with co-pays, deductibles and other plan features that are at or lower than the median co-pays, deductibles or plan design features offered by the GIC.
• The municipal executive’s plan would include: 1) the desired plan design changes or entrance into the GIC; 2) the projected one-year savings (or avoided costs) that the plan would generate; and 3) a plan to mitigate or moderate the impact on retirees, low-income employees and those with very high out-of-pocket costs (such as through a health reimbursement arrangement, through a temporary subsidy of rates, or other proposals).
• Communities would then convene a Public Employee Committee (PEC) with a make-up identical to the PEC in Section 19 of Chapter 32B. If a community already has adopted Section 19, then that would be the PEC. If a community has not adopted Section 19, then a temporary PEC would be established only for the limited purpose of negotiating on the proposal offered by the municipal executive. This is an important distinction, as full Section 19 has not worked at all, and any permanent Section 19 panel or expanded authority beyond the current draft would be a serious problem for cities and towns.
• The community and the PEC would have 30 days to reach agreement on the municipality’s proposal, with a majority vote (as opposed to 70 percent) as the new threshold. If no agreement is reached, the impasse would be referred to a three-member “municipal health insurance review panel” that includes a municipal representative, a labor representative, and an impartial third party from a list of experts in dispute mediation, municipal finance or municipal health benefits that is provided by the Secretary of Administration and Finance. If the community and labor representative cannot decide on the third member, the Secretary shall make the choice.
• This review panel would have 10 days to review and decide three matters: 1) whether the plan design changes for co-pays, deductibles and other features proposed by the community are at or lower than the median level of the features offered by the GIC; 2) what the one-year savings amount would be; and 3) whether the proposal to mitigate or moderate the impact of the changes on retirees, low-income workers and subscribers with high out-of-pocket costs is sufficient.
• If the municipality’s proposed changes do not exceed the GIC levels, the panel would be required to approve the immediate implementation of the plan design changes. This means that cities and towns would be able to implement plan design reform or join the GIC. This is a strong and powerful proposal that would benefit every community in Massachusetts.
• The panel would also confirm the projected savings amount, and would determine whether the mitigation proposal is sufficient. The panel could require additional savings to be dedicated to health reimbursement accounts, premium reductions, or other arrangements, but in no case could the panel designate more than 33 percent of one year’s savings to the mitigation plan.
• Cities and towns would still negotiate any change in the employee-employer premium share, giving municipal unions more bargaining authority over health insurance than state employee unions. Any new co-pays or deductibles higher than the GIC median would also have to be approved in collective bargaining.
• This measure is similar to the House plan in allowing for plan design changes and joining the GIC, yet it sets up a process that provides unions with a more structured framework. At the end of the day, the proposal gives unions a voice but not a veto over plan design changes, and it requires that no more than 33 percent of the savings be shared with employees in the first year, compared to the House’s 20 percent level. Overall, the Senate plan targets the same $100 million reduction in health plan costs that the House embraced.
Moreover, the plan creates a process that would continue to give municipal unions more bargaining power over health insurance than state unions. In fact, municipal employees would benefit from the legislation in five ways: Union jobs would be protected, employee premiums would be lower, communities would establish health reimbursement accounts to offset a portion of the costs for those employees who are heavy users of the health care system, they would be guaranteed health plans at least as good or better than state employees, and their bargaining over premium contributions would be preserved.
In short, the legislation saves taxpayers money, protects municipal union jobs, guarantees equity with state employee health benefits, and still leaves municipal unions with more bargaining power than state unions.
PLEASE OPPOSE AMENDMENTS TO WEAKEN OR DILUTE THE REFORM PLAN
This issue will clearly be a major topic of discussion during the Senate debate on the budget. As requested earlier, we respectfully ask you to support the Senate Ways and Means plan as offered and oppose any weakening amendments.
Specifically, we ask you to OPPOSE AMENDMENT #73, offered by Senator Keenan. This amendment would completely undo all reform elements in the Senate budget, and replace the Ways and Means proposal with a totally unworkable approach. The amendment would force communities to choose between the status quo (no reform at all) or a deeply flawed process that would give municipal unions a veto over any and all plan design changes, and resolve impasses using mandatory binding arbitration, which, as outlined below, would be extraordinarily costly for cities and towns and would guarantee nothing in the way of savings for taxpayers and municipalities. Labor would be able to demand 100 percent of any savings on a permanent basis, and the arbitrator would be able to impose any cost or structure on cities and towns.
It is possible that there may be last-minute amendments that will be offered to undermine or weaken the reform in other ways. We ask you to oppose any amendments that would weaken the reform, including the following:
• OPPOSE any amendment that would permanently impose the deeply flawed Section 19 coalition bargaining process on communities, which would allow one or two unions in a community to permanently control all health insurance matters, including plan design and the premium share. (Section 19 is now a local-option statute that has not worked; communities in Section 19 are pursuing home rule petitions to get out.) The negotiations in the Senate framework would take place with a temporary Public Employee Committee that would have the same constitution as the PEC that exists in Section 19, but the scope of the negotiations would be appropriately narrow and time limited. Any extension of Section 19 on a permanent basis would seriously undermine any reform.
• OPPOSE any amendment that would impose mandatory binding arbitration over health insurance matters. Mandatory binding arbitration was REPEALED BY THE VOTERS as a key part of Proposition 2½ because it is unaffordable for taxpayers. (History has demonstrated that many arbitrators are not impartial and are clearly slanted heavily toward labor, with the most recent example being the arbitrator’s decision in the Boston Fire Department case last year, granting extremely high salary increases in exchange for what should be routine drug testing). Inclusion of binding arbitration in this legislation would clearly harm municipalities by giving and an unaccountable, unelected outside person the power to set plan design features co-pays, deductibles, contribution percentages, health reimbursement accounts, and other benefits, essentially empowering the arbitrator to control up to 15 percent or more of a municipality’s budget.
• OPPOSE any amendment that would expand the scope of the Municipal Health Insurance Review Panel. This is a delicate and careful provision that would have a balanced panel certify that the plan design changes offered by communities meet the GIC standard, and also review projected savings and the mitigation plans. The panel’s composition should not be altered in any way, as A&F would vouch for the impartiality of the third panel member, and no outside, non-governmental group should take A&F’s place. Also, the panel should not have the ability to change or dictate municipal plan designs, or to impose structures and costs that exceed the cap of 33 percent of one year’s savings. Any change of this nature would greatly disrupt the promise of reform.
THE CHOICE IS CLEAR
This is the time to pass a real reform plan to save taxpayers $100 million in avoided health insurance costs. The Senate plan protects municipal union jobs and essential services, while guaranteeing equity with state employee health benefits, and leaves municipal unions with more bargaining power than state unions. Any money that communities save through plan design will be used to preserve services and prevent more layoffs. Job protection is the ultimate benefit of plan design reform. This is a strong, balanced, meaningful, and fair reform that will make a major difference for every community across the state, and we respectfully ask for your support. The communities and taxpayers you represent are counting on strong and real reform this year.
Thank you very much.
Sincerely,
Geoffrey C. Beckwith
Executive Director, MMA