House adopts municipal health insurance plan design reform

Late last night, the House of Representatives adopted a municipal health insurance reform plan that would create a process for cities and towns to adjust co-pays and deductibles without having to go through the collective bargaining process.

House members voted, 113-42, to add the reform amendment, advanced by Speaker Robert DeLeo and the House Ways and Means Committee, to the House’s fiscal 2012 state budget bill. The House then adopted the budget bill on April 28.

“This is a strong, effective, balanced and meaningful reform initiative,” said MMA Executive Director Geoff Beckwith. “The MMA applauds the leadership of Speaker Robert DeLeo, Ways and Means Chair Brian Dempsey, Ways and Means Vice Chair Stephen Kulik, Public Service Committee Co-Chair John Scibak and all of the members of the House who voted for this important measure.

“The House reform would save local taxpayers at least $100 million,” he continued, “protect essential education and public safety services, preserve thousands of municipal jobs, and guarantee high-quality health plans for local employees.”

The amendment would add a new Section 19A to Chapter 32B, which, if adopted by the board of selectmen in a town, the mayor or city manager and council in a city, or by the school committee in a regional school district, would allow the community or district to increase its co-pays, deductibles and other plan design features up to the level included in the most-subscribed plan offered by the state’s Group Insurance Commission, or to transfer its subscribers into the GIC if the community would save more through that option.

The plan would require the appropriate public authority (generally the municipal executive) to submit the proposal for plan design changes or transference to the GIC to a special committee composed of a representative of each collective bargaining unit and a retiree representative. The House amendment would prescribe a 30-day period to discuss the details of the plan design proposal and negotiate how to allocate 10 percent of one year’s estimated cost savings, provided that the allocation of the savings shall only be used for health-related programs for active employees and retirees.

Under the plan, if the 30-day discussion results in an agreement with the committee, the community shall implement the changes and the 10 percent savings shall be allocated as agreed. If the discussion does not result in an agreement with the committee, the community may implement the plan design changes or transfer to the GIC as originally proposed; in this case, however, the community shall set aside 20 percent of one year’s estimated savings for a health reimbursement account to offset costs for high users and retirees. (This provision provides an incentive to municipalities to reach an agreement with the committee, which is the House’s preferred alternative to binding arbitration, which is not in the amendment.)

The amendment makes it clear that the decision to implement plan design changes or enroll in the GIC is not subject to collective bargaining, while the employee-employer contribution percentage is still subject to collective bargaining, as is any change in co-pays or deductibles that would exceed those in the GIC’s most-subscribed plan.

Labor unions are mobilizing their members and vowing to fight hard to stop progress of the House proposal or anything similar, characterizing it as a wholesale assault on collective bargaining – even though, under the House plan, municipal unions would retain more bargaining authority over health insurance than state employee unions have.

The MMA and local officials say the reform is needed in order to protect union jobs and prevent further service cuts. Cities and towns cannot afford health plans that feature co-pays that are often just $5 and zero deductibles. Employees also stand to benefit by seeing any avoided cost increases reflected in their share of insurance premiums.

Action on this issue will now turn to the Senate, which has passed labor-favored language for the past two years.