Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
The Honorable Jay Kaufman, House Chair
The Honorable Benjamin Downing, Senate Chair
Joint Committee on Revenue
State House, Boston
Dear Representative Kaufman, Senator Downing and Members of the Committee,
On behalf of local officials across the Commonwealth, and on behalf of the key organizations that are all part of the Massachusetts Municipal Association (the Massachusetts Mayors’ Association, the Massachusetts Selectmen’s Association, the Massachusetts Municipal Management Association, the Massachusetts Municipal Councillors’ Association and the Association of Town Finance Committees), we respectfully and urgently request your support for reform to grant cities and towns the ability to implement necessary cost-savings initiatives and management authority in the area of health insurance for municipal employees. Specifically, we strongly urge your committee to support the municipal health insurance provisions of H. 3486, filed by Rep. Stephen Kulik.
City and town officials are on the front lines of our economy and know first-hand the negative impact of the fiscal crisis that has gripped the Commonwealth and the nation.
During the last recession, local aid was cut up to 20 percent for most cities and towns, and the situation has deteriorated, as the latest round of mid-year local aid cuts has hit communities hard. The loss of $128 million in aid through 9C reductions, combined with the previous reductions many years ago, means that local aid is nearly $700 million below fiscal 2002 levels, after adjusting for inflation. The fiscal 2010 budget proposed by the Governor threatens nearly $400 million in further local aid reductions.
The plain fact is that local aid reductions are translating into drastic cuts in municipal services and even deeper fiscal hardship, distress and pain. We predict that thousands of teachers, police officers, firefighters, public works employees, librarians and many more critical workers will lose their jobs. Cities and towns will be forced to eliminate positions and lay off key workers, and vital public safety, municipal and school services will decline while local reliance on property taxes will spike. We support your leadership efforts to secure major federal relief, and it is imperative that all levels of government work together as partners to help Massachusetts withstand the coming economic storm.
Cities and towns need powerful tools and resources to reduce the recession’s impact on municipal services, ensure that municipal personnel levels are adequate to deliver these services, and protect local taxpayers from even more increases in the overburdened property tax.
In particular, we are highlighting the urgent need to empower cities and towns to modernize their health insurance plans outside of collective bargaining – this would simply give local officials the same power the state has to update health plans and would save more money, more quickly and more efficiently than any other option (including joining the state plan, which doesn’t work for many municipalities).
Cities and towns have worked hard to control health insurance costs as best they can, but they operate under a state law that reflects a double standard. Municipalities are required to negotiate and receive union approval to implement significant changes in their health insurance plans, while the state has exempted itself from this requirement and implements basic decisions on health insurance outside of collective bargaining. It is time to end this double standard, and we strongly urge the Legislature to give cities and towns the same authority as the state in designing health insurance plans for employees. This one reform is the most effective way to bring immediate fiscal relief to all cities and towns, and it is urgently overdue.
An overwhelming number of municipalities participate in large regional or statewide insurance pools and buying groups, and they have been able to achieve the full amount of savings that come from bulk purchasing. The real issue in terms of cost and savings opportunities comes in the area of “plan design.” This is because health insurance plans range in price based on the basic benefits that are offered. Plans that are designed with lower co-pays and deductibles for visits to the doctor, the emergency room, and for in-patient and out-patient procedures are more expensive than plans that have higher co-pays and deductibles. Unfortunately, state law requires cities and towns to collectively bargain changes that would modernize their health insurance plan designs. On the other hand, the state has exempted itself from this, and plan design for state employees is determined by the Group Insurance Commission.
If cities and towns had the same authority as the state, they could quickly modernize their health plans to incorporate realistic co-pays, deductibles, and tiered networks (as the state has done) and reduce the cost of municipal health insurance throughout the Commonwealth. Keeping the status quo means leaving this important cost containment measure to the agonizingly slow and ineffective collective bargaining process that requires the agreement of all unions before affecting any change. Further, this change is far superior to the current option of having cities and towns consider joining the state plan, as there are many communities for whom the state plan would not work nearly as well, due to offsetting costs that depend on many complex factors, including the number of retirees, the percentage participation in indemnity plans, and other considerations. The MMA’s analysis shows that if cities and towns are able to update their health insurance plan designs to reflect the corresponding benefits that the state offers, many more municipalities would achieve immediate savings beginning in the last quarter of fiscal 2009, the savings would be greater, and there would be less of a cost shift onto employees.
The one sure way to ensure appropriate health insurance savings for cities and towns is to grant municipalities the basic management authority that the state now enjoys.
H. 3486 would allow cities and towns to update their health insurance plans, up to the equivalent plan designs set by the state Group Insurance Commission for state employees, outside of collective bargaining. This modest language would yield significant immediate savings for cities and towns all across the state.
This reform is necessary and essential to protect cities and towns during the extraordinarily difficult days ahead, otherwise communities will experience greater hardship, vital municipal and education services will suffer, the property tax burden will skyrocket, and our overall economy will be weaker.
This is the time to bring reform and change to Massachusetts, reform that is necessary to protect cities and towns and local taxpayers from great harm during the hard times that loom ahead.
Thank you very much for your consideration and your action.
Sincerely,
Geoffrey C. Beckwith
MMA Executive Director