MMA letter to legislative candidates calling for municipal health insurance reform

Dear Candidate,

Congratulations on winning your party’s nomination for the Legislature. On behalf of the cities, towns and local taxpayers of Massachusetts, we are writing to you concerning the single largest budget buster that communities are struggling with: the skyrocketing cost of municipal health insurance.

We urgently call on you to support reform legislation to give municipalities control over their health insurance costs. This vital reform would simply give local officials the same power the state has to shape employee health plans, and it would save taxpayers up to $100 million a year. This call for plan design reform has been embraced by municipal leaders from across the Commonwealth and by leading organizations, including the Massachusetts Taxpayers Foundation, Associated Industries of Massachusetts, the Boston Foundation, the Boston Municipal Research Bureau, local chambers of commerce, and others.

In February, the Boston Globe provided a rich outline of the crisis in municipal health costs, and days later The Boston Foundation released an 80-page report, “The Utility of Trouble – Leveling the Playing Field: Giving Municipal Officials the Tools to Moderate Health Insurance Costs.” The Boston Foundation’s conclusion is that we must “level the playing field between state and local health benefits management by removing the requirement that municipal officials must collectively bargain plan design changes.”

Total local aid is $825 million lower than what it was two years ago. Communities are in fiscal crisis, and health insurance reform offers meaningful savings and relief that taxpayers deserve. There is no excuse for keeping the unique and special veto power that municipal unions hold over health plan changes. This veto power is costing taxpayers millions of dollars a year, forcing cuts in essential municipal and school services that are crowded out by soaring health costs, and forcing the elimination of teachers, firefighters, police officers and other key employees. Without real reform, taxpayers will continue to pay millions more than they should, which will force even more service cuts and layoffs.

Local taxpayers are forced to pay millions more for employee health benefits
While health insurance costs are a problem for everyone, municipalities have been forced to pay much more than necessary because of Chapter 32B, the state law that gives municipal unions a veto over common-sense changes that would reduce the cost to taxpayers. Over the past 10 years, cities and towns have seen their health insurance costs rise by over 150 percent. Health insurance is the biggest budget buster at the local level, accounting for as much as 15 percent of local budgets, squeezing out vital services and costing local taxpayers more and more every year. The state has been able to moderate the cost of employee health benefits by implementing increases in co-pays and deductibles, just as the federal government and private employers have done. But communities have been blocked by the Chapter 32B bargaining mandate and are trapped in outdated plans that are too costly.

Local government needs the same authority the state has to design health insurance plans
Cities and towns are locked into overly expensive health plans because they cannot gain the required union approval to implement cost-savings, while the state has exempted itself from this mandate and routinely implements basic decisions on health insurance outside of collective bargaining, such as increasing co-pays and deductibles to lower the cost of their plans. The state must end this double standard by giving cities and towns the same authority to design health insurance plans outside of collective bargaining. We estimate that most cities and towns would be able to lower their health insurance costs by 4 to 6 percent, or as much as $100 million statewide. For example, the city of Boston could save well over $1 million a month, and the city of Salem could save $1 million a year. This is real savings that taxpayers deserve.

Of course municipal unions oppose this reform. That’s not a surprise, but as the Boston Foundation points out, “The growing cost of health care is a job-killer. We have union leadership that is reluctant to see changes, but how can they accept a situation that makes municipalities grow steadily weaker and less able to maintain the workforce they need? We need unions to align themselves with the communities they serve.”

Some state officials have tried to defend the status quo by claiming that labor “has a seat at the table” on the state Group Insurance Commission, but the fact is the 15-member GIC has just four labor seats, and the governor appoints the remaining 11 commissioners who make all the decisions. State officials may be unaware that every city and town already has an Insurance Advisory Committee made up of representatives of labor unions, and communities are required to consult with their IAC on all health insurance matters before taking action – this is much more real than what the state claims is their inclusive process. Rhetoric aside, there is no comparison with the state’s mandate that cities and towns must go through full collective bargaining and receive union approval before making co-pay and deductible changes in health plans, and the state’s power to out-vote labor and impose changes at will. This double standard costs local taxpayers millions of dollars each year!

Cities and towns need plan design control
This past session, the Massachusetts Municipal Association endorsed H. 2509 to eliminate the double standard in state law, and give cities and towns the same power the state has to implement necessary cost savings changes in municipal health insurance plans. This is a very focused and moderate proposal. Under the bill, municipalities would still negotiate any changes in the employee-employer premium share, giving municipal unions more bargaining authority than state unions. Municipalities would be able to modernize health plan design outside of collective bargaining, with a guarantee that all municipal and school employees would still have health plans that are the same or better than what state employees receive, meaning no municipal plan would have higher co-pays or deductibles than the state plan. The bill simply gives plan design parity to cities and towns.

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. This is balanced, meaningful and fair reform.

Communities are facing a true fiscal crisis. This is the time for real reform and real action. This is the time to pass plan design reform – further delay will only serve to hurt taxpayers, municipal employees and the public. We ask you to support this straightforward and necessary measure.

Thank you very much.

Sincerely,

Geoffrey C. Beckwith
Executive Director, MMA