Health care reform saves towns $175m

Two-fifths of the state’s municipalities have saved about $175 million by taking advantage of a state law passed a year ago giving cities and towns more flexibility in negotiating health benefits with their union workers, Patrick administration officials announced Wednesday.

“We have a lot to celebrate,” said Administration and Finance Secretary Jay Gonzalez on a conference call with reporters. “There are real savings for municipalities.”

Since being signed by the governor last July, the municipal health reform law has enabled 77 communities or school districts to either join the state’s Group Insurance Commission (GIC) or to directly change the design of their health care plans, according to Gonzalez. Arlington, Holden, and Somerville are among the communities that joined the GIC, while municipalities such as Gardner, Yarmouth, Plymouth, Framingham, and Chelmsford directly changed the design of their health plans.

Another 50 municipalities or school districts have used the threat of the law as leverage during union negotiations to secure reductions in health care costs. Gonzalez said many other communities are still in the early stages of taking advantage of the law.

When the law was passed, administration officials initially estimated the total savings would be close to $100 million in the first year. “We have blown way past that already,” Gonzalez said.

The law allows cities and towns to implement health care plan design for their employees through an expedited collective bargaining process. If towns can’t come to an agreement with their unions, a three-person review panel with one member of the union, one member representing the municipality, and one person representing the Secretary of Administration and Finance would arbitrate. Municipalities also have the option of transferring health coverage to the GIC, which often represents significant savings over many municipal health care plans.

Despite some concerns last year from unions who felt that the law was a Wisconsin-esque way of stripping away their collective bargaining rights, Secretary of Labor and Workforce Development Joanne Goldstein said the law has been fair to workers in that it still gives unions a say in the process even if it is diminished. “In Massachusetts, we are able to do it right, so that we bring all relevant stakeholders to the table,” Goldstein said.

Gonzalez said employees have been generally satisfied. “At least anecdotally, state employees and municipal employees are generally happy with the coverage they get from the GIC,” Gonzalez said.

Representatives from several unions got on the conference call with Gonzalez and asked him questions about how the law was working. Attempts to reach the state’s AFL-CIO were unsuccessful.

Christopher Walker, director of policy and information for Quincy Mayor Thomas Koch, said the estimate of savings statewide from the law doesn’t surprise him. Quincy’s union workers voluntarily agreed to join the GIC in 2009, two years before the insurance reform was passed, and Walker says it has paid off significantly.

“Putting communities into that larger pool with the GIC is really a tremendous savings,” Walker said. In the first year that Quincy joined, the city saw a nearly $10 million decrease in health insurance costs and the annual rate of increase in costs has been cut significantly, according to Walker.

Walker gave credit to the city’s employees for recognizing the seriousness of the city’s fiscal problems and for agreeing conceding healthcare benefits before the law was changed last year. “We had great cooperation from our unions,” Walker said.