Municipal health care reform taking hold
The municipal health care reform law is slowly starting to have an impact. Several early-adopter communities have used the law – or the leverage the law provides – to shave millions of dollars off their health care bills.
The law, which was approved by the Legislature in July, allows municipalities to sidestep collective bargaining to redesign their existing health plans or to move employees into the state’s Group Insurance Commission, which bargains for health care coverage on behalf of state workers. More communities are expected to take advantage of the law next year. State officials project savings of at least $100 million.
Medford and Somerville used the law’s passage as leverage to negotiate a transfer of their employees into the Group Insurance Commission. Medford expects to save $4.2 million annually and Somerville is forecasting savings of $9 million in the first year. Arlington, meanwhile, exercised its rights under the law to move its employees into the GIC, saving the town an estimated $4 million a year.
“These were some very rich plans and something had to give,” said Gardner Mayor Mark Hawke. He said the city spent a total of $5.6 million on health care in 2008 and was on track to spend $7.25 million this fiscal year.
The municipal health care law allows cities and towns to enroll in the GIC if joining will cut costs by at least 5 percent. It also permits design changes in existing health plans as long as the resulting copays and deductibles are no higher than those offered by GIC plans. The law requires municipalities to return up to 25 percent of the total health care savings as mitigation to union workers, particularly retirees, low-income workers, and heavy users of health care.
Municipalities and a committee representing union workers and retirees can bargain over any health coverage changes for 30 days. If no agreement is reached, the municipality’s plan is bumped up to a panel consisting of three members, one appointed by the unions, one by the town, and one by the state.
In Gardner, teachers, because of their greater number, controlled the union bargaining committee. Cindy Taddeo, president of the Gardner Education Association, which represents the city’s teachers, said she tried to slow the process down so all parties could think the changes through carefully. She said there was no bargaining over the higher copays and deductibles because those matched GIC plans, but there were extensive discussions over mitigation.
Ultimately, the parties agreed to provide mitigation in the form of a one-month holiday from premium payments. Hawke said the holiday would save workers on a family plan $400 and those with individual coverage $250. The agreement was reached before the 30-day bargaining period expired, in time for the town to launch the new health plans January 1.The one-month premium holiday will cost Gardner $176,000, which is about 21.2 percent of the total savings, Hawke said. He noted employees will also benefit from premium reductions brought about by the plan redesign. Premiums in Gardner are split 75-25 between the city and employees.
Geoff Beckwith, the head of the Massachusetts Municipal Association, said a handful of communities are pursuing health care changes now, but he expected many more to start next year. He predicted most will opt to redesign existing plans. “Most communities will achieve more savings by doing what Gardner has done,” he said.