Monthly Archives: July 2011

Friday, July 1, 2011

HOUSE AND SENATE LEADERS AGREE ON STRONG AND EFFECTIVE MUNICIPAL HEALTH INSURANCE REFORM PLAN

URGENT REQUEST FOR IMMEDIATE ACTION:

PLEASE CONTACT YOUR SENATOR AS SOON AS POSSIBLE THIS MORNING AND ASK FOR THEIR COMMITMENT TO VOTE FOR THE MUNI HEALTH PLAN AND THE CONFERENCE COMMITTEE BUDGET

BUDGET CONFERENCE COMMITTEE PLAN TO BE VOTED ON AS PART OF THE FISCAL 2012 STATE BUDGET BY HOUSE AND SENATE MEMBERS ON FRIDAY, JULY 1

GOVERNOR WILL HAVE 10 DAYS TO SIGN THE REFORM ACT; HIS SUPPORT IS NECESSARY TO ACHIEVE SAVINGS AND RELIEF FOR CITIES, TOWNS AND TAXPAYERS

At 8:00 p.m. last night, House and Senate leaders filed their agreement on a compromise plan to address the skyrocketing costs of municipal employee health insurance, as a key part of the fiscal 2012 state budget report issued by the budget Conference Committee. The measure will be voted on and enacted by the Legislature when the fiscal 2012 state budget is adopted by legislators on Friday, July 1st.

PLEASE CONTACT YOUR SENATORS IMMEDIATELY TO CALL ON THEM TO SUPPORT THE MUNICIPAL HEALTH INSURANCE PLAN AND THE CONFERENCE COMMITTEE BUDGET. IT IS VITAL THAT THEY HEAR FROM YOU THIS MORNING!

On behalf of local officials in every corner of the state, the Massachusetts Municipal Association applauds the Legislature’s outstanding work in creating a meaningful, fair, and effective reform plan that balances the needs of cities and towns, taxpayers, and municipal employees.

The legislation that the House and Senate budget conferees, Speaker and Senate President have all agreed on, saves taxpayers money, preserves essential local services, protects municipal union jobs, guarantees equity with state employee health benefits, and provides municipal unions with more bargaining power than state unions. This is a balanced and fair reform that would allow cities and towns to save $100 million in avoided health insurance costs, while guaranteeing a strong and meaningful voice and role for municipal unions at every step in the process.

Local officials look forward to Governor Deval Patrick’s full support in signing the measure into law in the coming days. Communities are in fiscal distress, and the Legislature’s municipal health insurance reform act offers the relief that taxpayers deserve. Soaring health insurance costs are forcing cuts in essential municipal and school services, and forcing the elimination of teachers, firefighters, police officers and other key employees from local budgets. Cities and towns will use this reform to provide relief for local taxpayers, protect essential services, and preserve thousands of municipal jobs.

It is important to recognize the leadership of Speaker Robert DeLeo, Chairman Brian Dempsey, Vice Chairman Stephen Kulik, President Therese Murray, Chairman Stephen Brewer, Vice Chairman Steven Baddour, budget conferees Rep. Vinny deMacedo and Sen. Michael Knapik, Public Service Committee Chairs Rep. John Scibak and Sen. Katherine Clark, and all of the members of the House of Representatives and Senate who have advocated for reform this session. We look forward to working with all legislators, the Administration and stakeholders to ensure that this reform plan delivers the relief and savings that every community needs.

MMA’S OVERVIEW OF THE CONFERENCE COMMITTEE’S MUNICIPAL HEALTH INSURANCE REFORM PLAN

Overall, the Conference Committee plan is strong, fair and balanced for all parties. It provides real reform and savings for communities, while giving municipal unions a real and meaningful voice and role in the process.

• The process is streamlined and clear: In cities, City Councils vote once to accept the statute, and in towns, Boards of Selectmen also vote once to accept the new law.
• After local acceptance, the appropriate municipal authority (generally the executive) can make health insurance plan design changes or transfer communities into the GIC following a structured process.
• The executive develops the proposed plan design changes (no plan could have higher co-pays, deductibles, tiered network co-payments or other plan features that exceed the dollar amounts in the most subscribed plan in the GIC), or a proposal to transfer subscribers into the GIC, and estimates the first-year savings that would result.
• The executive then notifies the Insurance Advisory Board of the estimated one-year savings resulting from the plan design changes or transfer to the GIC, and provides documentation to the IAC.
• After discussion with the IAC as to the estimated savings, the executive convenes a meeting of a new public employee committee (PEC) which is composed of a representative of every union (bargaining unit) and a retiree representative. Each participant has an equal vote, except the retiree representative, who shall have a 10% vote.
• The executive provides notice to the PEC detailing the proposed changes, the analysis and estimate of its anticipated savings, and a proposal to mitigate, moderate or cap the impact of the changes on subscribers, including retirees, low-income subscribers and subscribers with high out-of-pocket costs who would otherwise be disproportionately impacted.
• The executive and the PEC would have 30 days from the date of notice to negotiate over the proposed plan design changes and the executive’s plan on how to share a portion of the first-year savings with employees, especially with retirees and those most impacted by the changes. A majority vote of the PEC would be required to reach an agreement.
• If there is a written agreement by the end of the 30-day period, the community would proceed to implement the plan as agreed.
• If there is no agreement after 30 days, the matter would be referred to a “municipal health insurance review panel” composed of a municipal and labor representative and an impartial third member chosen from a list of individuals with professional experience in dispute mediation and municipal finance or municipal health benefits provided by A&F. If there is no agreement on the third member after 3 business days, the A&F secretary would choose the third member.
• If the proposed plan design changes do not exceed the GIC benchmark, the panel must approve the community’s immediate implementation of the changes. If the community is seeking to join the GIC, the panel must approve the transfer.
• The panel would have 10 days to: 1) confirm the estimated monetary savings, to be substantiated by documentation provided by the executive; 2) review the proposal to mitigate, moderate or cap the impact of the changes on subscribers, including retirees, low-income subscribers and subscribers with high out-of-pocket costs who would otherwise be disproportionately impacted; and 3) concur with the community that the proposed mitigation plan is sufficient.
• The review panel may determine the mitigation proposal to be insufficient, and may require additional savings to be shared with subscribers, however, the total cost of any mitigation plan developed by the panel (such as establishing an HRA or other similar steps) could not exceed 25% of the first-year savings, even if the mitigation plan is in place more than one year. The panel would be prohibited from imposing any change to contribution ratios.
• Once the mitigation funds are expended, all mitigation plan obligations on the part of the community would expire.
• The decisions of the municipal health insurance review panel would be binding.
• Regional and joint purchasing groups would clearly be allowed to establish a common plan design structure, although participating communities would each go through the steps above to notify unions and retirees of the estimated savings, and follow the 30-day negotiation process and 10-day review panel process regarding the plan design changes and structuring the mitigation plan.
• The Secretary of Administration and Finance will promulgate rules and regulations regarding the administrative procedures for the 30-day negotiation period and the municipal health insurance review panel, and issue guidelines in evaluating which subscribers would be disproportionately affected by plan design changes or transfer to the GIC.
• The plan design changes or enrollment in the GIC could be implemented immediately, following the above-described process, except in communities that have collective bargaining agreements or Section 19 agreements in place that set specific co-pays and deductibles that are different from the new plan. In those cases, communities must wait until the initial term of the CBA or Section 19 agreement has expired.
• For fiscal 2012, the reform plan would give cities and towns three opportunities to transfer subscribers to the GIC during the year (on January 1, April 1 and July 1), after a 4-month notification to the Commission. After that, enrollment in the GIC would occur each July 1, with notification by the previous December 1. The contribution ratios for employees entering the GIC will remain the same, but any future changes in the contribution ratios would have to be approved through full collective bargaining.
• Importantly, the Conference Committee deleted a section that would have forced dozens of communities to increase contribution ratios for retirees, and instead replaced it with a reasonable provision that delays any change in the contribution ratios paid by retirees for a two-year period after a community implements its first plan design changes under the new law.
• As previously announced in both the House and Senate plans, the new law would require all eligible retirees to be enrolled in a Medicare health plan (governmental units shall pay any federal penalties associated with a transfer to Medicare Part B).SUMMARY OF THE REFORM PLAN AS PROVIDED BY THE CONFERENCE COMMITTEE

  The following summary of the municipal health insurance reform plan was developed by the Fiscal 2012 Budget Conference Committee. The MMA will be analyzing the actual language of the proposed legislation, and will send out further details or clarifications as they become available.

  FY12 Conference Report on Municipal Health Reform

  Overview

   

• Requires all eligible retirees to enroll in a Medicare health plan.
• Creates 9 new sections in chapter 32B that permit plan design and enrollment in the GIC.
• These sections will not alter the collective bargaining rights associated with premium splits.
• It is at the option of the city or town, district or joint purchasing group to vote to accept the provisions of the new sections in order to implement plan design changes or transfer employees to the GIC.Negotiations
• The governmental unit shall present its proposal to implement plan design changes or transfer to the GIC to the public employee committee which is composed of one member from each collective bargaining unit and a retiree representative.
• After the proposal has been received by the committee, the governmental unit and the committee shall negotiate over the application of the estimated savings and plan design features for a period of 30 days.
• The public employee committee shall accept any agreement by majority vote; provided, however, that the retiree representative shall have 10% of the vote.
• If an accord cannot be reached between the governmental unit and the committee, the proposal will be submitted to a 3-person panel that shall immediately implement the plan design changes or approve the transfer to the GIC, but shall have 10 days to revise the proposed mitigation plan and may increase the percentage of savings to employees up to 25% of the initial estimate.Plan Design
• For active employees, a governmental unit may alter co-payments, deductibles and other plan design features in its non-Medicare health plans provided that such features are no greater in dollar amount than those in the largest non-Medicare subscriber plan offered by the GIC.
• For Medicare-eligible employees, a governmental unit may alter co-payments, deductibles and other plan design features in its Medicare health plans provided that such features are no greater in dollar amount than those in the largest Medicare subscriber plan offered by the GIC.
• A governmental unit may increase copayments, deductibles and other plan design features provided that the dollar amounts never exceed those in the largest subscriber plan offered by the GIC; provided, however, that the governmental unit must negotiate with the public employee committee each time it implements such changes.
• The decision to change copayments, deductibles and other plan design features will not be subject to coalition or collective bargaining; provided, however that any increases beyond the GIC are subject to bargaining.
• A governmental unit that makes changes under this section shall be prohibited from increasing retiree contribution ratios for a period of 2 years, but only after the initial implementation of such changes.GIC
• A governmental unit may elect to provide health care coverage to its subscribers by transferring them into the GIC.
• The governmental unit must submit the proposal to the public employee committee for the same negotiation period as a governmental unit making plan design changes.Outside Sections
• The provisions of sections 22 and 23 shall not be inconsistent with specific provisions of collective bargaining agreements, or section 19 agreements, in effect as of July 1, 2011.
• Contracts that were approved by the legislature by Home Rule shall not be affected by these provisions.
• For the next fiscal year, governmental units shall have three opportunities to transfer employees to the GIC upon giving four months notice to the commission.
• Employees that are transferred to the GIC shall maintain their current contribution ratios for the transfer; provided, however, that contribution ratios after the transfer shall be bargained for in accordance with chapter 150E or section 19 of the General Laws.CONFERENCE COMMITTEE SUPPORTS KEY LOCAL AID ITEMS IN FISCAL 2012 BUDGET

  In the main appropriations items in the Fiscal 2012 state budget, House and Senate negotiators have agreed to fund key local aid accounts as follows:

   

• As expected, the final legislative budget funds Chapter 70 school aid at $3.99 billion and Unrestricted General Government Aid (UGGA) at $834 million. The school aid number reflects an increase of $139 million in the state appropriation over fiscal 2011, although $82 million lower than combined state and federal support for Chapter 70. The general government aid account reflects a cut of $65 million, about 7 percent.
• The Special Education Circuit Breaker is funded at $213 million, an $80 million increase over fiscal 2011 levels.
• The Regional School Transportation reimbursement account is funded at $43.5 million, a $3 million increase over fiscal 2011 levels.
• The Payment-in-Lieu-of-Taxes (PILOT) account is funded at $27.3 million, a $1 million increase over fiscal 2011 levels.
• The conference committee budget eliminates funding for the Police Incentive Pay [Quinn] Program that would require approximately $60 million to fully fund the state’s fifty percent share. The state appropriated $5 million for this account in fiscal 2011. The budget includes $5.5 million for anti-gang grants.
• The budget includes $71.6 million for reimbursements to cities and towns to offset a portion of school aid losses paid as tuition to charter schools. It is not clear if this amount is sufficient to fund the state’s statutory reimbursement levels.
• The budget bill also includes a provision that could restore all or a portion of the $65 million cut to the Unrestricted General Government Aid account if the state ends fiscal 2011 with a surplus. With state tax collections running ahead of forecast through the end of June, there is a chance that there may be some state funds available for a supplemental municipal aid distribution later this year, but that will not be known until September or October, when the state finally closes it books for the year. The amendment would require that 50 percent of any “aggregate balance of appropriations,” not to exceed $65 million, be distributed to cities and towns not later than October 31, 2011. The MMA will be monitoring the status and prospects of any action under this provision very closely.
  

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