5/04/2011 1:06PM
Please support the reform of municipal health insurance that has already passed the House
James Timiltyjames.timilty@masenate.gov; James Timilty <matthew.moran@masenate.gov>, Michael Sullivan <mikes@medfield.net>;Kristine Trierweiler <kristinet@medfield.net>,
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Jim and Matt,
As a Town of Medfield selectman I write to ask that you support the reform of municipal health insurance that has already passed the House. Attached is the Massachusetts Municipal Association’s letter with the detailed explanation of why it is so important to Town of Medfield, however I think you already know the reasons. Thanks in advance.
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Dear Senator,
Skyrocketing health insurance costs have been crushing local budgets and forcing cuts in essential municipal and school services. Fortunately, relief is on the way, if you vote to support the municipal health insurance reform proposal passed overwhelmingly by the House of Representatives last week. We commend 113 representatives for recognizing the need for true reform and voting for a plan that offers powerful relief for local taxpayers and all communities.
The House plan is a strong, balanced, meaningful, and fair reform that will make a major difference for every community across the state, and we respectfully ask for your support. There are three major objectives central to reform: meaningful savings for taxpayers, speed to allow implementation in fiscal 2012, and a role (but not a veto) for labor. The House plan clearly meets all three objectives.
The reform in the House budget would simply give cities and towns the same power the state has to update co-pays and deductibles in municipal health insurance plans, saving local taxpayers $100 million in avoided health costs. As you know from your own health plans, the Commonwealth has used its authority to make unilateral adjustments in co-pays and deductibles to hold down the state’s overall costs. Communities, however, are blocked from making the same changes unless they receive permission from their municipal unions. As a recent MTF/Boston Foundation report documents, this has caused municipal health insurance costs to spiral out of control, forcing cuts in education, public safety and other vital programs and forcing the elimination of teachers, firefighters, police officers and other key employees from local budgets. The House plan would save and protect municipal union jobs, and preserve vital and essential services for the citizens of the Commonwealth, all while guaranteeing equity with state employee health benefits.
In spite of the over-the-top rhetoric from union lobbyists, the plan creates a process that would continue to give municipal unions more bargaining power over health insurance than state unions. In fact, municipal employees would benefit from the legislation in five ways: Union jobs would be protected; employee premiums would be lower; communities would establish health reimbursement accounts to offset a portion of the costs for those employees who are heavy users of the health care system; they would be guaranteed health plans at least as good or better than state employees; and their bargaining over premium contributions would be preserved.
THE SENATE VOTED FOR STRONGER PROVISIONS IN 2009
Two weeks ago, the Commonwealth won a Superior Court ruling upholding the Senate vote in the 2009 Transportation Reform Law that removed all health insurance matters from collective bargaining for state MBTA workers. In enacting the Transportation Reform Law, the Senate voted to end all bargaining over the plan design or premium share for MBTA unions and thousands of employees. In spite of loud union protests that the reform “subverts collective bargaining rights,” the Legislature and governor enacted the provision in order to save an estimated $30 million a year while giving T employees health plans that matched all other state workers. The Senate’s action in 2009 was made in the interests of all taxpayers, and was necessary to allow the MBTA to provide core services to the public. This is further proof that legislation to address the cost of employee health insurance is totally unrelated to the unfortunate developments in Wisconsin and Ohio. While the House-passed municipal health insurance provision is a powerful reform plan for cities and towns, it is much more modest than what the Senate voted for in 2009 in the transportation bill. The reform principle that benefited the state in 2009 is just as valid for cities and towns in 2011.
WHY STRONG REFORM IS NECESSARY
Total municipal aid is $416 million lower than what it was three years ago, and the Senate has already indicated that the fiscal 2012 budget will cut another $65 million. Communities are in fiscal crisis, and health insurance reform offers meaningful relief that taxpayers deserve. We cannot afford to keep the unique and special veto power that municipal unions hold over health plan features; 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 for health insurance than they should, which will force even more service cuts and layoffs.
The state has been able to moderate the cost of employee health benefits by implementing increases in co-pays and deductibles outside of collective bargaining, 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. When municipal leaders ask for plan design authority, the purpose is to preserve services, protect local taxpayers and prevent the elimination of more police officers, teachers, firefighters and other key workers from local budgets.
A December 2010 study by the Massachusetts Business Alliance for Education and The Boston Foundation revealed that all of the $700 million in new Chapter 70 school aid from 2000 to 2007 was consumed by rising health insurance costs, concluding that “controlling the overall cost of health care in Massachusetts is now the ultimate education issue,” because without reform every penny of new Chapter 70 aid will go to local health plans, not into the classroom.
An April 2011 report by the Massachusetts Taxpayers Foundation and The Boston Foundation concluded that municipal health plans cost taxpayers millions more than state, federal or private insurance plans because municipal unions can veto any change in the plans. The average family premium for city and town employees is 37 percent higher than the typical private-sector policy and 21 percent higher than that of state employees. The report said that the Legislature must give local officials the authority to adjust insurance plans outside of collective bargaining, and without this action “communities will be forced to make even more painful and severe cuts to education and other basic services.”
WHAT THE HOUSE PLAN WOULD DO
The House-passed plan would eliminate the double standard in state law, and give cities and towns the same power the state has to implement necessary cost savings in municipal health insurance plans, up to a point. This is a very focused and moderate proposal, offered in a spirit of compromise to find meaningful middle ground while achieving meaningful reform.
Under the bill, municipalities would notify unions of their desire to change co-pays or deductibles, or enroll in the Group Insurance Commission, and would then meet with a committee representing all municipal and school unions and retirees to discuss and review the changes. If the community and the committee reach agreement, the municipality would implement the agreed-upon plan changes and share 10 percent of the projected first-year cost savings with the employees, based on the agreement. If there is no agreement after 30 days, the municipality can move forward with the planned change, and would share 20 percent of the projected savings/avoided costs with employees and retirees in a health reimbursement account to assist heavy users of the health care system. Collective bargaining would still govern any change in the employee-employer premium share, giving municipal unions more bargaining authority than state unions. Municipalities would be able to modernize the health plan design, 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. Any higher co-pays or deductibles would have to be approved in collective bargaining. 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.
THE LABOR “ALTERNATIVE” IS NOT REFORM
During the House debate, labor offered an “alternative” plan that was the opposite of reform; it would actually strengthen union leverage and control over health benefits, offer taxpayers virtually no relief, and do nothing to protect municipal services and jobs. The amendment would have subjected any plan design change to coalition bargaining; required mandatory binding arbitration if an impasse is reached; guaranteed only 25 percent of the “savings” to go to communities, with 25 percent going to employees, and the remaining 50 percent subject to bargaining; blocked all further plan design changes until 2014; and placed all future negotiations over health insurance changes (any future plan design changes or any change in the employee-employer contribution share) in permanent Section 19 coalition bargaining.
In contrast to the clear reform and transparency of the House proposal, the labor-backed “alternative” and framework they announced in March and floated to House members is deficient in almost every way, and is so flawed that it would be even worse than no action at all. We ask you to oppose any language or provisions that would do the following:
• Prevent any change in municipal co-pays or deductibles in fiscal 2012 (or any other plan design feature) unless 70 percent of municipal unions agree, impose a three-year moratorium on any further health plan changes unless unions agree otherwise, or permanently impose the deeply flawed Section 19 coalition bargaining process on communities, which would allow one or two unions in a community to permanently control all health insurance matters including plan design and the premium share (Section 19 is now a local-option statute that has not worked – communities in Section 19 are pursuing home rule petitions to get out);
• Limit the guaranteed savings for taxpayers – the unions have stated that they seek 50 percent of the savings, but the entire purpose of reform is to preserve municipal and school services and protect jobs, and this provision would totally undermine reform by far too much into other employee benefit costs. Importantly, the state has shared 0 percent (none) of its plan design changes with state unions, and the House plan sets the shared savings at 10 percent to 20 percent. The problem with continuing the current system is that communities must give unaffordable concessions to get unions to agree to even modest changes – history and the facts have demonstrated this clearly;
• Impose mandatory binding arbitration over health insurance matters – mandatory binding arbitration was REPEALED BY THE VOTERS as a key part of Proposition 2½ because it is unaffordable for taxpayers (an example is the arbitrator’s decision in the Boston Fire Department case last year, granting extremely high salary increases in exchange for what should be routine drug testing). Labor would expand mandatory binding arbitration in unprecedented ways (historically, it only existed for police and fire contracts), and would give an unaccountable, unelected outside person the power to set all co-pays, deductibles, contribution percentages, health reimbursement accounts, and other benefits, essentially empowering the arbitrator to control up to 15 percent or more of a municipality’s budget.
THE CHOICE IS CLEAR
This is the time to pass a real reform plan to save taxpayers $100 million in avoided health insurance costs. The House plan protects municipal union jobs and essential services, while guaranteeing equity with state employee health benefits, and leaving municipal unions with more bargaining power than state unions. Any money that communities save through plan design will be used to preserve services and prevent more layoffs. Job protection is the ultimate benefit of plan design reform. This is a strong, balanced, meaningful, and fair reform that will make a major difference for every community across the state, and we respectfully ask for your support. The communities and taxpayers you represent are counting on strong and real reform this year. Thank you very much.
Sincerely,
Geoffrey C. Beckwith
Executive Director, MMA
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Best,
Pete
Osler L. Peterson, Attorney at Law
PETERSON | Law
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