Health costs are growing municipal concern Insurance premiums are squeezing out other programs; few towns sign on to the state's own program so far
BY NAOKO YOSHIDA FOR THE SUN CHRONICLE Jan 3, 2009
 Lost in the concern over the faltering Massachusetts budget is a painful fact that has confronted governments large and small well before the national recession: The growth of health care costs for municipal workers. Health insurance costs for city and town employees increased 63 percent from 2001 through 2005, according to a 2005 survey by the Massachusetts Municipal Association and the Massachusetts Taxpayers Foundation. The figure was nearly double the state's annual rate of increase for health costs. "Health insurance costs have been increasing above inflation, which means every year health insurance has taken up a great percentage of local budgets," said Geoffrey Beckwith, executive director of Massachusetts Municipal Association.

That has squeezed out other important programs, such as public safety, public education and public works." In July 2007, Gov. Deval Patrick signed a bill giving municipalities the option of buying health insurance through the Group Insurance Commission - the state's employee health care pool - as a tool save money. The state-run health insurance program provides more diverse health insurance plans for less cost than what local governments pay. The amount of savings differ from town to town, depending on what type of plans the communities are in, how many retirees they have and what those retirees pay. But the savings can be substantial. The town of Holbrook would save an estimated $212,000; the town of Millis would see about $300,000 in savings. But few cities or towns have taken advantage of the state plan. Only 17 municipalities out of 351 cities and towns have joined so far. The list of participants also includes six regional school districts, three planning agencies and one charter school. GIC Executive Director Dolores Mitchell says joining the state plan isn't easy. A town must cancel existing labor contracts that often give workers better deals than the GIC provides. "Given the difficulty and complexity of the decision they have to make, I'm perfectly happy with the number that have decided to participate," she said. "It isn't easy. If the administration of the community has decided that they want to do it, all different unions have to get together and collectively make that decision. It's a complicated and contentious and time-consuming activity
Municipalities need approval of 70 percent of union employees. A major sticking point is that municipal employers must pay from 50 percent to 99 percent of the health premium. The GIC decides other issues, including the type of plans, co-pays and deductibles. The process has been the major obstacle for local governments. "Getting our 13 unions to get concurrences to join can be an expensive undertaking," Norton Town Manager James Purcell said. Plainville Town Administrator Joseph Fernandes said: "If the town could simply say we are going to join the GIC, we could do a quick cost analysis of which is cheaper and just do it. But if we have to get unions to agree, they want something in exchange." Town officials also question the potential of cost savings. "You could save money, but that's a crap shoot too," Seekonk Town Administrator Michael Carroll said. "What is the GIC going to cost next year? They could overhaul the design of the plan." North Attleboro Town Administrator Mark Fisher agrees. "We have no guarantee that what we are looking at today is what's going to be there tomorrow," he said. A new problem surfaced in October, when Gov. Patrick cut $900 million from the state budget, including $32 million from GIC. Along with the budget cuts, the governor filed legislation to increase insurance premiums paid by state employees. Because it is unlikely the Legislature will act quickly on the proposal, GIC might be forced to increase co-pays and deductibles on subscribers, including state and municipal employees and retirees. Another complication is the warning by House Speaker Salvatore DiMasi that local aid could be cut up to 10 percent in the next fiscal year To help local governments manage the loss, DiMasi said he will propose a bill to give municipal officials the authority to join GIC without negotiating with local unions. The contribution ratio will still be negotiated through collective bargaining, he said. Local unions are opposed to DiMasi's proposal, which would allow local governments' to join GIC plans with higher co-pays and deductibles. "If you increase the co-pays and deductibles, you increase it all on the employees and retirees," said Bob McCarthy, president of Professional Fire fighters of Massachusetts. "The ones who need it the most have to pay more. That's why we want to have a voice." McCarthy also said the DiMasi plan would eliminate the basis of union-municipal negotiations that have balanced health care benefits against wage issues. "For years, public sector unions have foregone pay raises to maintain their health insurance benefits," McCarthy said. "So what happens when you take out the collective bargaining?" Another proposal offered by Massachusetts Municipal Association would give local officials the authority to shape health insurance plans outside of collective bargaining. Beckwith said giving cities and towns that power would mean quicker savings.
"If communities can just implement basic changes and update their health plan, they would be able to save a lot of money," he said. The savings could extend to workers. Although employees would face higher co-pays and deductibles, their premium would go down, Beckwith said. "It means much more overall savings than the cost of co-pay," he said. "In addition to that, our analysis shows that if cities and towns are able to change the plans themselves, in many cases, they can do it with less cost shift to employees than joining the GIC." But McCarthy has his doubts. He fears increases in co-pays and deductibles for outpatient surgery, prescription drugs and mental health care could cost employees thousands of dollars if they become sick. "I am concerned about quality, not just having a health insurance plan," he said.

posted by Jeff Bennett