Taxpayers Need Municipal Health Insurance Reform
Cities, towns and taxpayers are being crushed by skyrocketing health insurance costs for their employees, and the Legislature and governor must act now to give communities the power to control these costs. Failure to pass this reform will force cuts in essential services and eliminate police officers, firefighters, teachers and other key workers from local budgets.
Over the past 10 years, health insurance costs for cities and towns have risen by 150 percent, while spending on everything else, from public safety to education to road repair, has increased by only 30 percent.
For most communities, the annual increase in two items — health insurance and pension costs — exceeds all new property tax revenues. This means that each year cities and towns must slash spending on education, public works and public safety to balance their budgets.
The problem is caused by a state law that requires local officials to receive union approval before implementing changes in employee health plans. On the other hand, the state has exempted itself from this unaffordable law, and routinely implements basic decisions on health insurance outside of collective bargaining, such as increasing co-pays and deductibles to lower the cost of their plans.
For example, state employees pay $20 for visits to the doctor, $100 for the emergency room, and deductibles of up to $750, but many cities and towns are locked into health plans with $5 co-pays for visiting the doctor, $25 co-pays for emergency room visits, and no deductibles at all, because municipal unions have blocked any change. As a result, municipal health plans are much more expensive than state employee plans and the plans that average taxpayers have for their families.
The solution is clear: Pass House Bill 2964 to give cities and towns the same authority that state government uses to set co-pays and deductibles outside of collective bargaining. This one reform is the most effective way to bring immediate fiscal relief. Most communities would be able to lower their health insurance costs by 4 percent to 6 percent, or as much as $100 million statewide. This is real savings that taxpayers deserve.
This is a fair and moderate proposal offered in a spirit of compromise to find meaningful middle ground while achieving meaningful reform. Under the bill municipalities would be able to modernize the design of health plans outside of collective bargaining, with a guarantee that all 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 $100 million, protects municipal union jobs, guarantees equity with state employee health benefits, and leaves municipal unions with more bargaining power than state unions. This is a balanced, meaningful, fair and transparent reform.
Communities and taxpayers are experiencing extreme fiscal distress. This is the time for reform and action. Further delay will only serve to hurt taxpayers, municipal employees and the public. We ask all legislators to support this straightforward and necessary measure.
Geoffrey C. Beckwith is executive director of the Massachusetts Municipal Association. He can be reached at gbeckwith@mma.org.
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