Muni Health Care Hearing

The Legislature convened a hearing on municipal health care yesterday, which I was unable to attend.The Mass Mayors had Scott Lang of New Bedford, Kim Driscoll of Salem, and Tom Menino of Boston, amongst many, speaking for giving municipalities health care plan design authority. On Monday leaders of multiple state unions offered what they called a “compromise” on muni-health in advance of yesterday’s hearing. Lets start with the hearing.

Both management and unions were out in force, and legislators heard both sides. The problem that the unions have is that the numbers are not subject to change or spin. From the State House News Service:

But committee members heard over and over that health insurance costs are making other investments impossible.

Since 2000, the cost of employee health care has wiped out increases in state aid from 1993 to 2000 that brought school districts up to targeted funding levels, according to Linda Noonan, executive director of the Massachusetts Business Alliance for Education. From 2000 to 2007, annual health care costs in school budgets grew by $1 billion, $300 more than the rise in Chapter 70 school aid, the chief pot of state funding for local schools, she said.

I covered that study in an earlier blog post, but those numbers are a cold slap in the face. Mike Widmer was at the hearing, and spoke how unsustainable the numbers are.

Massachusetts Taxpayers Foundation President Michael Widmer said reforms are necessary to preserve local government services and jobs and noted the pending proposals don’t even attempt to address billions of dollars in unfunded municipal retiree health care liabilities. Widmer said taxpayers are footing the bill for “the most generous health plans in the state” while seeing their own health insurance benefits and local services erode and paying increased property taxes “They are being hit four ways,” he said. “This is an absolute unsustainable situation.”

This situation has been covered relentlessly, but the municipalities, who have seen local aid cut by 40% over the past four years, need relief. And that relief, in the form of health care plan design, would save cities and towns about $100 million per year. It would also allow us to use those savings to retain municipal workers and continue to provide core services to our citizens.

The unions so called counter-offer was dissected pretty effectively by Globe columnist Scot Lehigh, who picks apart the key components of the proposal.

This plan is so silly it doesn’t even merit respectful consideration.

Under labor’s proposal, if unions and municipal management couldn’t agree to an unspecified and non-mandatory — and thus easily sidestepped — “benchmark’’ for health care savings, some kind of binding arbitration would decide the issue. (That idea should be an immediate red flag, given the Menino administration’s experiences with binding arbitration in disputes with both the firefighters and the police union.) Half of any savings through possible plan design changes or joining the state’s Group Insurance Commission would go to union members, at least in year one.

In exchange for those (totally inadequate) provisions, labor proposes limiting the GIC’s mid-year plan-changing flexibility — and increasing labor’s representation on the commission to half (!) the members.

The unions seek half the “savings” from introduction of lower cost plans in municipalities, and then seek to bring to the state GIC what they have brought to localities, which is health care gridlock. They ignore the fact that any reduction in the increase of health care costs to municipal taxpayers will inevitably be spent on job retention, which means that they are getting 100% of the so called “savings”. Their attempt to gain a veto over the actions of the GIC would mean that the state health care system, which provides excellent care at costs substantially lower than municipalities, would likely suffer dramatic costs increases to state taxpayers. I wonder how the state legislature will feel about that proviso? Labor’s proposal probably goes a bit further than they have in the past, but it does not at all come close to solving the problem. Both the Tribune and the Globe wrote editorials pointing out the inherent flaws in the union proposal, and urged the Legislature to move to real muni health care reform. With local aid cuts looming large again the Legislature needs to act in this area. Nothing is more important statewide for localities.

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