State Senate Moves on Muni Health Care Reform

The Senate Ways and Means Committee yesterday released its version of municipal health care reform, and while it differed from the House version it certainly delivers on the promise of municipal health care reform. More to say later, the MMA description below will have to suffice for now. Great job in trying to achieve some political balance by the Ways and Means Committee.

As you know, the MMA has strongly endorsed the municipal health insurance reform proposal adopted by the House of Representatives in April, thanks to the leadership of Speaker Robert DeLeo, House Ways and Means Chairman Brian Dempsey, Vice Chairs Stephen Kulik and Marty Walz, and House Public Service Committee Chairman John Scibak. The House plan is a strong, balanced, fair and meaningful bill that would provide powerful relief for cities and towns. After the House adopted their plan by a groundbreaking 113-42 vote, all eyes turned to the Senate.

The plan proposed today by Senate President Therese Murray, Senate Ways and Means Chairman Stephen Brewer, Vice Chairs Steven Baddour and Jennifer Flanagan, Senate Public Service Chair Katherine Clark and the Senate Ways and Means Committee is a strong plan that offers significant reform for cities, towns and taxpayers.

The process established by the Senate plan differs from the House framework, yet the bottom line is very close – cities and towns would be able to implement plan design changes or join the GIC in order to achieve real savings that would be used to protect services and preserve municipal jobs, all while giving municipal employee unions more collective bargaining power over health insurance than state employees. The reform proposal would also require all municipalities to enroll all eligible retirees into Medicare.

The key provisions of the reform proposal (Sections 45-49, 51, 109 and 110 of the SW&M budget) are as follows:

As drafted, municipalities would accept the new law by vote of the Board of Selectmen, or by approval by the Mayor and Council.

The municipal executive would then propose a plan to modernize the design of their employee health plans or join the state GIC, with a guarantee that all municipal and school employees would still have health plans with co-pays, deductibles and other plan features that are at or lower than the median co-pays, deductibles or plan design features offered by the GIC.

The municipal executive’s plan would include 1) the desired plan design changes or entrance into the GIC, 2) the projected 1-year savings (or avoided costs) that the plan would generate, and 3) a plan to mitigate or moderate the impact on retirees, low-income employees and those with very high out-of-pocket costs (such as through a health reimbursement account, through a temporary subsidy of rates, or other proposals).

Communities would then convene a Public Employee Committee (PEC) identical to the make-up of the PEC in Section 19 of Chapter 32B. If a community already has adopted Section 19, then that would be the PEC. If a community has not adopted Section 19, then a temporary PEC would be established just for the purpose of negotiating on the proposal offered by the municipal executive.

The community and the PEC would have 30 days to reach agreement on the municipality’s proposal.

If no agreement is reached, the impasse would be referred to a three-member “municipal health insurance review panel” that includes a municipal representative, a labor representative, and an “impartial” third party from a list of experts in dispute mediation, municipal finance or municipal health benefits that is provided by the Secretary of Administration and Finance. If the community and labor representative cannot decide on the third member, the Secretary shall make the choice.

This review panel would have ten days to review and decide three matters: 1) whether the plan design changes for co-pays, deductibles and other features proposed by the community are at or lower than the median level of the features offered by the GIC, 2) what the one-year savings amount would be, and 3) whether the proposal to mitigate or moderate the impact of the changes on retirees, low-income workers and subscribers with high out-of-pocket costs is sufficient.

If the municipality’s proposed changes do not exceed the GIC median, the panel is required to approve the immediate implementation of the plan design changes. This means that cities and towns would be able to implement plan design reform or join the GIC. This is a strong and powerful proposal that would benefit every community in Massachusetts.

The panel would also confirm the projected savings amount, and would determine whether the mitigation proposal is sufficient. The panel could require additional savings to be dedicated to health reimbursement accounts, premium reductions, or other arrangements, but in no case can the panel designate more than 33% of one-year’s savings to the mitigation plan.

Cities and towns would still negotiate any change in the employee-employer premium share, giving municipal unions more bargaining authority over health insurance than state employee unions. Any new co-pays or deductibles higher than the GIC median would have to be approved in collective bargaining.

This measure is similar to the House plan in allowing for plan design changes and joining the GIC, yet sets up a process that provides unions with a more structured framework. At the end of the day, the proposal gives unions a voice but not a veto over plan design changes, and requires that no more than 33% of the savings be shared with employees in the first year, compared to the House’s 20% level. Overall, the Senate plan targets the same $100 million reduction in health plan costs that the House embraced.

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4 Responses to State Senate Moves on Muni Health Care Reform

  1. Jules Gordon says:

    Your Honor,

    Is this acceptable to you, a mayor or does it end devolving into the a return to the bad old ways?

    Explain sharing with employees. I notice no sharing with your constituency.

    Jules

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  2. Bill Manzi says:

    Jules,

    Yes it is acceptable. It is different from the House version, but it still works, and the savings achieved will be about $100 million per year statewide. Both the House version and the Senate version call for some of the year one “savings” to go back to employees by way of a mechanisms to buffer them from the potential shock of increased co-pays and deductibles. The savings sharing only applies in year one, which honestly works for municipalities. The “appeal” contained in the Senate bill does not restore “binding arbitration” as the plan must be approved if it hits pre-established benchmarks. (GIC)It is not done yet, but real reform appears to be coming this year.

    Bill

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  3. Jules Gordon says:

    Your Honor,

    A couple of more questions.

    1. Why have the unions been so quiet? I mean compared to Wisconsin. Are there “rewards” coming to buy their silence?

    2. How come no one gives me “shock” money? Something like Governor Patrick’s promised real estate tax breaks might have done.

    Jules

    Like

  4. Bill Manzi says:

    Jules,

    They really were not quiet on the House side, threatening political retribution against those who voted for the bill. I do agree that they were much more measured in their response to the Senate bill. I do believe that they understand that politically, on this issue, the stars are aligned against them.

    Bill

    Like

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