The Massachusetts Senate, via a late budget amendment, has added a provision dealing with retiree health care that would negate a large portion of prospective savings that their original bill provided. The Massachusetts Taxpayers Foundation, (thank you Michael Widmer) has released a detailed analysis of the Senate version of muni health care reform, which I have attached below. I have excerpted a key portion here:
The Senate version would fall well short of the estimated $100 million in first-year savings for cities and towns because of the costs for increased retiree contributions. Since the $100 million in savings would grow dramatically over time, this shortfall in savings would increase commensurately as well.
By placing additional obligations on communities, the Senate amendment runs directly counter to the entire purpose of the municipal health reform legislation—to give municipalities greater flexibility to control their soaring health costs.
Municipalities urgently need to address their unaffordable retiree health care liabilities as described in the Foundation’s recent report, Retiree Health Care: The Brick That Broke Municipalities’ Backs. The Senate amendment flies in the face of that reality, adding to the burden for a substantial fraction of Massachusetts communities and limiting the ability of all cities and towns to address an obligation that is beyond the ability of local taxpayers to pay for without decimating basic services.
In tying retiree contributions to active employee contributions, which are negotiated through collective bargaining, the Senate amendment takes a huge step backwards by further constraining the ability of local officials to manage retiree health care liabilities.
The budget is now in a House-Senate conference Committee. The Legislature has come a very long way on this issue. At the local level we hope that the conferees opt for the original goal of saving that $100 million per year, so that we can provide services and save jobs. It would be a shame to stop short at this late point.