Bill Manzi.com

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.

The House budget section dealing with municipal health care has drawn some serious flak from different quarters, with plenty of media and blog coverage The hand wringing centers around comparisons to Governor Walker’s legislation in Wisconsin, with cries of labor bashing in the air.

One constant that I have noticed in the criticism is the persistent failure of the critics to propose solutions, or to delve too deeply into the policy issues involved. Better to deal in generalities, and use sloganeering as a substitute when the fact sets do not support your argument.

So what are the arguments against the Deleo-Dempsey House bill?

1) It is wrong to modify collective bargaining rights, even when a policy goal of great importance will be achieved. The critics generally go on to give a wonderful historical perspective on the long history of collective bargaining in the United States. Quite frankly it is their strongest and best argument, but it stills falls woefully short. Usually the fact that the modification of collective bargaining rights brings municipal workers to where state employees are with regards to health care bargaining rights is not mentioned. And critics NEVER want to talk about the underlying economics.

2) The sanctity of the contract issue. Both management and labor periodically petition the Legislature for changes in the rules governing collective bargaining. Labor is currently petitioning the Legislature to change, outside of collective bargaining with management, their rights with regards to extending expired contracts beyond the statutorily allowed three years via so called evergreen clauses. Such a petition would modify management’s existing contractual rights under statute, and would be done outside of collective bargaining. The Legislature, as part of Transportation Reform, unilaterally modified the contracts of MBTA employees with regards to health care, and ending the 23 and out provision. Where were the critics on that one? Aside from the MBTA employees I did not hear the criticism that is being made today, although the contractual issues are identical.

The critics generally admit that the House proposal will save big money for taxpayers, but say that those savings should not be achieved outside of collective bargaining. What they do not seem to want to talk about are the following issues.

1) Collective Bargaining has been in place and Unions have generally refused to make modifications through that process to adjust plans that are totally out of whack with economic realities. Yes, there are exceptions (Methuen being one of them) but by and large unions have lost this political fight in the House because of their own reluctance to modify health care provisions in bargaining agreements that are not sustainable in the current economy. The provisions of 150E, the State Law governing collective bargaining, makes it almost impossible to modify a benefit once it exists. Want to make changes through collective bargaining? Modify 150E to give management some additional rights to make changes AFTER the expiration of existing contracts. The Collective Bargaining deck is rigged currently to favor employees over management, and some changes that balance that out a bit would make the bargaining process more palatable.

2) Critics almost always avoid talking about the consequences for union employees that sticking to the status quo brings. The layoffs and decimation of local services to citizens are just shrugged off or not spoken about. Solutions offered? Almost never. The union amendment to the Dempsey budget proposal did not offer any real solutions. Why do such amendments fail to offer the financing necessary to fund the status quo? Why not simply fund the escalating costs of these benefits through the State budget if change to the benefit packages through legislation is anathema? Instead cuts to local aid are offered.

3) The legislation establishes a health care floor underneath which municipalities cannot go in municipal health care. That standard is the State GIC, which insures thousands of state employees. It is quality health care at prices that are appreciating at about half the rate of municipal plans. So when you see the misdirection offered that some regional plans are better than the GIC, or that the GIC should not be forced on employees simply remind those critics that the Legislation allows for local plans to stay in place, but that costs cannot exceed the GIC benchmarks.

Don’t be fooled by the arguments that try to shift our attention away from the important issues involved. The Dempsey legislation provides for first rate health care for municipal employees while allowing for cost reductions to taxpayers that will save union jobs and preserve local services to our citizens. Yes we should ALL be looking for ways to stop the unsustainable rise in overall health care costs, but until that day everyone must share in the sacrifices that we need to make to preserve government services and union jobs.