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Globe Editorial

City Hall’s weak compromise passes up millions in savings

March 24, 2010

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THE MENINO administration is squandering $5 million this year by allowing about 1,700 former city employees over the age of 65 to thumb their noses at Medicare. It’s a wasteful practice and an insult to the taxpayers of Boston that almost no one in city government is willing to tackle head-on.

Mayor Menino and the City Council are pursuing a weak compromise: require future city retirees to enroll in Medicare at age 65, but allow current Medicare-eligible retirees to remain on the more costly city-sponsored-plan. The Council is expected to vote in favor of the measure today.

But it would be wiser to postpone the matter and come back with a plan that moves all retirees into Medicare. As next year’s budget comes into focus, perhaps elected leaders will come to see the danger of perpetuating an employee health insurance plan that has increased in cost at twice the rate of the city’s total spending over the past five years.

Earlier this month, Menino stood before business leaders at a meeting of the Boston Municipal Research Bureau and told them he was ready to “meet the demands of a new day,’’ including curbing health-care cost increases “to protect the services taxpayers deserve.’’ Instead, the mayor has backed away from that pledge in the face of resistance from municipal unions and some retirees. It’s a disappointing performance by the mayor, who said he would confront the “old no’s’’ in what is likely to be his final term.

Samuel Tyler, president of the Research Bureau, has been urging the administration for years to shift some of the costs of retiree health insurance to the federal Medicare plan as a way to control runaway costs. This year alone, city employee health insurance costs will top $275 million, making it the city’s second-largest budget account after the schools.

In addition to the annual savings, the shift to Medicare would likely result in a 5 percent reduction in the cost of health insurance plans for active employees based on fewer high-cost claims by older retirees, according to Tyler.

State law gives municipalities the option to enroll all retirees — current and prospective — in a Medicare supplemental plan provided that it is comparable to the retiree’s current coverage. Such a shift would require little or no disruption for retirees while providing significant savings for taxpayers. That’s why more than 100 cities and towns, including Springfield and Worcester, have chosen this fresh path.

Menino and members of the City Council should follow them.

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