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Town’s health care bill triggers pain

In Framingham, deep split over rising costs

By Sean P. Murphy
Globe Staff / May 6, 2010

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FRAMINGHAM — Last year, this large, diverse suburb west of Boston eliminated a few dozen jobs, including police, firefighters, and clerks at Town Hall. This year, at least 50 teachers and staff are slated to be cut.

Everyone here seems to agree that a major factor is the rising cost of health care insurance for employees and retirees, which has jumped by $20 million in 10 years.

But there is a deep split in town over what to do about it, illustrating on the most local level a friction that exists statewide as cities and towns struggle with mounting health care costs.

On one side are the roughly 3,700 Framingham employees and retirees who enjoy health care insurance benefits among the best anywhere: For most, the town pays 87 percent of their premiums, with $10 copayments for office visits.

For those employees with family coverage, the town pays $16,400 and the employee $2,450; for individual coverage, the town pays $6,275, and the employee $925. In a few cases, the town pays as much as $30,000 a year for employee family coverage, with the employee paying $10,000.

The employees, retirees, and their families, not surprisingly, are fighting to keep benefits they won years ago during collective bargaining.

On the other side are the town manager, chief financial officer, and, judging by interviews conducted here, many taxpayers in this town of about 66,000 people. They want public employees to shoulder more of the burden, as has happened in the private sector, and town officials have infuriated unions by trying unilaterally to shift costs to workers.

“This is dividing everyone in town,’’ said Rosemary Jebari, co-president of the local teachers’ union.

“It’s town employees against everyone else,’’ she said. “It’s driving a huge wedge down on us. It’s because people feel health care is breaking the bank.’’

Framingham is but one of scores of communities hampered by the burgeoning cost of health care. Statewide, the expense of insuring municipal employees, retirees, and elected officials more than doubled between 2001 and 2009, adding $1 billion in new costs.

A Globe survey of 25 communities earlier this year found that they now devote, on average, 14 percent of their budgets to health care, up from 8 percent a decade ago. Framingham, where health care costs accounted for about 10 percent of the budget in 2001, now dedicates about 17 percent of its annual spending to health care.

Municipal managers in Framingham and elsewhere have tried in negotiations to shift more of the burden to employees and retirees. But they have been stymied by a state law that gives municipal unions an effective veto over changes in health care plans. And unions have mostly fought off all but modest changes in health care plans and premiums.

State legislators, meanwhile, are meeting behind closed doors with unions and municipal officials in an attempt to broker a deal on health care costs. Led by Boston’s mayor, Thomas M. Menino, a coalition of mayors says that, if necessary, it will launch a ballot initiative for 2012 to get public support to bring down health care costs.

In January, Framingham, facing yet another annual budget shortfall despite deep job cuts, did something unprecedented. The town went outside of the collective bargaining process by closing its most generous health plans to anyone hired after Jan. 1. Instead, new employees are funneled into plans under which the town pays 75 percent of the premium.

The unions are challenging the town’s legal authority to create what is now a two-tier system, with most employees paying $2,450 annually for family coverage, compared with $4,350 annually for family coverage for new employees.

The challenge is in arbitration, and it is being followed closely by municipalities and unions across the state.

Some Framingham taxpayers insisted in interviews that health care benefits must be rolled back for town employees and retirees.

Aaron Lewis, a 69-year-old retired office manager, said he worked for a company for 25 years, but unlike public-sector employees, he got no pension and no health care benefits in retirement. He and his wife get by on Social Security and Medicare, he said. It galls him that others are so much better off, at his expense.

“I’m paying the taxes for town employees to have it much better than I do,’’ he said. “Give me a break.’’

Sue Wallace taught physical education in the Framingham public schools for 37 years. She is now retired, but cochairs the committee representing public employee unions and retirees in negotiations with the town. She is adamant that public employees deserve what they get.

“Do we have good plans? Yes, we have very, very good ones,’’ she said. “And why not? I am passionate that everyone deserves quality health care insurance. I feel badly that people are being laid off. But I really think there are some other changes that can be made.’’

Wallace said the cost of medical care, not employee greed, is driving up premiums. “Everything has been so anti-union lately,’’ she said.

When the town tried to force new employees into less costly plans, Wallace said, she was stunned. She believes the move will not solve the overall problem confronting the town.

But the numbers are bleak. In 1991, health care costs represented 7 percent of the annual town budget. Health care costs are projected to eat up 25 percent of Framingham’s budget in 10 years unless changes are made.

Back in the early 1990s, Framingham — like scores of other municipalities — agreed in collective bargaining with unions to cover 90 percent of employee health care costs. “That was when health care was relatively inexpensive and a town could afford it,’’ said Mary Ellen Kelley, town chief financial officer. “But not in this day and age.’’

The unions agreed last year to lower the town’s share of employee premiums from 90 percent to 87 percent. The unions also agreed to a mandate that all eligible retirees go on Medicare, lowering costs for taxpayers.

Still, the increase in health care spending for the next fiscal year is projected to be almost $3 million, about 1.5 percent of the budget.

Even if it survives the union challenge, the town’s plan to put new employees into less expensive plans will not save much money in the short term, because so few hires have been made in this current period of austerity. The savings so far have been modest — projected to about $70,000 this year. As current employees retire or resign and new ones go into the less expensive plans, the town expects to save about $1 million over five years, Kelley said.

David Williams, the recently hired assistant town manager, is one of those new hires who was forced to choose a health plan less costly to the town. But he said he does not begrudge his Town Hall peers who are getting a better deal, especially in light of the budget crunch.

“Everybody has to do more,’’ he said. “We even empty our own trash at the end of the day now.’’

Sean Murphy can be reached at smurphy@globe.com.

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