Rising healthcare costs stagger cities

Saying their budgets are being crippled by soaring healthcare costs, cities and towns want the Legislature to give them more flexibility in designing health insurance benefits for their employees.

A report by the Massachusetts Taxpayers Foundation released yesterday cited a ''crisis in municipal health costs" and said cities and towns have seen a 63 percent increase in health insurance costs since fiscal year 2001, nearly double the rate of increase of state healthcare costs and more than four times the growth rate of local budgets.

''This is a staggering obligation that cities and towns are having to bear," said Michael J. Widmer, president of the taxpayers foundation. ''Clearly this is unsustainable."

Municipalities say that they are hamstrung by state laws that require them to negotiate with unions on almost all aspects of health benefits and, in some cases, to obtain agreement from all labor unions over any changes to health insurance plans. The report argues for allowing local officials to bypass unions and unilaterally set employee contribution rates, as Senate President Robert E. Travaligni has proposed in his health insurance package.

The report also advocates allowing municipalities to negotiate with individual unions on benefits rather than with all at once, as is currently required.

''Our hands are being tied by the state," said Mayor Thomas M. Menino, speaking at a State House press conference yesterday ''My message today is, give us some relief."

The report also proposes ''the even bolder step" of allowing municipalities to set up independent commissions to design benefits packages, a provision included in the health insurance legislation Governor Mitt Romney is planning to roll out today.

Unions, however, are sure to fight any move to limit their power to negotiate health benefits for their members.

''That's outrageous," said Bob McCarthy, president of the Professional Fire Fighters of Massachusetts. ''That's taking health insurance off the collective bargaining table. They are being greedy, plain and simple."

Though current law restricts the ability of municipal leaders to make health insurance changes without the consent of unions, the state has wide authority to do so.

Contribution rates for state employees are set by the Legislature and governor, and benefits packages are designed by the Group Insurance Commission, an 11-member group that includes labor representatives and is controlled by executive branch appointees.

Because the state has the ability to make changes in plan design, pricing structures, and benefit alternatives, the report says, the state's employee health costs grew at just half the rate of municipal health insurance costs over the past four years.

''The reforms we're calling for would treat someone who works at a high school the same way that the state treats a professor at a state college," said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association. ''A local police officer's health benefits would be decided the same way as they're decided for state troopers. All local officials want is the same level of authority and flexibility that state leaders have to make these healthcare decisions."

The cost increases, coupled with large cuts in state aid to cities and towns since a state budget crisis three years ago, have eaten into budgets and forced Massachusetts municipalities to lay off about 14,000 employees since fiscal year 2002, more than any other state, Beckwith said.

In Northampton, where health insurance costs have risen from $5.4 million in fiscal year 2002 to a projected $8 million this year, Mayor Mary Clare Higgins said the city has had to cut 27 city employees and 20 school employees in the last three years.

''It's the health insurance coupled with the very dramatic cuts in state aid," she said. ''If it was one or the other, we might be able to muddle through better, but since it was both, it made it extraordinarily difficult."

Higgins said she supports the report's recommendations, especially the idea of setting up a commission to design benefits packages. ''It's very difficult to get, in my case, 15 unions to agree on the plan design," she said.

Mayor Thomas Ambrosino of Revere is also in favor of the changes. He said his city has just completed lengthy negotiations in which the city agreed to 12 percent salary increases over three years in exchange for only paying 85 percent of employee health premiums. ''It requires an awful lot of money to get them to reduce contribution rates, and in this era of fiscal difficulty, that kind of money is not available," he said.