Cities, towns urged to join health plan
Statewide pool may save $100m
Massachusetts cities and towns could save $100 million on the rapidly spiraling cost of health insurance in the fiscal year 2009 alone if they took advantage of a new law allowing them to join the state's health insurance program, according to a report released yesterday.
But, according to the report, one thing may stand in their way: labor unions.
In a controversial recommendation that has angered some union leaders, the report by the Boston Municipal Research Bureau and the Massachusetts Taxpayers Foundation said cities and towns should be allowed to bypass any negotiations with unions in order to join the state plan.
"I understand the political difficulty of that suggestion, but there are no easy answers to the local healthcare dilemma of escalating costs, and while this is a good first step, we're concerned that it doesn't go far enough and that not very many communities will take advantage of it," said Michael Widmer, president of the Massachusetts Taxpayers Foundation
Governor Deval Patrick signed a law last month giving cities and towns permission to join the state's Group Insurance Commission to take advantage of its negotiating power for better rates and flexibility.
But the law also requires that cities and towns get permission from local coalitions of labor unions, many of which have been wary of the move.
The authors of yesterday's report said unions could prevent some cities or towns from meeting an Oct. 1 deadline for notifying the state it intends to join.
But several union officials said yesterday they should not be eliminated from the process.
"They think that they can do a report and that report will turn into legislation," said Bob McCarthy, president of the Professional Firefighters of Massachusetts, which has 12,000 members and 193 local unions across the state. "They don't want to manage; they just want to mandate."
The insurance measure is part of Patrick's Municipal Partnership Act, which attempts to help communities cut residential property taxes by saving money on pensions and healthcare and giving them new sources of local revenue.
"Allowing cities and towns to join the Group Insurance Commission for healthcare needs is an important part of the governor's Municipal Partnership Act, and we agree that there are opportunities for serious cost savings throughout the state," Kyle Sullivan, Patrick's press secretary, said in a statement. "However, this is just one of the tools communities need to decrease costs and help ease the tax burden on property owners."
Widmer and Sam Tyler -- president of the Boston Municipal Research Bureau, a business-funded watchdog group -- cautioned that cities and towns should evaluate their positions before deciding whether to sign up, although doing so would be a cost-saving measure for 90 percent of municipalities. The Group Insurance Commission purchases health insurance for state employees and teachers at a lower cost than most municipalities pay.
According to the report, healthcare costs for municipal employees jumped 63 percent between fiscal year 2001 and 2005, while municipal budgets increased 15 percent.
Mayor Claire Higgins of Northampton said that in fiscal 2001, health insurance consumed 9 percent of Northampton's $57,791,000 budget, while in 2005, it required 12 percent of the $61,405,000 base budget, a 43 percent increase.
She said the city is evaluating its options, but won't be able to sign up by Oct. 1.
Health insurance is "still a growing portion of our budget, growing faster than we'd like," Higgins said.
Dolores L. Mitchell, executive director of the Group Insurance Commission, said she understood that deciding to join would be tough for localities that are struggling financially, but are not prepared to let the state take care of health coverage.
"I hope enough communities will join so they can set an example for other towns," Mitchell said. "On the other hand, if some want to wait and see, I respect that as well."
April Simpson can be reached at asimpson@globe.com 