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Mayors hope for more say on controlling health care costs

Want to determine deductible levels to reduce layoffs

By Kyle Cheney and Michael Norton
State House News Service / November 10, 2010

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Municipal officials hoping for increased control over employee health care costs will have to wait a little longer for a signal from the Patrick administration about plans to curb soaring premiums.

Governor Deval Patrick’s budget chief, Jay Gonzalez, speaking to an audience of municipal officials at a State House meeting yesterday, steered clear of addressing their specific demands, saying only that the governor is looking for ways to control health care costs across Massachusetts.

“We need permanent solutions to cost control across our health care sector,’’ he said at a meeting of the Massachusetts Municipal Association’s Local Government Advisory Council, adding that rising costs are “unsustainable’’ for everybody in Massachusetts.

At the meeting, Gonzalez warned of a significant budget gap looming for the fiscal year beginning next July, and he foreshadowed a push for a new bond authorization to support municipal road and bridge construction.

Local government leaders told Patrick administration officials yesterday they could have prevented layoffs if Beacon Hill had granted them broader authority to reconfigure municipal health insurance plans.

“The percentage of the overall general fund budget that the city shared with the health care plans has continued to grow,’’ Mayor William Scanlon of Beverly, president of the Massachusetts Municipal Association, told Gonzalez.

“The increase in costs ate up all our new money.’’

Mayor Thomas M. Menino of Boston plans to discuss municipal health reform this morning at Suffolk University, joined by Mayor Robert Dolan of Melrose and Mayor Kimberley Driscoll of Salem.

Scanlon called municipal health insurance plan design legislation the “granddaddy’’ of municipal issues, and local officials called on state government to pass reform legislation early next year.

“While the state has been swimming upstream, the cities and towns are still at the bottom of the waterfall,’’ said Mayor Mark Hawke of Gardner. “. . . This is going to save municipal jobs. We could have brought back quite a few of them if we had this plan design authority.

“We don’t have years; we have days and months’’ to make fiscal 2012 budget decisions and factor in potential savings from insurance reforms, he said.

Hawke said cities and towns need action by March 1 to make the necessary budget decisions.

City and town leaders have long called for plan design authority, the unilateral power to set copayments, deductibles, and benefit levels for their employees. Republican Charles D. Baker, Patrick’s main opponent, had called for plan design, estimating it would save $100 million a year in health costs for municipalities, and said he was the only candidate for governor willing to fight unions resisting the change.

Labor unions oppose the move, contending it would eliminate their right to negotiate health care benefits and would result in higher costs for thousands of workers.

Patrick has not embraced plan design reform but has called on cities and towns to join the state’s health insurance program, a move that requires union approval.

At least one other piece of Patrick’s agenda for a second term is coming into focus.

A day after State House News Service reported that municipal officials plan to press for passage of new capital spending on local road and bridge repairs, Gonzalez said, “I expect that would be on our agenda at the beginning of the year.’’

Gonzalez told municipal officials that the administration is very aware of an April 1 deadline to inform cities and towns of reimbursement levels expected under the state’s Chapter 90 program.

Municipal officials say demand for road and bridge repairs far exceeds the amount of funding the state has provided in recent years.

“If there’s ever any extra money, Chapter 90’s the place we need it,’’ Scanlon said.

“Message heard,’’ Gonzalez responded.

During the meeting, Gonzalez estimated as “huge’’ the failure of Question 3, a ballot initiative that would have slashed the state sales tax to 3 percent from 6.25 percent.

“I wouldn’t be sitting with you here right now if that had passed, because we would be in the midst of emergency budget cuts,’’ he said.

Gonzalez added that voters’ decision to repeal the state sales tax on alcohol, effective Jan. 1, will force the state to cope with an estimated $46 million less than budgeted in the last six months of the fiscal year and $110 million less than expected in the next fiscal year.

Over the first four months of the fiscal year, he added, Massachusetts has collected $413 million in taxes above estimates.

Gonzalez said the Patrick administration is “internally starting to update economic projections’’ to develop revenue estimates for the next fiscal year.

Massachusetts relied on $1.5 billion in federal stimulus funds to balance the current year’s budget, funds that will not be available next year, he said.

Responding to a question from a local official, Gonzalez called it premature to say which areas of the budget will see cuts next fiscal year.

“It’s going to be a challenging year,’’ he said.

“I don’t know yet the specifics of how we’re going to get through that. There will be a budget gap, and it will be a significant budget gap.’’