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Communities see savings in health law

By Calvin Hennick
Globe Correspondent / July 28, 2011

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Area cities and towns are salivating at the prospect of saving millions of dollars in insurance costs in coming years, under a new law making it easier to change health coverage for their employees.

“This has a huge impact on municipal finance,’’ said Plainville Town Administrator Joseph Fernandes, who added that his town will probably adopt the local-option statute next year. “I’d be shocked if these same thoughts aren’t taking place, as we speak, in literally every other community.’’

The law eases the way for communities to either alter their health insurance plans or join the state’s Group Insurance Commission system without obtaining approval by unions, as long as the change would meet certain criteria.

Officials in Belmont, Framingham, Lexington, and Maynard said they would look into modifying health coverage offered to their employees.

Newton Mayor Setti Warren won’t talk about the prospect of the city joining the state plan, but a trio of aldermen said they want to explore the idea.

“I am leaning toward it,’’ Alderman Ted Hess-Mahan said of the state plan. “I think it’s something we should look at.’’

In announcing a three-year deal with Newton firefighters last week, the mayor’s office said the contract will yield health insurance savings equivalent to the GIC plan. Two other contracts have been settled, and more are in negotiations.

“Because I am at the table actively, having productive discussions, I’m not going to comment on the potential use of the new legislation,’’ said Warren, who is running for the Democratic nomination to challenge US Senator Scott Brown next year.

Arlington’s selectmen voted to accept the new law, the first step toward moving town employees to the GIC, on July 12, the day it was signed by the governor.

Brookline, Millis, Watertown, and Weston, as well as the Groton-Dunstable school system, are among the roughly two dozen communities and regional districts that had previously joined the state health plan.

“Communities have been forced to cut back on services and lay off employees in great part because of the spiking cost of health insurance,’’ said Geoff Beckwith, executive director of the Massachusetts Municipal Association. “Now they’ll be able to use this law to save taxpayers money, and avoid layoffs and service reductions.’’

The new law allows communities to change health plans without going through the usual collective bargaining process with unions, as long as the new arrangement is no more burdensome to municipal employees than the state’s coverage plan with the most subscribers.

Also, communities can join the GIC system if they show it would save at least 5 percent more than simply making changes to their existing plans in the first year.

The law calls for a 30-day negotiation period with unions, at which time any changes would go before a state review panel if there is still disagreement. But the panel would be required to approve the changes as long as they meet the specifications of the law, Beckwith said.

Beckwith said all told, cities and towns across the state could save $100 million a year by making changes to their plans. But those savings could come at a cost to employees in the form of higher copayments and deductibles.

Under changes proposed by Arlington, for example, copays could go from $10 to $20 for office visits, from $50 to $100 for emergency room visits, and zero to $125 for outpatient surgery.

Linda Hanson, vice president of the Arlington Education Association, said she hopes the town doesn’t rush into any changes. “It’s a very significant change from the type of plan we’ve had in the past,’’ she said.

She said the school district’s employees aren’t worried so much about modest bumps in copayments for office visits as they are about large deductibles for repeated hospitalizations.

The law requires cities and towns to mitigate new out-of-pocket expenses for employees by putting up to 25 percent of the savings from the first year into a special fund.

“That’s a very good thing,’’ Hanson said. “I feel like we at least got something there.’’

Adam Chapdelaine, Arlington’s deputy town manager, said changes could result in savings that will allow the town to make good on its goal not to ask voters to raise taxes through a Proposition 2 1/2 override for the next three years, and perhaps longer.

Beckwith, the municipal association director, said he expects many more communities will begin to move to revise health insurance coverage or join the state plan this summer and fall.

The changes would “stop the bleeding’’ for communities that have faced double-digit rates of increase in insurance costs in recent years, he said.