Towns curbing health care bills
New law makes process easier
Cities and towns north of Boston are stepping up efforts to rein in employee health-care costs following the recent adoption of state legislation bolstering their power to make changes.
The new local option law allows communities to change the design of their health care plans or transfer their employees to the state’s Group Insurance Commission system by following a specified process that includes an expedited union bargaining period.
Already, several local municipalities have adopted the law through votes by their governing bodies, with more planning votes in the coming months. There are also communities that have negotiated changes without tapping the law, or plan to try to do so.
“We anticipate a huge amount of activity statewide using the new law in the coming weeks and months,’’ said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association.
Beckwith said that in addition to the communities that have adopted the law, many other cities and towns are laying the groundwork for adoption by analyzing the potential for savings and educating themselves on the steps required.
Under the new law, municipalities can propose changes to their deductibles, co-payments, or other features of their health plans provided they are comparable to those offered by the GIC, or they can transfer to the GIC.
The community would have to negotiate with a local union committee regarding those changes, estimated cost savings, and plans to mitigate the impact of the changes on subscribers who would be adversely affected.
If no agreement is reached after 30 days, the matter would be referred to a three-person review panel.
The panel would be required to approve the design changes if they determine the benefits are comparable with those of the GIC, or to approve the community’s transfer to the GIC if the community can show the savings would be at least 5 percent greater than going with changes in its own health plan.
Up to 25 percent of the first-year savings would go to funding the subscriber mitigation plan, which would have to be approved by the review panel.
The Beverly City Council on Aug. 2 and the Somerville Board of Aldermen on Aug. 11 voted to approve their cities’ adoption of the new law.
Beverly Mayor William F. Scanlon Jr. said he hopes to begin negotiations with the city’s unions in the next few weeks and expects the city will be seeking a change to its plan design rather than a transfer to the GIC.
Scanlon, one of a number of municipal leaders from the area who were active in seeking the legislation, said he is pleased with the final product.
“I think this law will allow for better balance in how cities and towns spend their money,’’ he said, noting that Beverly’s health care costs consume 17 percent of the city’s general fund, up from 7 percent when he first took office in 1994.
Somerville is seeking through the new law to transfer the city into the GIC, which officials estimate will save Somerville about $9 million annually.
“We looked at plan design, and we wouldn’t have achieved nearly as much savings as through entering the GIC,’’ said Jackie Rossetti, a spokeswoman for Mayor Joseph A. Curtatone.
Salem Mayor Kimberley L. Driscoll said she plans to place before the City Council at its Sept. 8 meeting a proposal that the city adopt the new law.
Driscoll said the city has had an informal dialogue for some time with its unions about how to lower the city’s health care costs.
“This is really a continuation [of those talks], and now there is a way to end them,’’ she said.
Peabody Mayor Michael J. Bonfanti said he intends to seek a council vote for his city to adopt the new law, and as a first step has arranged to have consultants brief councilors on the regulations at tonight’s council meeting.
“I think in the end we will come up with something that is worthwhile for the city of Peabody, its residents, and its employees,’’ he said.
Lowell city councilors were set to vote on adopting the state law this Tuesday, according to Thomas Moses, the city’s chief financial officer.
Moses estimated Lowell could save $3 million annually from implementing the law, which would come on top of $1 million the city is already saving this year through a union health-care concession.
Haverhill Mayor James J. Fiorentini said he plans to ask the City Council in mid-September to adopt the new law.
“I’m convinced there would be some immediate savings and some very significant long-term savings,’’ he said.
Gloucester this past June reached agreement with its unions providing for health care changes. But the pact is for fiscal 2012 only, and Mayor Carolyn Kirk said she plans to ask the City Council next month to adopt the new law, allowing her to seek cost savings extending beyond this fiscal year.
Amesbury Mayor Thatcher W. Kezer III said city unions have made health-care concessions twice in the past three years. But he said he plans to ask the Municipal Council next month to adopt the new law because he believes “there are much more savings to be sought after.’’
Chelsea City Manager Jay Ash said the city is seeking to either join the GIC or have its own plan in place by Jan. 1. He said he is negotiating with unions outside the new law, but will seek to have the city adopt the law if those talks are not successful.
Medford is joining the GIC next Jan. 1 under an agreement Mayor Michael J. McGlynn recently struck with unions that he said will save the city $25.5 million and employees $9 million over the next six years.
The pact was negotiated outside the new law, McGlynn said, “because the unions recognized something had to be done to make sure there was a good plan for the employees but also to ease the burden on the community.’’