Facing declining state aid and local tax revenues, municipal officials are clamoring for a new tool to cut costs: the ability to unilaterally change the health care plans they provide to employees, elected officials and retirees.
Municipalities are pitching the idea as a way to reduce police, firefighter and teacher layoffs. Cities and towns could save $100 million in one year — and $2.5 billion in a decade — if they were allowed to adjust premiums and co-payments without union approval, said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association.
State officials already enjoy the power to raise health-plan premiums shares and co-payments. Cities and towns, which now have to negotiate with each union to do so, are asking the state Legislature to pass a bill that would give them similar power. The unions say changes should be made only through negotiation.
The state Senate included an amendment to its budget that would have allowed municipalities to revise their health plans, but they still would have needed to go through a bargaining process with unions. The amendment was slammed both by municipal government groups and unions, and was not included in the final budget passed by the Legislature.
Municipal leaders say that without similar latitude to what the state has, they are being forced to cut jobs and slash the services received by the taxpayers who are funding the employee benefits. Some municipalities cover close to 90 percent of their employees’ premiums.
“We have costs associated with health care plans that are unwieldy,” said New Bedford Mayor Scott Lang. Last year, he had to cut more than 150 city positions and said a 4 percent cut in local aid in the newest state budget will mean more layoffs.
“This is an issue that has tremendous ramifications for the next several decades,” Lang said.
Salem Mayor Kim Driscoll said she has reached agreements with unions representing half the city’s public employees to increase their co-payments for doctor visits from $5 to a range of $15-$20. But Driscoll said the ability to make the changes without union consent would prevent future layoffs, especially if other unions do not agree to the changes.
“We can’t have a budget crisis every year,” Driscoll said.
Public union representatives acknowledge that municipalities are wise to try to trim health care spending, but say skirting collective bargaining would set a dangerous precedent.
“We should not be in the business of taking away workers’ rights,” said Tim Sullivan, a spokesman for the state chapter of the AFL-CIO.
Robert McCarthy, president of the Professional Fire Fighters of Massachusetts, said: “The cost cannot just be borne by unions.”
Gov. Deval Patrick has encouraged cities and towns to develop a plan so unions get a say in any changes a municipality proposes. In the interim, Patrick said, municipalities can start cutting costs by moving their retired employees from municipal plans to Medicare.
“We get that cities and towns need some help in dealing with skyrocketing health insurance costs,” he said. “Meanwhile, they should use the tools at their disposal.”
One of Patrick’s opponents in the race for governor, Republican Charles Baker, said he supports letting municipalities make health plan changes because it would help them save money that they could spend on other pressing needs, such as education.
Beckwith, the municipal association official, likened the state’s current policies to a “double standard.”
“This reform would take the handcuffs off cities and towns and help them combat the fiscal crisis,” Beckwith said.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, said public employees would still have much better health plans than most private sector employees if cities and towns could unilaterally change their health plans.
“No one is talking about gutting the plans,” Widmer said.
With the legislative session set to end on July 31, the House and Senate are not expected to address the issue again this year.
Beckwith said he hopes lawmakers will address municipal health reform again in early 2011. If not, a ballot question is likely for 2012, he said.
“This is our top priority and will continue to be our top priority,” he said. “Communities need relief and reform now.”