Health Insurance Reform, per Massachusetts Municipal Association

TheMassachusetts Municipal Association sends selectmen alerts on hot political topics – this one came yesterday on the Senate’s proposed budget and the health insurance reform, and explains the issues.


    Earlier today, the Senate Ways and Means Committee released their proposed fiscal 2012 state budget, which seeks to close an estimated $1.9 billion shortfall. In a major development for cities and towns, the Senate budget document includes a municipal health insurance reform proposal intended to provide relief for cities and towns.

    Despite the state’s difficult fiscal condition, the Senate Ways and Means budget would fund the Unrestricted General Government Aid, Chapter 70, PILOT, and Regional School Transportation accounts at the same level proposed by Governor Patrick and the House earlier this year.

    Senators are in the process of filing amendments to the budget that must be submitted by noon on Friday, May 20, with debate commencing on Wednesday, May 25. The Senate will finish its budget deliberations by Friday, May 27.




    As you know, the MMA has strongly endorsed the municipal health insurance reform proposal adopted by the House of Representatives in April, thanks to the leadership of Speaker Robert DeLeo, House Ways and Means Chairman Brian Dempsey, Vice Chairs Stephen Kulik and Marty Walz, and House Public Service Committee Chairman John Scibak. The House plan is a strong, balanced, fair and meaningful bill that would provide powerful relief for cities and towns. After the House adopted their plan by a groundbreaking 113-42 vote, all eyes turned to the Senate.

    The plan proposed today by Senate President Therese Murray, Senate Ways and Means Chairman Stephen Brewer, Vice Chairs Steven Baddour and Jennifer Flanagan, Senate Public Service Chair Katherine Clark and the Senate Ways and Means Committee is a strong plan that offers significant reform for cities, towns and taxpayers.

    The process established by the Senate plan differs from the House framework, yet the bottom line is very close – cities and towns would be able to implement plan design changes or join the GIC in order to achieve real savings that would be used to protect services and preserve municipal jobs, all while giving municipal employee unions more collective bargaining power over health insurance than state employees. The reform proposal would also require all municipalities to enroll all eligible retirees into Medicare.

    The key provisions of the reform proposal (Sections 45-49, 51, 109 and 110 of the SW&M budget) are as follows:

  • As drafted, municipalities would accept the new law by vote of the Board of Selectmen, or by approval by the Mayor and Council.
  • The municipal executive would then propose a plan to modernize the design of their employee health plans or join the state GIC, with a guarantee that all municipal and school employees would still have health plans with co-pays, deductibles and other plan features that are at or lower than the median co-pays, deductibles or plan design features offered by the GIC.
  • The municipal executive’s plan would include 1) the desired plan design changes or entrance into the GIC, 2) the projected 1-year savings (or avoided costs) that the plan would generate, and 3) a plan to mitigate or moderate the impact on retirees, low-income employees and those with very high out-of-pocket costs (such as through a health reimbursement account, through a temporary subsidy of rates, or other proposals).
  • Communities would then convene a Public Employee Committee (PEC) identical to the make-up of the PEC in Section 19 of Chapter 32B. If a community already has adopted Section 19, then that would be the PEC. If a community has not adopted Section 19, then a temporary PEC would be established just for the purpose of negotiating on the proposal offered by the municipal executive.
  • The community and the PEC would have 30 days to reach agreement on the municipality’s proposal.
  • If no agreement is reached, the impasse would be referred to a three-member “municipal health insurance review panel” that includes a municipal representative, a labor representative, and an “impartial” third party from a list of experts in dispute mediation, municipal finance or municipal health benefits that is provided by the Secretary of Administration and Finance. If the community and labor representative cannot decide on the third member, the Secretary shall make the choice.
  • This review panel would have ten days to review and decide three matters: 1) whether the plan design changes for co-pays, deductibles and other features proposed by the community are at or lower than the median level of the features offered by the GIC, 2) what the one-year savings amount would be, and 3) whether the proposal to mitigate or moderate the impact of the changes on retirees, low-income workers and subscribers with high out-of-pocket costs is sufficient.
  • If the municipality’s proposed changes do not exceed the GIC median, the panel is required to approve the immediate implementation of the plan design changes. This means that cities and towns would be able to implement plan design reform or join the GIC. This is a strong and powerful proposal that would benefit every community in Massachusetts.
  • The panel would also confirm the projected savings amount, and would determine whether the mitigation proposal is sufficient. The panel could require additional savings to be dedicated to health reimbursement accounts, premium reductions, or other arrangements, but in no case can the panel designate more than 33% of one-year’s savings to the mitigation plan.
  • Cities and towns would still negotiate any change in the employee-employer premium share, giving municipal unions more bargaining authority over health insurance than state employee unions. Any new co-pays or deductibles higher than the GIC median would have to be approved in collective bargaining.
  • This measure is similar to the House plan in allowing for plan design changes and joining the GIC, yet sets up a process that provides unions with a more structured framework. At the end of the day, the proposal gives unions a voice but not a veto over plan design changes, and requires that no more than 33% of the savings be shared with employees in the first year, compared to the House’s 20% level. Overall, the Senate plan targets the same $100 million reduction in health plan costs that the House embraced.

  • The MMA will be working with Senators and the Ways and Means Committee on the details of the plan over the coming days and through the debate.

    Municipal employees would benefit from the legislation in three ways – union jobs would be protected, employee premiums would be lower, and communities would establish health reimbursement accounts or other savings measures to offset a portion of the costs for those employees who are heavy users of the health care system.

    Please Call Your Senators Today And Ask For Their Commitment to Support the Senate Ways and Means Municipal Health Insurance Reform Proposal With NO Weakening Amendments. Key points to make are:

  • The legislation proposed by the Senate President and the Senate Ways and Means Committee saves taxpayers money, preserves essential local services, protects municipal union jobs, guarantees equity with state employee health benefits, and still leaves municipal unions with more bargaining power than state unions. This is a balanced, meaningful, fair and transparent reform that would allow cities and towns to save $100 million in avoided health insurance costs.
  • Communities are in fiscal crisis, and municipal health insurance reform offers meaningful relief that taxpayers deserve. Skyrocketing health insurance costs are forcing cuts in essential municipal and school services, and forcing the elimination of teachers, firefighters, police officers and other key employees from local budgets. Cities and towns will use this reform to provide relief for local taxpayers, protect essential services, and preserve thousands of municipal jobs.


    The fiscal 2012 state budget recommendation filed by the Senate Ways and Means Committee would generally match the local aid numbers in the Governor’s and House budget from earlier this year. Unrestricted General Government Aid would be cut by $65 million, but the state appropriation for Chapter 70 school aid would increase by $140 million.

    Preliminary Cherry Sheets for fiscal 2012 showing estimated municipal and school aid amounts based on the Governor’s, House, and Senate Ways and Means budget recommendations have been posted on the Division of Local Services Web site.


    The proposed cut to the Unrestricted General Government Aid (UGGA) account, formerly Lottery and Additional Assistance, would mark the fourth year of cuts and result in a total drop of $481 million, about 37 percent, since fiscal 2008. The SW&M budget would level fund the Cherry Sheet Payment-in-Lieu-of-Taxes account at $25 million and fund the Regional School Transportation account at $40.5 million, the same level as the Governor, House and Fiscal 2011. Funding for the Police Career Incentive Pay Program would be $2.5 million. The bill also includes a small $1.7 million reduction to the Charter School Reimbursement Account compared to the House level.

    The most significant difference is that the Senate budget plan would provide $30 million less for the Special Education Circuit Breaker program than the House or Governor – making this a priority issue during the Senate budget debate and conference committee deliberations.

    If you have any questions, comments or suggestions, feel free to contact us.
    You can also always find additional information on our website at:

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