Massachusetts towns shift retirees to Medicare to pare costs

Massachusetts towns shift retirees to Medicare to pare costs

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As Gov. Deval Patrick pushes legislation to force municipalities to enroll eligible retirees in Medicare, a new survey shows most cities and towns in the Greater Boston area have already done that.

A compilation of surveys gathered by the Metropolitan Area Planning Council shows that over the past five years, the vast majority of communities in metropolitan Boston from Newburyport to Duxbury have adopted policies to ensure that retirees receive health insurance through Medicare instead of municipal plans.

With most communities already taking advantage of those available savings, efforts to force retirees onto Medicare as part of a package of municipal health reforms being debated on Beacon Hill could diminish in value as a bargaining chip as lawmakers work to reach a compromise between communities and labor unions.

According to the MAPC, roughly 90 percent of the 101 communities in the metropolitan Boston area have already shifted retirees onto Medicare, saving some communities as much as $3.5 million a year. Statistics for central and western Massachusetts were not available.

(As Essay on the OpEd page of this morning’s Times examines funding issues for Tisbury’s liability for post-retirement benefits.)

In January, Patrick said cities and towns could save between $15 million and $30 million by forcing eligible retirees into Medicare. Administration officials at the time said many communities had not made the switch to the federally funded program.

In February 2006, only 33 percent of respondents to a similar survey distributed by council indicated that their community had adopted a section of state law allowing municipalities to require Medicare enrollment.

Communities that still have not adopted the change continue to pay for health insurance for those retirees and their spouses even though those employees frequently paid into the federal Medicare program for decades.

“I think it still makes absolute sense to have people in Medicare since they’ve paid into the system for decades, but this is an issue at the margins of the debate,” said Joel Barrera, deputy director of the Metropolitan Area Planning Council. “Rather than a concession, it’s more an endorsement of the status quo.”

Barrera said the numbers show cities and towns have been more “assertive” over the past five years in moving retirees onto Medicare as health-care costs have skyrocketed and sought-after reforms by managers have stalled in the Legislature.

Gov. Patrick, the Massachusetts Municipal Association and a coalition of labor organizations have proposed legislation this session to reform the ways cities and towns provide health insurance to employees, offering competing plans.

Patrick’s plan would force communities to join the state’s group insurance plan if they cannot negotiate with unions for comparable savings, while the MMA wants city and town managers to have the ability to design health plans without collective bargaining.

Unions, led by the AFL-CIO and the Massachusetts Teachers Association, have indicated they would support legislation requiring retirees to enroll in Medicare, but have resisted efforts to take health insurance out of collective bargaining and insist that any savings achieved through negotiations be split equally with employees.

Under Chapter 32, Section 18, cities and towns already have the ability to require eligible retirees to join Medicare Part B, while Section 18A applies to future retirees. Both sections in state law can be adopted by a municipality through a vote of the city council, Town Meeting, or through a community-wide ballot.

“People have woken up to the fact that we can’t be spending local resources unnecessarily. Cities and towns have stepped up to the plate and more or less done it,” Barrera said. “In most cases, it’s hundreds of thousands of dollars, and every dime counts.”

Savings associated with retiree Medicare enrollment varies from town to town. In 2006, the small town of Georgetown reported just $12,786 in annual savings from the change, while Fall River saved $3.5 million.