Senate rolls out municipal health plan

Weeks after labor leaders ripped a House plan to restrict their bargaining rights over municipal health insurance plan details, the Senate on Wednesday rolled out a counter-proposal that would give unions a comparatively larger role in negotiations over plan changes while still offering the promise of $100 million in savings to cities and towns.

On the heels of the House plan, incorporation of the Senate plan into its annual budget bill means Beacon Hill may be on the verge of a breakthrough on an issue that’s gone unresolved for years and which municipal officials claim represents their best shot at budget savings during an era of local aid cuts.

The Senate proposal, a summary of which was obtained by the News Service, would retain the local option for cities and towns to pursue savings in their municipal health insurance plans while laying out a 40-day process for achieving savings should local government managers opt into the reform.

Employees would have the opportunity to share in more of the savings achieved through changes to plans that would shift costs to workers by empowering municipalities to increase co-payments and deductibles.

As much as 33 percent of the first-year savings would have to be set aside to mitigate the impact to municipal subscribers through benefits such as health reimbursement accounts, with a particular focus on capping or curbing increased costs to retirees, low-wage earners, and the heaviest users of health care.

“While providing this valuable new tool to the Commonwealth’s cities and towns, the Committee proposal also preserves a meaningful voice for municipal employees and retirees in determining their health care costs,” the summary of the Ways and Means Committee plan explains.

The Senate has approved municipal health plan reforms in each of the past two years, with its proposals dying in the House. Senate President Therese Murray has said she agrees with Gov. Deval Patrick that labor needs to have a “meaningful role” in negotiations.

Under the proposal, following a vote of the local governing body to enter negotiations, representatives from municipal unions, including retirees, would be given a 30-day window to bargain with management over health plan design changes or a transfer to the state’s Group Insurance Commission.

A public employee committee would include weighted representation from all local unions, but cities and towns would not be required to adopt Chapter 19 coalition bargaining to pursue plan design.

Those negotiations would include plans for how to distribute a portion of the savings among employees to offset the shift in health care costs to workers.

Unlike the House plan, if an agreement cannot be reached, the Senate suggests the matter be handed over to a three-person review panel. That panel would be made up of one labor representative, one management representative, and a third mutually selected person from a list provided by the Secretary of Administration and Finance of professionals with expertise in dispute resolution, municipal finance, or municipal health insurance.

The secretary would have the authority to appoint the third review panel member if both sides cannot agree on an individual.

The review board created by the Senate would be required to approve any health insurance plan changes proposed by management that do not exceed the benchmarks of those benefits received by state employees, defined as the median co-payment and deductible levels for GIC health plans.

If the proposed changes do shift a greater amount of cost onto employees than the GIC, the panel could consider union alternatives. The proposal also states that cities and towns would be guaranteed two-thirds of any cost savings, but the panel would have 10 days to review and approve the mitigation plan to protect workers and retirees most affected by the cost-shifting.

This procedure differs significantly from the House bill that would give management the unilateral authority to make plan design changes if negotiations break down in exchange for a 20 percent share of the savings going back to employees in the first year instead of 10 percent.

Like the House plan, the proposal from Senate Ways and Means would give cities and the towns the local option of implementing plan design changes or joining the GIC to achieve savings. Supporters of the local option claim many municipal managers would be eager to pursue savings-minded reforms.

Following passage of the House version, Gov. Patrick said he felt that any reform should be mandatory, pointing to his own proposal that required municipalities to seek savings through health plans comparable to the ones offered state workers, or risk being forced to join the GIC.

Like the House bill, the Senate will also propose a mandate that all eligible municipal retirees be enrolled in Medicare, and the bill would prohibit the GIC from making mid-year cost sharing changes to its health plans unless triggered by emergency budget cuts by the governor.

To accommodate the potential of many cities and towns electing to join the GIC rather than negotiate over their own health plans, the Senate would open up GIC plans to rolling admissions for fiscal 2012.