State budget deal envisions savings in health care costs

A deal between House and Senate leaders on municipal health care reform would give cities and towns the option to make unilateral design changes to plans for employee health coverage after an expedited 30-day bargaining window so long as 25 percent of the achieved savings are redirected back to employees.

The compromise reached by a six-member House-Senate conference committee resolved what had become a major sticking pointing in negotiations between the two branches over a final accord on a fiscal 2012 budget.

The controversial issue exploded after labor groups ripped the House in April for voting to strip workers of collective bargaining rights, comparing the plan to those advanced in other states like Wisconsin where political leaders were pressing to strip unions of bargaining power. Labor softened its stance as talks advanced.

Legislators insisted throughout the process that they were seeking a balance that preserved a voice at the bargaining table for labor without giving unions the ability to effectively veto changes that reform proponents estimate will save municipalities $100 million a year. Reform critics say those savings will be effectuated by shifting health care costs to employees.

“We believe the compromise we have reached will provide for a very fair and balanced approach that will allow for folks to have a voice but will also allow for us to achieve the savings that I think we all want to achieve,” House Ways and Means Chairman Brian Dempsey said.

The final proposal, according to a budget document obtained by the News Service, allows municipalities to present a proposal for plan design changes, including increases in co-payments and deductibles, or suggest transferring of employees into the state’s Group Insurance Commission to a public employee committee.

The city or town would have 30 days to negotiate the changes with the committee — composed of one member from each collective bargaining unit and a retiree representative — as well as proposals to offset the impact of higher employee costs with programs such as health reimbursement accounts.

The final draft of the municipal health reform plan combines several of the strategies recommended by the House and Senate in their initial budgets, while compromising in the middle on the amount of savings each city and town will realize as a result of shifting some health care costs to workers.

While the Senate called for up to 33 percent of savings to go back to employees and the House recommended 10 percent to 20 percent, the final budget calls for up to 25 percent to come back to employees.

“Well clearly everyone has known for several years now that municipal health insurance is a real challenge and the realities of the world require substantive but fair reforms,” Senate Ways and Means Chairman Stephen Brewer said.

If a majority of the employee committee does not agree to the management offer after 30 days, a three-person panel, including one independent arbiter, would be authorized to implement the plan design changes, but would be given 10 days to decide how to share up to 25 percent of the achieved savings with subscribers, including retirees, low-income subscribers and large health care utilizers.

Co-payment and deductible levels would not be allowed to exceed those of the most-subscribed health plan in the GIC for each employee group, under the terms of the agreement, but increases beyond that level could still be pursued through traditional collective bargaining.

According to officials, the most subscribed plan for active employees in the GIC is currently the Navigator plan, offered through Tufts Health Plan, carrying deductibles of $250 for individuals and $750 for families.

The final agreement dropped a Senate-approved provision that would have required cities and towns to offer the same premium cost split for retirees as current employees.

Massachusetts Taxpayer Foundation President Michael Widmer, whose organization has promoted municipal health insurance reform, said earlier this month that the retiree provision would “torpedo” the overall reform by offsetting much of savings being sought by municipalities through plan design.

Instead, the new proposal puts a two-year moratorium on increases to retiree premium contribution ratios for municipalities that impose plan design changes.

All eligible municipal retirees would also be required to enroll in Medicare, an idea that has generated little controversy, but which has become hung up in recent months in the larger debate over deciding who pays the tab for rising municipal health premiums.

“This compromise speaks to the desire to protect retirees, in terms of their premiums contributions, and that was the essential purpose of the Senate amendment. This does that without compromising the savings,” Widmer said Thursday.

Widmer also praised the effort of the House and Senate to strike a deal on a controversial issue that has gone unresolved for years as municipal leaders have clamored for more local control to capitalize on potential health care savings and spare jobs and services sacrificed to pay health premium bills.

“I think this is a very constructive compromise which takes the best of the House and Senate proposals,” Widmer said. “As a result municipalities will save hundreds of millions of taxpayer dollars over the next decade, while preserving critical jobs and services and still providing generous health care benefits for municipal employees and retirees.”

Tim Sullivan, the legislative director for the AFL-CIO, said Thursday night that the union had not had a chance to review the details of the proposal, but would spend the night reviewing the plan if it received a copy before a planned meeting on the topic Friday morning.