News & Events

‘Crisis mode’ for municipal health plans

By Scot Lehigh, Globe Columnist  |  March 5, 2010

A BUDGETARY iceberg looms ahead, a peril identified by fiscal experts but given insufficient attention by those guiding the ship of state, who fear a dramatic course correction will cause their union passengers to mutiny.

We’re talking here about lavish – and unaffordable – municipal health care plans, a problem that came into sharp focus this week. First, the Globe’s Sean P. Murphy presented a look at the way munificent municipal plans – plans that typically see the locality paying a much greater proportion of premiums and employees making much smaller co-payments than in the private sector – are hampering the ability to provide basic city services.

Then came a Boston Foundation study detailing the annual savings three Massachusetts municipalities could realize if their health insurance costs tracked the state’s: $41 million or more for Boston, at least $3.7 million for Cambridge, and $450,000 or so for Marshfield. Meanwhile, Melrose, which has joined the Group Insurance Commission, the agency that provides health plans for state employees, stands to save more than $1.6 million.

So why don’t more communities join? Simple: Unions don’t want to change a status quo highly favorable to their members – not without compensatory concessions, anyway. And they have a de facto veto.

The solutions here are obvious, though politically difficult: Give municipalities the same authority to design health plans without negotiating every detail that the state now has. And make it easier for them to join the GIC, if they prefer to go that route. Savings would result from a more realistic cost-sharing with local employees and through lower premiums.

“That would be the biggest thing the state can do to help municipalities deal with their enormous fiscal problems,’’ said Michael Widmer, president of the Massachusetts Taxpayers Foundation.

So what do the gubernatorial candidates prescribe to treat that growing municipal malady?

Republican hopeful Charlie Baker says his preferred approach is to let local governments “make the decision on plan design,’’ provided those plans are comparable with GIC offerings. “That would be the backstop’’ to ensure quality coverage, he said. Baker would leave who pays what share of premiums to local negotiations. He’d also let cities and towns join the GIC without a union veto.

Republican rival Christy Mihos favors removing the de facto union veto on joining the GIC and would go even further on plan design by letting cities and towns set the premium split as well. “It is time to get really serious,’’ Mihos declared. “We are in crisis mode.’’

Deval Patrick, the Democratic incumbent, is more incremental. He has filed legislation to reduce from 70 percent to 50 percent the union-committee OK required for a municipality to sign up with the GIC. Patrick says “it is wrong for municipal unions to be inflexible about this because if we stay on the path we’re on, we’re going to be talking about a lot of layoffs and a profound impact on municipal services.’’ But he also insists that unions deserve a say in that decision because “these are things that have been collectively bargained.’’

The governor said he’s told municipal leaders he’d consider legislation to give them enhanced plan-design authority, “but you’ve got to bring us a proposal that includes everybody’s voice who needs to be at the table.’’ Translation: Don’t try to cut the unions out.

The office of Treasurer Tim Cahill, an independent gubernatorial candidate, did not respond to a request for comment.

If Patrick seems tentative, so, too, do legislative leaders. But here, politicians must decide whom they really represent. It’s simply not tenable to ask taxpayers to fund health insurance plans for municipal employees that are much more generous than their own coverage.

Nor is it fair to let those costs squeeze out local services everyone else depends on.

“It is consuming the financial capacity of local governments,’’ says Boston Foundation President Paul Grogan, who notes that Boston is contemplating closing 10 library branches that could be kept open with the savings the city would see if it were part of the GIC.

Further, though unions often claim public sector workers have forgone better salaries or other benefits to obtain or preserve generous health-care plans, US Bureau of Labor Statistics data suggests that Boston-Worcester area public-sector jobs are just as likely to pay more than private sector posts as they are to pay less.

“I think the salaries for the most part have caught up so they are comparable, and yet they still have the better benefits,’’ said Sam Tyler, president of the Boston Municipal Research Bureau.

Campaigns should be about important issues, and this is a big one. So far, the Republican candidates are the ones showing the moxie needed to tackle it head on.

Scot Lehigh can be reached at