Scot Lehigh

Municipal health care reform?

By Scot Lehigh
January 28, 2011

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The fine print often determines whether a reform really works. That will certainly be the case with Governor Patrick’s scheme to help municipalities lower their health care costs and thereby preserve other vital services.

After temporizing throughout the gubernatorial campaign, Patrick has now embraced the idea that Beacon Hill needs to bring generous local health care plans into line with state government’s less costly offerings. He has called for giving localities and their unions a short period to negotiate changes to accomplish that goal. If they fail to do so, the communities must then either join the Group Insurance Commission, which provides plans for state workers, or offer coverage of comparable cost.

So far, so good. When I asked the governor on Wednesday if local unions would retain their current ability to block changes, he minced no words. “Is there going to be a veto? No. I’m done with that,’’ Patrick declared.

That’s even better. That union veto has kept cities and towns from joining the GIC and reduced their incentives for agreeing to health plan changes that would lower costs for municipalities.

But here’s where things get murky. The section of Patrick’s legislation that would bring this about is all of four sentences long. The last sentence merits particular attention. It would grant the secretary of administration and finance power to issue regulations “determining the extent to which reduced costs to the municipality resulting from adoption of coverage under this section shall be shared with the municipality’s employees.’’

So would local employees get some of the savings, estimated at about $100 million in year one? And if they do, would that happen just in the first year, or will that sharing be a permanent arrangement?

The administration won’t say, claiming those vital details have yet to be determined.

“We haven’t drafted the regulations yet,’’ said Administration and Finance chief Jay Gonzalez. “Those decisions haven’t been made.’’

But those crucial matters go to the very heart of the reform. After all, whatever savings are directed to the employees wouldn’t be available to help fiscally strapped cities and towns maintain services. And if the administration were to require an ongoing sharing of those savings, that would seriously reduce the value of the reform. That’s why those questions are too important to be left vague during legislative debate and only answered later through regulation.

On Wednesday, Patrick provided some insight into his thinking. Unions secured their health care benefits at the bargaining table, he said, so they deserve a chance to bargain the changes now.

“By the way, municipal leaders were at the bargaining too,’’ he added. “They cut these deals.’’

But that formulation obscures a more important dynamic. Time was, most everyone’s health plan was more generous than is the case today. However, once health care costs began their rapid rise, most private-sector employers were able to change copays and deductibles. The state has done the same.

So why haven’t cities and towns followed suit? Because state law says local governments have to bargain those changes — even though the same law exempts state government from that requirement.

“For the most part, these are plan designs that are 10 or 15 years old that cities and towns have been unable to get unions to agree to change,’’ according to Geoff Beckwith, executive director of the Massachusetts Municipal Association. “It’s what they have been stuck with for a long time.’’

It’s also important to note that while many local employees would pay more in copays and deductibles under a GIC-like plan, they would also save some money because those changes would restrain premium increases. Further, lower municipal health care costs should also help protect some union jobs.

So, bottom-line time: The governor has taken an important step, but the devil remains in the details. To effectuate a truly meaningful change, Patrick and legislative leaders will have to be firm. A one-time sharing of savings might be justified to help smooth the transition. But if this reform is to live up to its potential to preserve local services, the state simply can’t make that a permanent arrangement.

Scot Lehigh can be reached at