Coverage switch urged for localities

Study finds savings in state health plan; Law change sought to empower towns

By Sean P. Murphy
Globe Staff / March 3, 2010

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Cities and towns would save tens of millions of dollars in health care costs for employees, retirees, and elected officials by joining the state’s much larger, more flexible health care system, according to a new report by the Boston Foundation.

The foundation’s detailed study of four municipalities - Boston, Cambridge, Melrose, and Marshfield - illustrates how health care expenses are severely hampering communities across Massachusetts.

Boston, for example, could reduce its health insurance premiums this fiscal year by up to 17 percent, or $45 million, by joining the state’s Group Insurance Commission, the report finds. Melrose, which joined the GIC in July, will likely save $1.6 to $1.8 million annually, says the report, which the foundation will release today.

“The irrefutable point,’’ the report concludes, “is that there could be significant savings for cities and towns - in a time of severe fiscal challenges - if they were allowed to join the GIC apart from collective bargaining.’’

Currently, communities can join the GIC only with the approval of local unions. But with some exceptions, unions across the state have rejected such a move because it would end up costing their members more money, particularly in the form of higher copayments.

Cities and towns are pushing the Legislature to change the law so communities can join the state system without union approval.

“It’s the single most important step the Legislature can take to address the budget crisis of the cities and towns,’’ Paul S. Grogan, president of the Boston Foundation, said in an interview yesterday.

The Globe reported earlier this week on how exploding municipal health care costs are wrecking local budgets, forcing cities and towns to cut services and ask more of taxpayers.

Grogan said that municipal plans stand out by being far more generous to subscribers than almost all other plans in the public or private sectors.

“The current plans in the municipalities are just way out of whack compared to what everyone else pays,’’ he said. “All we are asking is to bring the municipalities into line with others.’’

The Globe reported that municipal plans pay as much as 89 percent of premiums, while typically requiring $5 copayments for office visits and $25 for emergency room treatments.

Plans in the private sector typically pay less than 70 percent of premiums, and require $20 copayments or more for office visits and $100 for emergency room treatments.

The GIC’s copayments are on par with the private sector’s.

The Boston Foundation report also recommends that the Legislature give municipalities who do not join the GIC the power to increase premiums and copayments of the plans they offer without collective bargaining. In addition, the report says, cities and towns would save millions by forcing retirees onto Medicare at age 65, a politically difficult decision some communities have refused to make.

Since 2007, when the state Legislature changed the law to allow cities and towns into the GIC, 19 municipalities have joined the system, including Springfield, Quincy, Weston, and Norwood.

But unions in only two municipalities agreed to join the plan as of July 1 of this year: Brookline and Hopedale. Unions in other cities and towns, meanwhile, rejected such a move.

Public employee unions are leery of changes to municipal health care plans.

Brad Tenney, secretary-treasurer of the Professional Fire Fighters of Massachusetts, an umbrella group of local unions, said his members are willing to “sit down with leaders on Beacon Hill and in the municipalities to reach a meeting of the minds.’’

“We recognize the significant cost of health care,’’ he said. “But we feel it is unfair to look at health insurance in a vacuum. Members gave up pay raises or accepted smaller pay raises through the years for the health care benefits they have.’’

Public employee unions and retiree groups, which make generous donations to the treasuries of many state officer-holders, are well-connected on Beacon Hill.

In brief interviews on Monday, House Speaker Robert DeLeo and Senate President Therese Murray expressed little desire to strip union employees of long-held collective bargaining rights. Murray also said she did not believe the GIC was capable of accepting cities and towns without increasing its staff.

The GIC provides health insurance for about 300,000 state employees, retirees, and elected officials, including employees and retirees of numerous independent authorities. State law allows the GIC to adjust the amounts subscribers pay in premiums and copayments without union negotiations.

The report found that Cambridge, by moving into the GIC, would save up to 10 percent, or $4.4 million, while Marshfield would save up to 11 percent, or $530,000.

Robert Carey, a consultant and former GIC official who wrote the Boston Foundation report, said in an interview that the GIC would save municipalities not only by shifting more costs to subscribers, but also by lowering overall costs.

He said the GIC saves money in part by steering subscribers to those medical providers whom the plan rates as most cost-efficient. It does so by providing a financial incentive. Subscribers who go to doctors rated the least cost-efficient pay a $45 copayment, while they pay $20 copayments for doctors rated the most cost-efficient.

The GIC also rewards subscribers for using lower-cost hospitals.

Sean Murphy can be reached at

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