Skyrocketing health insurance costs are negatively impacting organizations of all types, from private business to governmental entities. Perhaps nowhere is the impact as acute or as obvious as in the case of municipal governments. Rapidly escalating health insurance costs have put cities and towns across the commonwealth in the untenable position of either cutting municipal services or increasing already high property taxes.
A recent Massachusetts Taxpayers Foundation report reveals that the cost of health coverage to municipal employees has skyrocketed by an average of 63 percent from 2001 to 2005. Though health insurance costs have increased in virtually all sectors, the municipal increase is especially drastic: The municipal health insurance growth rate was nearly double the rate of increase for health coverage of state government employees over the same period.
Continued growth at this rate is simply unsustainable. Health insurance cost increases far exceed the growth rate in municipal revenues. As a result, city and town policy makers must make cuts elsewhere in their already strained budgets in order to simply maintain the status quo in health insurance. Reductions in staff levels in critical departments and cutbacks in basic services such as street and sidewalk repair are the inevitable result.
A variety of proposals has been suggested in order to address this challenge, but these ideas have a mixed chance of success at best. Notable among these is the idea of removing health insurance completely from the collective bargaining process and allowing municipal governments to unilaterally decide how to share premium costs between employer and employee. This proposal has been met with vigorous opposition from employee unions, who argue that concessions which they received on the issue of premium splits were based upon concessions that they made in other areas, such as wages or work rules.
As we debate this issue in the Legislature, I will advocate for an idea that recognizes the concerns of both sides and has the potential to yield greater savings than other proposals. I believe that we should allow municipalities to purchase into the same health insurance plans that provide coverage for state employees, and to do so as part of the same insurance pool as the state. Currently municipalities may do so as separate, individual pools but no community has ever done so because it would not yield significant savings. As part of the larger state employee pool, on the other hand, the savings could be enormous.
This idea can be adopted in either of two ways, both of which may result in significant savings, while at the same time preserving the basic framework of collective bargaining. The first would be to allow the municipality and the union to agree through collective bargaining to enter into the state system.
The union would agree to do so under all the same terms and conditions as state employees, including the premium share paid by state employees. The alternative would be for the municipality and unions to agree to join the state pool while still negotiating how to share the costs of the premium between employee and employer. The municipality would forward full payment of the premium to the state and would collect the employee's share directly from him or her.
In either case, the savings could be considerable. In the two municipalities that I represent - Worcester and West Boylston - adoption of this plan could immediately have a positive impact on their budgets. The cost of comparable state health insurance plans is approximately 75 percent to 80 percent of the cost in either of these municipalities. As a result, adoption of this plan could yield significant savings for both communities, while still providing their employees with comprehensive and high-quality coverage. It is very likely that this dynamic could be repeated in communities of all sizes throughout Massachusetts. The money saved could alleviate the tax burden on homeowners and enable communities to dedicate much needed funds to critical services such as schools, roads and public safety.
The time has come to grapple with the developing municipal health insurance crisis. Active involvement on the state level, by opening up our state health plans to municipal employees, will serve everyone well - municipal leaders, municipal employees and, most important, the residents and taxpayers of our communities.
A recent Massachusetts Taxpayers Foundation report reveals that the cost of health coverage to municipal employees has skyrocketed by an average of 63 percent from 2001 to 2005. Though health insurance costs have increased in virtually all sectors, the municipal increase is especially drastic: The municipal health insurance growth rate was nearly double the rate of increase for health coverage of state government employees over the same period.
Continued growth at this rate is simply unsustainable. Health insurance cost increases far exceed the growth rate in municipal revenues. As a result, city and town policy makers must make cuts elsewhere in their already strained budgets in order to simply maintain the status quo in health insurance. Reductions in staff levels in critical departments and cutbacks in basic services such as street and sidewalk repair are the inevitable result.
A variety of proposals has been suggested in order to address this challenge, but these ideas have a mixed chance of success at best. Notable among these is the idea of removing health insurance completely from the collective bargaining process and allowing municipal governments to unilaterally decide how to share premium costs between employer and employee. This proposal has been met with vigorous opposition from employee unions, who argue that concessions which they received on the issue of premium splits were based upon concessions that they made in other areas, such as wages or work rules.
As we debate this issue in the Legislature, I will advocate for an idea that recognizes the concerns of both sides and has the potential to yield greater savings than other proposals. I believe that we should allow municipalities to purchase into the same health insurance plans that provide coverage for state employees, and to do so as part of the same insurance pool as the state. Currently municipalities may do so as separate, individual pools but no community has ever done so because it would not yield significant savings. As part of the larger state employee pool, on the other hand, the savings could be enormous.
This idea can be adopted in either of two ways, both of which may result in significant savings, while at the same time preserving the basic framework of collective bargaining. The first would be to allow the municipality and the union to agree through collective bargaining to enter into the state system.
The union would agree to do so under all the same terms and conditions as state employees, including the premium share paid by state employees. The alternative would be for the municipality and unions to agree to join the state pool while still negotiating how to share the costs of the premium between employee and employer. The municipality would forward full payment of the premium to the state and would collect the employee's share directly from him or her.
In either case, the savings could be considerable. In the two municipalities that I represent - Worcester and West Boylston - adoption of this plan could immediately have a positive impact on their budgets. The cost of comparable state health insurance plans is approximately 75 percent to 80 percent of the cost in either of these municipalities. As a result, adoption of this plan could yield significant savings for both communities, while still providing their employees with comprehensive and high-quality coverage. It is very likely that this dynamic could be repeated in communities of all sizes throughout Massachusetts. The money saved could alleviate the tax burden on homeowners and enable communities to dedicate much needed funds to critical services such as schools, roads and public safety.
The time has come to grapple with the developing municipal health insurance crisis. Active involvement on the state level, by opening up our state health plans to municipal employees, will serve everyone well - municipal leaders, municipal employees and, most important, the residents and taxpayers of our communities.
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