I have decided to co-sponsor a controversial health care cost control bill
authored by the Massachusetts Municipal Association.
The bill may need to be amended to share transitional savings with
employees, but it makes two important statements: Health care plan design
should not be a subject of collective bargaining with public employees;
health care plan design by municipal managers should follow patterns set by
the Group Insurance Commission.
Collective bargaining has been fundamental to American economic progress,
but a standardized state-wide system offers municipal employees another kind
of protection: The fairness of a uniform law — all employees and managers
alike receiving the same benefits. The MMA bill points the way towards that
approach.
Today, municipal managers face an unnecessarily difficult task as they try
to control health care costs. In order to make any changes in plan design
— like co-pays or deductibles — they need to get each municipal union to
agree separately to the same plan. This means bringing eight or ten
difficult negotiations to the same conclusion. It’s an unwieldy dance. An
alternative optional approach known as “coalition bargaining” allows
municipal managers to bargain in a single negotiation with all unions, but
even in this system, municipal managers face a very complex process in which
different unions may seek different rewards for agreement.
The other problem with today’s system is the fragmentation of health care
buying at the local level. Even if municipal managers could freely make
plan design decisions, they lack the expertise and bargaining power with
insurers to do so. Plan design depends on both economic and health care
considerations. If one makes the costs of using certain drugs that treat
chronic disorders too low, they may be used unnecessarily. On the hand, if
one makes the costs too high, people may end up in the hospital because they
are not using drugs that can manage their ailments.
The state’s Group Insurance Commission purchases health insurance for all
state employees. Although there are many different union bargaining units
among state employees, the GIC has authority to define plan options for all
of them. It has a strong market position and it employs a substantial
professional staff. Over the years, it has done much better than most
municipalities at providing high quality health insurance at affordable
prices. The GIC has led the way in Massachusetts towards greater use of
cost and quality measures that allow consumers to choose health care
providers more intelligently.
In the last session, I supported a bill which allowed municipalities to
begin buying health insurance through the GIC if they could agree with
unions through a coalition bargaining process. This bill was passed, but
has not resulted in many municipalities entering the GIC. Given the GIC’s
superior record of cost control and the cost pressures we face, the slow
progress in unacceptable.
In the current session, the politics are lining up around two polar
alternatives. The administration has proposed a minor adjustment to the
coalition bargaining process for entry into the GIC, essentially
preserving the current process. The MMA bill, actively opposed by the
public employee unions, is the more radical option. It would give municipal
managers the flexibility to make plan decision changes without bargaining as
long as the plan designs tracked plan designs offered by the GIC. For the
reasons stated above, I think that the MMA bill offers a better starting
point.
The main weakness in the MMA bill is that it does not compensate employees
for major plan changes. There should be some simple formula to share
cost-savings with employees in the initial transition to the GIC or a GIC
standardized plan. Another weakness in the MMA bill is that it does not
adequately circumscribe the plan design options. An improved bill would
create a more specific standard framework of plan choices for municipal
managers — to protect both employees and taxpayers from unfair or
technically unwise designs.
There is a powerful coalition against change — the unions are joined by
Blue Cross Blue Shield, the state’s largest health insurer, which has
refused for years to enter into an agreement with pricing acceptable to the
Group Insurance Commission. Also, powerful providers may also prefer to
deal with Blue Cross independently than with the GIC.
I look forward to participating in the legislative process in the coming
months and hope that we can develop a fair bill that makes real change, but
it won’t be easy.
Representative Brownsberger–
I appreciate your view that the GIC can create cost savings through an economy of scale, I cannot agree that this should be forced on municipal employees without fair bargaining. Municipal employees have bargained health care for decades, and you need to appreciate that over this time, they have sacrificed salary and other benefits in order to maintain their health care programs. If you allow municipalities to unilaterally change these plans and pass all the added costs onto their employees, you effectively undo decades of gains for these employees. For instance, in lean years, some unions have accepted cost of living adjustments well below inflation (even 0%) in exchange for stable health care contribution rates. How do you propose that they recoup these sacrifices if their towns move to the GIC?
For those communities where the GIC makes sense (and the unionized employees have embraced it), the plan has merit. But for those communities that offer health care plans that are better than the GIC, your proposal would be really damaging for unionized workers. I simply don’t share your optimism that municipalities will “do the right thing” and pass savings onto their employees if they are allowed to move to the GIC.
I’m a teacher who has made significant salary concessions with the knowledge that they were made to preserve excellent health care coverage in my community. In EACH of the 10 years that I have taught, I have taken a pay CUT in real terms if you account for inflation in the Boston area. Your plan would raise my cost of living at a time when we are already earning historically low wages.
Representative Brownsberger, I agree with you on so many issues and I appreciate your service, but I respectfully disagree with your attempts to force this on municipal employees in the name of efficiency.
Nate,
Belmont
Thanks for speaking out on this issue, Nate.
You raise a fair point. If a union has given up wage increases in return for a better health plan, that should be considered. As I say in the piece above, “The main weakness in the MMA bill is that it does not compensate employees for major plan changes. There should be some simple formula to share cost-savings with employees in the initial transition to the GIC or a GIC standardized plan.” I think that something fair could be worked out along these lines and feel that should address the concern you raise.
Sound reasonable?
Will B.
That does sound fair, but as a teacher, I am highly suspicious of the phrase “share cost savings.” In negotiations, the past is never really discussed; you really only move forward at the bargaining table. If my city had the right to unilaterally change my health care, I assure you that they would (even if it entailed sharing “cost savings”). This despite the fact that we (and all other city unions) just negotiated lower wages (last year) in exchange for a degree of cost savings in our current health care program.
I appreciate the attempt to streamline health care delivery and make it more efficient–God only knows that providers need added incentives to lower costs… but I simply do not have the faith that the heads of municipal governments will engage in genuine good faith sharing of cost savings; that’s simply not the economic climate these days.
Thanks for your reply.
Nate
Just to be clear, I’m suggesting that a sharing mechanism be part of the legislation, not left up to managers. The mechanism would operate only in the year of the transition.
First off, I appreciate the dialog, and commend you for your diligence in responding…
I guess that I’d have to see the specific language of the sharing mechanism to see if it really is equitable for someone like me who gets paid relatively little, but who enjoys excellent health care.
Since I am not very informed about the specific language of the law and since I am not involved in developing the legislation I’d like to ask a simple favor of you: As you move forward with the G.I.C. discussion, please keep in mind that there are a LOT of people out there who stand to get taken advantage of.
I sincerely hope that our legislators really delve into the potential impact that this might have without getting blinded by happy-sounding language like “efficiency”, “economy”, “streamlinng”, “cost-savings” and “savings-sharing”. In my humble opinion, we need to attract excellent talent into the public sector, not create more incentives for people to abandon it. I would be saddened if the economic realities of the GIC forced me (or any of my colleagues) to seek an alternative career.
A fair ask!
Thank you for the input.
Hi Will,
I am a teacher — I called you about this a few months ago and you were diligent in responding. My concern was that this proposal removed something from the negotiating table that should be the province of workers and management, not the state. If you go by the principle that giving up bargaining rights is OK if things get “streamlined” and less costly due to uniformity and/or economy of scale, I can imagine many other things that might fall into that category. It seems like a slippery slope toward anti-worker legislation to me, even though I know that is not your belief.
I don’t know where this proposal is at right now but I want to mention something I learned from experience last week. My union just negotiated a contract which puts our basic plan provisions (co-pays, particularly) at about the same place as the GIC, yet retains Blue Cross as the insurer (not available under GIC and something many employees wanted) and has some other minor variations the negotiating team wanted. The negotiators were specifically guided by the GIC numbers as they talked. But we retained the bargaining rights and ratified the plan — it was not imposed on us. This seems like a good model to me.
Going a little further, if the state provides funds which specifically cover health insurance for municipal employees and wants to say “we only help pay for health plans where the municipality is part of GIC, or to the extent that plan numbers (co-pays etc.) are with $x or y% of the GIC,” that seems reasonable and leaves unions and municipalities free to do what they want within those limits.
However what seems unreasonable to me is if the state mandates such a provision for the use of funds which are for the general support of education, or if the cities and towns are required to join GIC rather than simply required to meet certain standards for use of state money to support health insurance.
One other point — I do see the structural issue of the multiple parties at the bargaining table and how this is hard for the municipal managers. To me the solution would be something like allowing the towns to require coalition bargaining on health insurance prior to all other issues. However the municipal managers should not then be complaining that “different unions may seek different rewards for agreement” — that’s part of having different unions and is perfectly reasonable. What is important to firefighters if they have to sustain health care cuts or cost increases is different than what is important to teachers. Trying to use state requirements as a back door to get away from this fact is out of line in my view.
Tom
Thanks, Tom, for this update on your experience.
I agree that this is a good model — using the GIC plans as a template but dealing with other insurers. I do believe that this should be allowed and have been advocating for this in continuing conversations on the issue. My approach would be to allow municipalities to make a decision to parallel the GIC unilaterally, but require compensation to the workers for the change. How one computes and delivers that computation is, of course, the rub — it could be by formula, by impact bargaining or by arbitration. All three of those are embraced by different players in the conversation right now.
The issue seems to be truly up in the air. I’ve been in a number of conversations recently and can tell you that there is a very wide spectrum of views about how this issue should be handled — so wide that nothing may really happen with it. I remain hopeful that we can do something that will save money and be fair to all.
I appreciate hearing from you and I’m glad to continue the dialog.
/w.