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
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
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.