The Governor has signed the Fiscal 2012 budget, making no spending changes and relatively few changes in “outside sections.” His action finalizes the relatively good outcomes on local aid that we have achieved in this session.
The municipal health insurance changes, although modest, were sufficient to win labor support. Municipal management advocates remain OK with the changes. The changes do not materially weaken the reform’s basic limitations of collective bargaining for health insurance plan design changes. The governor’s changes had been pre-negotiated with the House and Senate and were adopted immediately today by votes of 148-2 in the House and 37-0 in the Senate.
I was pleased to support the revisions. All along, I have believed that the current bargaining process for municipal health care is unworkable, that if we can streamline it we’ll be able to better manage health care costs, and that both employees and taxpayers will benefit. The final changes leave the new process substantially intact, but improve protections for employees with high health care costs.
Here are the specifics of the changes:
- A new cost-saving threshold for municipal entry into the GIC. The Governor’s amendments require that, in order to go into the GIC, the municipality must show that the GIC offers 5% or more savings than similar plan design changes implemented locally. This is the one new hurdle in the process, but the denominator of the 5% fraction clearly reads as the amount of savings, not the entire amount of the plan cost, so this is not too high a hurdle to surmount in most cases. The question of whether the 5% test is met would be resolved by the review panels already in the legislation.
- Modest increase in the amount of savings that must be shared with employees. The reform provides that 25% of the savings in the first year of implementation must be shared with employees. In the conference report version, savings were computed based on the employer share of health insurance cost; in the Governor’s revision, the savings must be computed based on the total cost (including the employer and employee contributions to the premium cost). Since the employer pays well over 50% in most municipalities, this is a small incremental increase. For example, in a municipality where the employer paid 80% of the cost, the Governor’s change would increase the employee savings share from 25% of 80% to 25% of 100% — in other words an increase of $50,000 per million in savings.
- Clarification of the kinds of changes that municipalities will be able to make through the new process. It was implicit in new Section 22 of Chapter 32B that municipalities had new freedom to introduce co-pays, deductibles and other cost-sharing measures, but not new freedom to restrict provider networks The Governor’s changes clarifies this.
- Stronger moratorium on retiree health insurance premium changes. The original draft provided that municipalities could not increase the premium share paid by retirees for two years after making plan design changes using the new process. The new version freezes the retiree share at July 1, 2011 levels until July 1, 2014 (in those communities that take advantage of the new process).