Governor’s Actions on the Budget

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.

He did send back the municipal health care reform provisions (analysed in a previous post) with four narrow changes. Click here for his full veto message.

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).

Published by Will Brownsberger

Will Brownsberger is State Senator from the Second Suffolk and Middlesex District.

4 replies on “Governor’s Actions on the Budget”

  1. GIC = Group Insurance Commission, right?
    I was under the impression that municipalities have better coverage than they would in the GIC. Or is that not correct?
    If it is correct, why would a municipality attempt to qualify for the GIC?
    The explanations in your July 11 article seem to be an attempt to inform but this whole issue, as so many political issues are, is so labyrinthine, I just give up.

  2. Right. GIC is the group insurance commission. It provides very good benefits for state employees at a cost generally below the cost of health insurance for municipalities.

    A municipality would want to go into the GIC to cut costs and also shed a management headache (management of health insurance), while continuing to provide its employees a very good package.

    The new process makes it much easier for municipalities to make this move — the old process was unmanageable.

    That’s the bottom line and what you can take away. I’ve written up the details for those who want more.

  3. Hi Will: Thank you for putting this on your site.

    Two questions:
    1. is there any restrictions on what providers or groups are included in the health plan and if so who determines who is included?

    2. In regards to tiering, who determines the tiering of physicians or groups and is it based on financial cost, quality or both? There is currently no good quality measures for pediatric specialists.

    Section 29. Each fiscal year, the commission shall prepare and place on its website a report delineating the dollar amount of the copayments, deductibles, tiered provider network co-payments and other design features offered by the commission in the non-Medicare plan with the largest subscriber enrollment and the dollar amount of the copayments, deductibles, tiered provider network copayments and other design features offered by the commission in the Medicare extension plan with the largest subscriber enrollment.

    Who is the commission comprised of?

    Thank you


    1. The Group Insurance Commission purchases health insurance for state employees. The new reform would make it easier for municipalities to buy into GIC coverage. The legislation does not change the rules or coverage for state employees. The section you highlight is about disclosing details of GIC coverage for comparability purposes.

      The GIC determines the provider networks, copays, etc. for participating employees. It does this through a bidding process with insurers. You can view it’s membership here and get more information about it generally here.

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