The state budget approved today includes a new approach to health care negotiation for municipal employees. The new approach is a compromise between the House and Senate approaches. I support the new approach as I believe that it streamlines today’s very cumbersome process while setting reasonable boundaries on the choices that municipal managers can make and assuring some sharing of savings with employees. In these respects it is consistent with my long-stated views. I also like that the approach gives attention to the situation of employees who face high out-of-pocket costs.
It looks to me like it will work well, although it is dependent on good gubernatorial administration of a new appeal process. Initial public reaction by the Massachusetts Taxpayers Foundation and other reform advocates has been positive.
The new rules are defined in “outside” Section 58 (line 732) of the conference committee report. Section 58 creates two new options employee health options for municipalities to adopt through a streamlined process which does not require traditional collective bargaining. Section 58 implements these options by adding nine new sections to the employee health care chapter of the General Laws. These new options are available to a community whether or not they have previously adopted coalition bargaining (Section 19). These options apply to both active employees and to retirees with Medicare wraparound policies.
The two new options created are:
- Move to a new plan design that is least as generous (in terms of copays, which may be tiered, and deductibles) as the state employee health insurance plan. Limited networks may be offered but only if an open network plan is also offered.
- Migrate employees into the state’s Group Insurance Commission where they would have the same plan options as state employees. In years after Fiscal 2012, the annual deadline for notice of intent to move into the GIC is December 1 for coverage on the following July 1. It appears that the process outlined further below would need to be completed in advance of December 1. In Section 201, line 3100, the budget provides that in Fiscal 2012, there should be several additional dates for municipalities to join on an expedited timeline — the additional notice dates are September 1, 2011, December 1, 2011 and April 1, 2012 with enrollment to take effect four months after each.
In either scenario, the public authority may be required, in the appeal process, to share 25% of the projected first year savings with employees through some form of reimbursement of costs, perhaps targeted at employees who are disproportionately impacted. See my previous post on the risk of disproportionate out-of-pocket costs in GIC-like plans.
To exercise either of these options, the municipality must comply with the procedures defined in new Section 21. Note that municipalities retain the inherent option to bargain any health insurance plan through traditional collective bargaining. The steps of the new procedures are as follows:
- Adoption — of the new process by majority vote of the board of selectmen in a town or by the city council with the approval of the manager (Section 21). Municipalities may instead elect to continue the coalition bargaining process of Section 19. Adoption is a one time vote; all other steps must be followed for each plan design change.
- Projections — the public authority must create a projection of savings that it expects to realize by implementing health care changes over the next twelve months.
- Information Sharing — the authority then transmits its findings to the “insurance advisory committee”, which is compromised of 7 employee representatives and a retiree representative (all as defined in G.L. c. 32B, s.3). The municipality must provide any documentation requested by the insurance advisory committee and discuss the savings available through the proposal with the committee but is not required to bargain with the advisory committee.
- Notice — the public authority then notifies its bargaining units and the statewide retiree association of its intention to implement changes. Notice to the employee groups (collectively called the public employee committee) must include an analysis of 12 month savings and a proposal to mitigate the impact of changes for subscribers who might be disproportionately effected (e.g. those with high out-of-pocket expenses). One mitigation mechanism authorized in the law is the health care reimbursement account.
- Expedited Bargaining — the authority must then convene bargaining with the public employee committee (with a 7 day notice under a revision to Section 19 included in the new law). Negotiations are limited to a 30 day period.
- Review Panel — in the event of a failure to enter into a written agreement within 30 days, the matter is submitted to a health insurance review panel. Members of the review panel include one chosen by the public authority, one chosen by the public employee committee and one chosen by the Secretary of Administration and Finance (or from a list provided by the Secretary if the other two can agree on the choice from the list).
- Automatic Approval within 10 days — the review panel must approve immediate implementation of the changes if they comply with the terms of Sections 22 and 23 — i.e., the change would be to the GIC or a plan at least as generous as the GIC’s largest plan — and further provided that the savings are substantiated (there is no minimum required amount of savings). The panel must act within 10 days.
- Assurance of Saving Sharing with Employees — the panel may conclude that the protections for employees provided by the proposal are inadequate and revise the proposal to distribute up to 25% of the initial 12 month savings to employees, especially those disproportionately impacted, including retirees. The panel may not require the distribution of more than this one-time amount, even over the life of a multi-year proposal. Additionally, the panel may not impose any change in contribution ratios.
The review panel approach seems like a fair way to provide employees with a necessary protection against unreasonable actions by municipal managers. At the same time, it is relatively simple. We can probably assume that the review panel members selected by Adminstration and Finance will be professional and follow the statute. Provided this is true, the process seems likely to work well and generate substantial savings. Time will tell.
The legislation leaves open the problem of health care costs generally for businesses and individuals — we are committed to making broader progress through the balance of the session.