SHREWSBURY, Massachusetts – In a relatively rare move, the Shrewsbury Board of Selectmen unanimously signed a direct letter to Massachusetts Governor Deval Patrick. In their letter, drafted and voted on at their meeting on July 5th, they voted to reach out directly to the Governor urging him to “sign the Massachusetts Health Insurance Reform package, adopted last week by the House and Senate,” and “resist the urge to weaken this much needed reform.”
The Massachusetts Municipal Association has done the same, urging enactment of the legislation. In a recent MMA publication, they spelled out in great detail the approach taken by the proposed law, and its positive aspects on the constituents. The information below if directly from their press release on the matter, from July 1st.
Legislature enacts municipal health insurance reform
July 1, 2011 As part of its fiscal 2012 state budget, enacted today, the Legislature has approved a long-awaited reform to address the skyrocketing costs of municipal employee health insurance.
The governor now has 10 days to review the full budget bill.
The MMA issued a statement applauding the Legislature’s work in creating “meaningful, fair, and effective reform plan that balances the needs of cities and towns, taxpayers, and municipal employees.”
MMA Executive Director Geoff Beckwith said the legislation “will save taxpayers money, preserve essential local services, protect municipal union jobs, guarantee equity with state employee health benefits, and provide municipal unions with more bargaining power than state unions.”
The reform will allow cities and towns to avoid an estimated $100 million in health insurance increases, while guaranteeing a role for municipal unions at every step in the process.
Under the plan, the new local-option would be accepted by a vote of the city council in cities and by the board of selectmen in towns. The community would only have to vote once to opt in.
After local acceptance, the appropriate municipal authority (generally the executive) could make health insurance plan design changes or transfer communities into the state’s Group Insurance Commission following a structured process.
The executive would develop proposed plan design changes – no plan could have co-pays, deductibles, tiered network co-payments or other plan features that exceed the dollar amounts in the most subscribed plan in the GIC – or a proposal to transfer subscribers into the GIC. The proposal would include estimates of the first-year savings that would result.
The executive would then notify the Insurance Advisory Board of the estimated one-year savings and provide documentation.
After discussion with the Insurance Advisory Board as to the estimated savings, the executive would convene a meeting of a new public employee committee (PEC), composed of a representative of every union (bargaining unit) as well as a retiree representative. Each participant will have an equal vote, except for the retiree representative, who would have a 10 percent vote.
The executive would provide notice to the PEC detailing the proposed changes, the analysis and estimate of anticipated savings, and a proposal to mitigate, moderate or cap the impact of the changes on subscribers, including retirees, low-income subscribers and subscribers with high out-of-pocket costs who would otherwise be disproportionately affected.
The executive and the PEC would have 30 days from the date of notice to negotiate over the proposed plan design changes and the executive’s plan on how to share a portion of the first-year savings with employees, especially with retirees and those most affected by the changes. A majority vote of the PEC would be required to reach an agreement.
If there is a written agreement by the end of the 30-day period, the community would proceed to implement the plan as agreed. If there is no agreement, the matter would be referred to a “municipal health insurance review panel,” composed of a municipal and labor representative and an impartial third member chosen from a list of individuals with professional experience in dispute mediation and municipal finance or municipal health benefits provided by the Executive Office for Administration and Finance. If there is no agreement on the third member after three business days, the Administration and Finance secretary would choose the third member.
If the proposed plan design changes do not exceed the GIC benchmark, the panel would be required to approve the community’s immediate implementation of the changes. If the community is seeking to join the GIC, the panel would be required to approve the transfer.
The panel would have 10 days to do the following:
• Confirm the estimated monetary savings, to be substantiated by documentation provided by the executive
• Review the proposal to mitigate, moderate or cap the impact of the changes on subscribers, including retirees, low-income subscribers and subscribers with high out-of-pocket costs who would otherwise be disproportionately affected
• Concur with the community that the proposed mitigation plan is sufficient
The review panel would have the authority to determine if the mitigation proposal is insufficient and would have the authority to require that additional savings be shared with subscribers, but the total cost of any mitigation plan developed by the panel (such as establishing an HRA or other similar steps) could not exceed 25 percent of the first-year savings, even if the mitigation plan is in place for more than one year. The panel would be prohibited from imposing any change to contribution ratios.
Once the mitigation funds are expended, all mitigation plan obligations on the part of the community would expire.
The decisions of the municipal health insurance review panel would be binding.
Regional and joint purchasing groups would be allowed to establish a common plan design structure, although participating communities would each go through the steps above to notify unions and retirees of the estimated savings, and follow the 30-day negotiation process and 10-day review panel process regarding the plan design changes and structuring the mitigation plan.
Under the proposal, the Administration and Finance secretary would promulgate regulations regarding the administrative procedures for the 30-day negotiation period and the municipal health insurance review panel and issue guidelines for evaluating which subscribers would be disproportionately affected by plan design changes or a transfer to the GIC.
After a community completes the process, the plan design changes could be implemented immediately, except in communities where collective bargaining agreements or Section 19 agreements set specific co-pays and deductibles that are different from the new plan. In those cases, communities would have to wait until the initial term of the agreement has expired.
For fiscal 2012, the reform plan will give cities and towns three opportunities to transfer subscribers to the GIC – on January 1, April 1 and July 1 – after a four-month notification to the commission. After fiscal 2012, enrollment in the GIC would be allowed to occur each July 1, with notification by the previous Dec. 1. The contribution ratios for employees entering the GIC would remain the same, but any future changes in the contribution ratios would have to be approved through full collective bargaining.
As previously announced in both the House and Senate plans, the new law would require all eligible retirees to be enrolled in a Medicare health plan, and governmental units would pay any federal penalties associated with a transfer to Medicare Part B.