House Ways & Means Budget Allowing Cities and Towns to Set Health Plans

The Massachusetts High Technology Council applauds Chairman Brian Dempsey and the House Ways and Means Committee for proposing to give cities and towns the same authority enjoyed by the Commonwealth to design health insurance plans outside of collective bargaining as part of the FY12 state budget. As a member of the Mass Reform First Coalition, the Council has long supported “plan design” for cities and towns and requiring that all eligible local retirees enroll in Medicare as their primary source of health insurance.

“We need to maintain our high local quality of life in order to keep technology companies and workers in Massachusetts. This is the single most important thing the Legislature could do to help shore up local budgets and offset reductions in local aid,” said James D. Rooney, Council Vice President. “Council members have expressed serious concern that runaway municipal health care costs are draining scarce resources and crowding out needed investments in P-16 education including STEM (Science, Technology, Engineering, and Math),” he added.

One way in which cities and towns have been able to curb runaway costs is by joining the state’s Group Insurance Commission (GIC), which has moderated costs by increasing point of service cost sharing and offering plans with tiered provider networks. Only a handful of towns have joined the GIC, however, since 70% union approval is required – too high a barrier in most communities given the challenge of winning union support and/or associated tradeoffs required. The Commonwealth faces no such requirement.

The GIC is but one option available to cities and towns seeking to design their own health plans, and several recent studies by organizations like the Boston Foundation and Massachusetts Taxpayers Foundation demonstrate significant savings could accrue to municipalities if granted such powers. In 2009, Governor Deval Patrick’s Readiness Finance Commission, on which Council President Christopher Anderson served, estimated a total potential savings from municipal plan design statewide at $200M.

The Council advocates that all savings resulting from plan design be made available to host cities and towns – as is the case with the Commonwealth – rather than requiring that 10% of savings be diverted to subscribers, but applauds the general thrust of the House Ways and Means Budget and looks forward to further advocacy on this issue in the upcoming weeks.