For Immediate Release - November 21, 2011

Secretary Jay Gonzalez Meets with Municipal Leaders to Discuss Implementation of Municipal Health Care Reform

Reform will save an estimated $18 million for municipalities and employees in the first 12 months of implementation

ARLINGTON – Monday, November 21, 2011 Secretary of Administration and Finance Jay Gonzalez met today with the Metropolitan Area Planning Council, the Boston Foundation, local municipal leaders and union officials to discuss the implementation of landmark municipal health care reform legislation signed by Governor Patrick earlier this year.

"Municipal health care reform changes the way cities and towns negotiate their health insurance plans and will help municipalities stem the rising costs of municipal health insurance to save jobs and deliver core local services like education and public safety," said Secretary Gonzalez.

Under municipal health care reform, cities and towns can choose to implement health care plan design changes under a newly-created process. The process includes an expedited negotiation period to arrive at a new health insurance benefit plan for employees. If the municipalities and unions fail to reach agreement within 30 days, the case is submitted to a three-person review panel, with one member appointed by unions, one by the municipality and one selected from three names submitted by the Secretary of Administration and Finance.

Officials from Arlington, Somerville, Wakefield, Gardner and other municipalities and representatives from the Massachusetts Municipal Association, the Massachusetts Taxpayer Foundation and the Massachusetts Teacher’s Association came together to share success stories and key takeaways of the negotiations that led to major changes in plan design or a mutual decision to join the Group Insurance Commission (GIC) and other issues that are important to public sector union members.

"The law has had an immediate and powerful impact on municipal finances. This forum is intended to give municipal leaders a toolkit to implement the law, work collaboratively with their unions, and save millions of dollars for taxpayers," said Joel Barrera, Deputy Director of the Metropolitan Area Planning Council.

"The process under the new law and traditional bargaining are both methods for reducing health insurance costs that should be considered. I urge municipalities and unions to pursue the strategy that provides the greatest benefits to both the employer and the employees," said Paul Toner, Massachusetts Teachers Association President. "When the new law was being negotiated we had three core principles that were ultimately incorporated into it. We wanted employees to have a meaningful voice in the process. We wanted to protect retirees from sudden, steep increases in costs. And we wanted to make sure that the sickest retirees and employees were protected from exorbitantly high out-of-pocket expenses."

"The Town of Arlington was able to reach an agreement with its employees under the new law that will provide substantial savings to the community, while still protecting employees from the impact of the health plan changes via a Health Reimbursement Arrangement," said Brian Sullivan, Town Manager of Arlington. "We are glad this forum will provide us with an opportunity to share our experience in Arlington with other municipalities looking to make similar changes."

Municipal Health Reform, passed into law just five months ago, is producing significant and immediate savings for local governments and their employees. The four municipalities that have engaged in the new decision-making process to date have secured an estimated total of $18 million in savings for municipalities and employees from premium reductions. Of that $18 million, municipalities will see $9.9 million in the form of premium reductions, and employees will see $4.8 million in premium reductions plus $3.6 million in mitigation benefits to employees.

Municipalities can use this process to adopt co-pays and deductibles, along with other cost-sharing health care plan design features that are not higher than those offered by the GIC. Alternatively, municipalities can transfer employees to the GIC if it would result in at least 5 percent more savings than could be achieved through a local health care plan. The law also allows a portion of savings to be returned to employees and includes protections for retirees and employees with existing health concerns, who are likely to incur higher co-pay and deductible costs.