Patrick-Murray Administration Announces $205 Million in Savings From Municipal Health Care Reform
Comprehensive Report Shows Potential for $250 million statewide, More Than Double Initial Savings Estimates
BOSTON – Friday, January 25, 2013 – Delivering his welcoming remarks at the 34th Massachusetts Municipal Association's annual meeting Friday, Governor Deval Patrick announced that more than 204 communities and school districts across the Commonwealth have collectively saved more than $200 million in health insurance premiums as a result of the landmark municipal health care reform law.
"Massachusetts leads the nation in health care coverage, and working together we are lowering the cost of health care so it can be as affordable as it is accessible," said Governor Patrick. "With labor at the table, municipal health care reform has had a powerful and immediate impact on municipal finances across the Commonwealth, while maintaining quality, affordable health care for working families.”
“The successful implementation of municipal health care reform has achieved real results and great savings for cities and towns across Massachusetts,” said Lieutenant Governor Timothy Murray. “During tough fiscal times, our Administration has worked closely with cities and towns and public employee unions through this reform to help preserve essential local government jobs and services.”
According to the report, there is the potential for an additional $45 million dollars in savings were more municipalities and regional school districts to use the reform process. Combined with savings announced today, this reform has the potential to achieve over $250 million in savings statewide.
"Municipal health care reform has changed the way cities and towns negotiate their health insurance plans and helped municipalities stem the rising costs of health insurance to save jobs and deliver core local services like education and public safety," said Secretary of Administration and Finance Glen Shor.
To date, 81 cities and towns have completed the process and made changes to employee health plans or joined the Group Insurance Commission (GIC) resulting in nearly $70 million in employer and employee premium cost savings. Employers and employees share almost equally in the $70 million in reform savings after accounting for sharing savings with employees through mitigation programs in addition to direct employee premium savings. In addition, more than 122 communities and school districts have used the new law as leverage to negotiate health plan insurance changes with local unions without actually adopting the reform, yielding more than $137 million in total premium savings for employers and employees in the first year.
Municipal health care reform is providing significant and immediate savings to cities and towns, while preserving a meaningful role for organized labor in the process and protecting health care quality for retirees and municipal employees. Cities and towns now have the choice of a new, expedited process to implement changes to existing local health care plan design or join the state’s GIC. Since the law was adopted, 16 new communities and school districts have joined the GIC - 7 using the new reform process and 9 negotiating outside of the reform process. The GIC now has 43 communities and school districts representing over 45,000 municipal subscribers.
According to the Massachusetts Taxpayers Foundation, this reform could produce as much as $2.8 billion in cumulative savings over 10 years if implemented by all communities and school districts.
Two years ago at the Mass Municipal Association’s Annual Meeting, Governor Patrick introduced his municipal health care reform bill to allow communities to either join the GIC or come up with their own plan or program of equivalent value and cost. Together with the Legislature, labor, and municipal managers, this reform has given municipalities another tool in the toolbox to support the continued delivery of critical local services.
“As we approach the second anniversary of municipal health insurance reform, municipalities have been assured economic relief while providing quality, affordable health care for municipal employees and their families. This resulted from cooperation between municipal officials and public employee unions,” said Secretary of Labor and Workforce Development Joanne F. Goldstein. “Massachusetts continues to bring all parties into the decision-making process that is respectful of their interests.”
"Municipal health insurance reform is one of the most important legislative acts to benefit cities, towns and taxpayers in decades, and the MMA applauds Governor Patrick, Speaker DeLeo, Senate President Murray, Representative Dempsey, Senator Brewer and the members of the Legislature for their leadership and support in achieving this landmark accomplishment," said Geoffrey C. Beckwith, Executive Director of the Massachusetts Municipal Association. "Communities are using the new law to save millions of dollars for taxpayers, protect essential municipal and school services, and preserve jobs for teachers, firefighters, police officers and other vital employees all across the state."
“This is among the most meaningful municipal reforms in decades, and its success has surpassed all expectations,” said Michael Widmer President of the Massachusetts Taxpayers Foundation. “The early and widespread adoption by communities across the state shows the importance of this tool in providing municipal budget relief, both now and for years to come.”
The First Year Savings Report can be found at http://www.mass.gov/anf/docs/anf/the-first-year-savings-report.doc