Patrick Administration Announces $247 Million in Savings from Municipal Health Care Reform
Savings are 140 percent more than originally estimated, help preserve essential local government jobs and services
BOSTON – Tuesday, June 10, 2014 – Secretary of Administration and Finance Glen Shor today announced that more than 257 communities and school districts across the Commonwealth have collectively saved more than $247 million in health insurance premiums over the past three years as a result of the landmark municipal health care reform law signed by Governor Deval Patrick in July 2011. Over 60 percent of municipalities and school districts have made cost-saving healthcare changes to date, and the law has resulted in 140 percent more savings for cities and towns than originally estimated.
“Municipal health care reform has had a powerful and positive impact on municipal finances across the Commonwealth, while maintaining quality, affordable health care for working families. The savings achieved are critical to Massachusetts’ role as a leader in keeping health care costs down while securing the highest level of care,” said Governor Deval Patrick.
The three-year results of the municipal health care reform law were announced at the annual Local Government Advisory Committee meeting and are included in the report, Municipal Health Reform Savings FY12 – FY14 To Date. According to the report, there is the potential for an additional $10 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 $260 million in savings statewide, more than double the initial savings estimate.
“Massachusetts leads the nation in health care coverage, and we are also lowering the cost of health care so it can be as affordable as it is accessible,” said Secretary Shor. “Municipal health care reform has changed the way cities and towns negotiate their health insurance plans so they can save money and maintain core services like education and public safety.”
To date, 91 cities and towns across the state have completed the reform process and made changes to employee health plans or joined the Group Insurance Commission (GIC), resulting in nearly $95 million in employer and employee premium cost savings in just the first year the changes were implemented. In addition, more than 166 communities and school districts have used the new law as leverage to negotiate health plan insurance changes with local unions, yielding more than $152 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 using a new, expedited process to implement changes to existing local health care plan design or joining the state’s GIC. Since the law was adopted, 22 new communities and school districts have joined the GIC --12 using the new reform process and 10 negotiating outside of the reform process. The GIC now has 43 participating communities and school districts representing over 65,000 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.
Working together, the Patrick Administration and the Commonwealth’s municipalities have achieved real, meaningful savings and structural changes to keep costs down so municipalities can make the necessary investments in community services that keep them thriving. Including Municipal Health Care reform, the Patrick Administration has provided cities and towns with the tools to realize $3.78 billion in savings, revenue, and investments through new local option taxes, increased capital investments and pension reforms. Communities are also achieving savings through innovations achieved through the Community Innovation Challenge Grant and municipal performance management programs.
The full report, including savings by municipality and school district, is available on the Administration and Finance website under “Publications & Reports” at www.mass.gov/anf.