For Immediate Release - August 05, 2009

PATRICK-MURRAY ADMINISTRATION MUNICIPAL HEALTH INSURANCE REFORM PLAN ALREADY SAVING MILLIONS FOR CITIES AND TOWNS

Administration urges other communities to join in the savings

BOSTON - Wednesday, August 5, 2009 - As communities look for ways to control costs in these challenging economic times, Governor Deval Patrick announced today that municipalities across Massachusetts are saving millions of dollars annually in health insurance costs thanks to the Administration's Municipal Partnership Act, which allows cities and towns to join the state's health insurance program.

"Cities and towns, like all of us, are looking for every opportunity to cut costs and achieve savings to help balance budgets," said Governor Patrick. "Our Municipal Partnership Act is producing real savings for these communities. In this and other ways, we will continue to work with municipalities to ensure they have the tools they need to educate our children, protect public safety and provide local services."

From 2001 to 2005, health insurance costs for municipalities grew nearly twice as fast as for state government. Since the Governor signed pieces of the MPA into law in July 2007, 17 municipalities, six school districts and three planning councils/commissions/development districts have joined the state Group Insurance Commission (GIC).

Among the savings realized by communities are:

  • $10 million in the City of Quincy;
  • $2.6 million in the Town of Watertown;
  • $2.6 million in the City of Pittsfield; and
  • $1. 5 million in the Town of Norwood

The savings are calculated on current rates and enrollment, including premium increases anticipated from the municipalities' carriers prior to joining the state's health insurance program.

"As a former mayor and Chair of the Municipal Affairs Coordinating Cabinet, I have had the opportunity to talk with our local partners about the tools we have to help weather this fiscal downturn," said Lieutenant Governor Murray. "Joining the GIC is one of the most important tools and I would encourage communities that have not joined to do so in an effort to save scarce resources."

According to municipal officials, communities will use the savings from joining the GIC to balance their budgets, stave off cuts to core services and invest in capital projects. Additionally, some communities will deposit the savings to shore up their Rainy Day Funds.

"Joining the GIC allowed Melrose to not only avoid layoffs, but also expand programs," said Melrose Mayor Robert J. Dolan. "The City was able to put $600,000 into the schools that they wouldn't have been able to do without GIC. The GIC proved to be a win for management and employees. The savings from GIC participation has not only been beneficial in these difficult fiscal times, but also created a structural change in our budget that will be beneficial for years to come."

"For many communities, joining the GIC is a win-win proposition for municipalities and their employees. These savings can mean the difference between layoffs and no layoffs, and help cities and towns manage their way through the current fiscal crisis with reforms and efficiencies," said Joel Barrera, Deputy Director of the Metropolitan Area Planning Council, which was instrumental in facilitating the compromise between labor and management that led to the GIC option law. "In the fall, many new communities will look to the GIC as an option."

Municipalities who joined the state health insurance program prior to the enactment of the MPA have also reaped substantial savings. A recent report commissioned by The Edward J. Collins, Jr. Center for Public Management at UMass Boston's McCormack Graduate School of Public Policy Studies and the Rappaport Institute for Greater Boston at Harvard's Kennedy School of Government estimates that the City of Springfield, which joined under emergency legislation in January 2007, has saved $19 million to $23 million. The town of Saugus, which joined in January 2008, avoided a $1.3 million deficit in FY09, dramatically helping their fiscal health.

In addition to allowing communities to join the GIC, the Municipal Partnership Act identifies and requires the state's lowest-performing pension systems to invest with the state Pension Reserve Investment Trust (PRIT). Additionally, the Governor proposed and the Legislature adopted measures to give communities additional revenue from a local option increase in the meals and hotel/motel taxes and by repealing the outdated telecom tax exemption.

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