Governor Patrick Signs Municipal Health Care Reform to Save Millions for Massachusetts Communities

Press Release

Governor Deval Patrick today signed municipal health care reform legislation that will provide significant and immediate savings to cities and towns, while preserving a meaningful role for organized labor in the process. This bill, "An Act Relative To Municipal Health Insurance," builds on the Patrick-Murray Administration's success in reducing rising health care costs for thousands of small businesses and working families across the Commonwealth, and is an important step in the Administration's efforts to bring health care system costs down.

"This is the biggest step yet in our efforts to deliver millions of dollars in savings to cities and towns, while assuring a meaningful role for labor in determining how to achieve those savings," said Governor Patrick. "This has been no small accomplishment, and it came with cooperation from leaders in the Legislature, labor, and municipalities all working together to get a positive result."

"This bill is a testament of our Administration's long-standing commitment to providing cities and towns with cost-saving measures," said Lieutenant Governor Timothy Murray. "By partnering with the state Legislature, labor, and municipal managers, this reform offers municipalities another tool in the toolbox that will help to support the continued delivery of critical local services."

"Everyone came together and made this work," said Senate President Therese Murray. "Municipal, business and labor leaders, along with the Legislature and the Administration, agreed that these improvements will further protect retirees from cost increases and support an ongoing voice for employees while maintaining the reform's primary goal of creating significant savings for cities and towns."

"In these difficult fiscal times we have to give cities and towns the tools they need to manage tight budgets," said House Speaker Robert A. DeLeo. "This major reform will provide municipalities with a process to effectively manage rising municipal healthcare costs. And, by spending less on the healthcare costs of municipal employees, our cities and towns will be able to fund vital municipal services like education and public safety."

The municipal health care reform law will help communities collectively save more than $100 million, while protecting health care quality for retirees and municipal employees. Cities and towns will have the choice to implement health care plan design changes under a newly-created process. The process will include expedited collective bargaining to negotiate 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 by the Secretary of Administration and Finance.

Municipalities will be able to 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 Group Insurance Commission (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.

"This reform will deliver material savings in health care costs to cities and towns at a time when they need it most," said Jay Gonzalez, Secretary of Administration and Finance. "This means that many teachers, firefighters, and other public employees will be able to keep their jobs and continue to deliver the critical local services taxpayers expect and deserve."

"Governor Patrick's municipal health insurance proposal offers cities and towns financial relief, while ensuring labor a meaningful seat at the negotiating table," said Joanne Goldstein, Secretary of the Executive Office of Labor and Workforce Development. "Unions representing municipal workers and municipalities will have the opportunity to collaborate on how to continue to provide quality health care for workers while ensuring meaningful savings for cities and towns."

"I am proud to have been able to work with Governor Patrick, Speaker DeLeo, and Senate President Murray to ensure meaningful reforms for our cities and towns while providing a seat for our labor leaders at the table. These reforms will help keep more teachers in classrooms, more police officers and firefighters on our streets, and will allow us to continue to provide services that keep our neighborhoods clean and vibrant," said Boston Mayor Thomas M. Menino.

"The landmark municipal health insurance reform in the FY 2012 budget was achieved through the hard work and good will of Governor Patrick, Speaker DeLeo, Senate President Murray and many legislators, municipal officials and labor leaders who have come together to deliver a reform package that will preserve essential local government jobs and services, while protecting taxpayers and employee alike," said Joshua Ostroff, President of the Massachusetts Municipal Association. "As a culmination of years of effort and debate, this is a proud moment for Massachusetts and its cities and towns and will be a cornerstone of our economic recovery."

"This reform is one of the most significant measures to assist cities and towns in the past 30 years," said Geoff Beckwith, Executive Director of the Massachusetts Municipal Association. "Thanks to the Governor, Speaker, and Senate President, it is strong, fair, and balanced for all stakeholders. This is a good day for communities, taxpayers, and municipal employees."

The Public Employees' Coalition on Municipal Health Insurance released a statement recognizing the historic shared sacrifice pledged by a coalition of public employee unions and retirees. The statement notes that as a result of this legislation, Massachusetts cities and towns will save an estimated $100 million in health insurance costs while preserving a voice for labor. The coalition believes that now that this distraction has been eliminated from the public debate, the focus can shift to the real crisis, which is the ever-spiraling cost of health care for all residents of Massachusetts. The coalition stands ready to work with the Legislature and governor to address this critical issue.

"The rising costs of municipal health insurance threaten the viability of every local government in the Commonwealth," said Scott W. Lang, Mayor of New Bedford and President of the Massachusetts Mayor's Association. "The Governor, Speaker and Senate President's bold leadership has created an equitable law that will help hold down the cost of health insurance for taxpayers while providing municipal employees and their families with the finest health care plans. This will stabilize municipal services throughout the state which will lead to new growth."

"The action by Governor Patrick and the Legislature provides meaningful reform to the municipal health insurance process and will ensure that local taxpayer dollars go more towards direct services instead of getting eaten up by employee overhead costs," said Jay Ash, City Manager for the city of Chelsea. "In this municipal finance environment, delivering cities and towns the potential for $100 million in savings will surely save police jobs, keep libraries open and reduce the pressure to raise class sizes, all in the name of balancing the budget."