Officials in Chelsea, Revere and Everett are actively pushing this week to address the significant financial strain caused by municipal health insurance costs. Jay Ash, Chelsea’s City Manager, has been working closely with Revere Mayor Tom Ambrosino and Everett Mayor Carlo DiMaria to urge Gov. Deval Patrick’s administration to implement reforms to municipal health insurance. The three leaders have held a private meeting with the governor’s administration and finance director, Jay Gonzalez, on the matter. Early indications suggest their efforts may succeed. Positive signals are also emerging from the Legislature, where House Speaker Bob DeLeo (D-Winthrop) identified the issue as one of his top three priorities during his recent inaugural address. A spokesperson for DeLeo recently stated they would move forward promptly. “It’s definitely something they will take up in the coming session,” said Seth Gitell, DeLeo’s spokesman. “They don’t have all the details worked out, but they will certainly be focusing on it.”
Over the past decade, health insurance costs for municipal employees have risen dramatically and represent the largest growing expense in city budgets annually, reflecting broader national increases in health care spending. Last year, mayors throughout the Commonwealth attempted to secure reform measures, but the effort stalled in a state Senate committee and produced no results. Meanwhile, expenses have continued to mount for cities including Chelsea, Revere and Everett. This year appears more promising. A primary proposal under consideration involves enrolling municipal employees—including teachers—in the state’s Group Insurance Commission (GIC), a pooled insurance program comprised of state workers. Municipalities such as Quincy have already participated and achieved significant cost reductions. Nonetheless, many police, fire and teacher unions remain reluctant, citing increased premiums and co-pays for members, along with concerns about reduced access to care. Currently, municipalities must obtain approval from 60 percent of union members to join the GIC. Unions frequently leverage the possibility of joining the GIC as a negotiating tool to secure salary increases or other benefits. City officials are seeking state action to eliminate the voting requirement, allowing municipal workers to enter the GIC without a vote and removing it from collective bargaining discussions. This proposal has proven contentious and repeatedly failed due to union opposition. Current economic circumstances, however, are more severe than in the past, particularly for city finances. As a result, the potential savings available to Chelsea and comparable cities through GIC membership appear increasingly acceptable.
Chelsea City Manager Jay Ash noted that in 2000, health insurance represented 5 percent of the city’s budget. By 2010, that proportion had grown to 13 percent, which he described as unsustainable. “We’ve been doing a lot of other things to keep down costs, but when one particular cost grows by double digits for 10 years, it can wreak havoc on your budget,” he said. “It takes an average of six single-family homes paying taxes in Chelsea to cover one employee’s health insurance for a year. It’s not a sustainable system.”
Revere Mayor Tom Ambrosino indicated the city could save approximately $5 million annually by entering the GIC. He noted previous attempts to move workers into the GIC have encountered strong resistance from teachers and firefighters unions. According to Ambrosino, state administrative and legislative intervention represents the most viable path forward. “Our hope is that there is something in the governor’s budget that includes health insurance relief for municipalities,” he said. “They’re trying to balance the concerns of municipal leaders and municipal unions right now. I get the sense from Secretary Gonzalez they are very serious and want to do something that will help. We’ll see at the end of the month when the State Budget proposal comes out.”
Everett faces similarly substantial potential savings, ranging from $3-5 million annually. Ash added, “We were told that municipal health insurance reform is one of the Governor’s priorities. Several ideas were batted around, but no concrete proposal was put on the table. Gonzalez said he was talking with labor unions this week and will be back in touch with everyone soon to discuss something more concrete.”
An alternative approach to achieving such savings involves a ballot measure. Ash and Ambrosino noted that numerous city leaders across the state have committed to placing health insurance reform on the 2012 ballot should no action occur this year. “It would be a shame if it came down to that, but at the same time if that’s what it takes to get reform, maybe it needs to be explored,” said Ash. Ambrosino suggested such a ballot question would likely succeed. “I don’t think there would be too many voters all that interested in preserving the health insurance collective bargaining rights of municipal employees, especially in these financial times,” he said. “I don’t think it would be popular with the general public.”
All three cities and their workforces should receive updates regarding their health insurance programs’ status by month’s end.