Merrimack Valley

Cities, towns could save millions on health care

DiMasi plan would allow communities to force unions to join state insurance program

By J.J. Huggins
jhuggins@eagletribune.com
Published: December 28, 2008

Haverhill Mayor James Fiorentini estimates his city could save $1.8 million to $2.5 million per year if its employees joined the state's health insurance program.

That might sound like a no-brainer to taxpayers, but enrolling municipal workers in the state's Group Insurance Commission is easier said than done.

A state law passed last year says municipal workers can enroll in the GIC, but 70 percent of their labor union's members have to agree to do so. Only 24 cities, towns and regional school districts have joined.

Unions use health care benefits as a bargaining chip when negotiating labor contracts, and they're not eager to give that up.

But House Speaker Salvatore DiMasi has announced that he plans to propose legislation next month to allow municipal leaders to stick their unions in the GIC without union approval.

That's music to local mayors' ears.

"The 70 percent threshold is unacceptable and needs to be changed," Methuen Mayor William Manzi said. "Quite frankly, it should be zero."

As local leaders brace for budget cuts, mayors say they need to get ballooning health care costs under control.

Massachusetts cities and towns could have saved as much as $100 million this year, $750 million in fiscal 2013 and $2.5 billion in fiscal year 2018 if they all joined the GIC this year, according to a report jointly released in August 2007 by the Boston Municipal Research Bureau and the Massachusetts Taxpayers Foundation.

Haverhill spent $16.2 million on health care in fiscal year 2004, a figure that rose to $20 million last year. They have spent $9.6 million in the first six months of fiscal year 2009, according to figures provided by Fiorentini's office.

Methuen appropriated $8 million for health benefits in fiscal year 2004 and $10.8 million this year, according to documents provided by Manzi.

Joining the GIC would help save money because it has more members, which means it has more bargaining power, officials said.

"They have tremendous leverage with the insurance companies," Fiorentini said.

But the GIC has higher deductibles, higher drug costs and higher co-payments for doctors' visits, said Marc Harvey, president of the Haverhill Education Association.

On the flip side, however, Fiorentini said workers in the GIC pay lower premiums.

"So for the young, healthy employees, they'll actually make out better under the GIC," he said.

Harvey said officials need to further analyze whether joining the state GIC is a good idea.

"You really need to look at data in order to see what is cost beneficial and what is prohibitive," he said.

Fiorentini agreed that joining the GIC would save taxpayers money at the expense of municipal workers.

"But these are benefits we just can afford to do anymore," he said. "We have a $5 co-pay when we go to the doctor. It's 2008 health care at 1950s rates."

Fiorentini wants to raise the co-payment to $15 per doctor's visit. He said that would save Haverhill $400,000 a year. He noted that the police union agreed to start paying higher co-payments beginning next month as part of its latest contract.

The Massachusetts Teachers Association, a statewide teachers union, released a statement calling DiMasi's plan "an attack" on workers' rights.

"Collective bargaining is the mechanism through which ordinary workers have meaningful input in what their economic lives will look like," it said. "Denying employees the right to have any say over their health insurance plans is an attack on the rights and interests of working people in this Commonwealth."

"It's not democratic," said Donna Gogas, an eighth-grade teacher and chairwoman of the Methuen Insurance Coalition, a group of union leaders.

Gogas said Methuen saw less of an increase in health care costs than the state did between last year and this year.

"If anything, I think we have done a pretty good job of managing our health care in the town," she said.

Manzi said that is a good thing, but the smaller cost increase appears to be "an anomaly based on less usage."

DiMasi was told by union representatives that they would join the GIC if the state passed the 2007 law allowing cities and towns to join it. But only two dozen have done that, and municipal officials say it's mainly because they can't reach agreements with the unions, according to David Guarino, a spokesman for DiMasi.

State Rep. Linda Dean Campbell, D-Methuen, said she supports DiMasi's plan.

Beside the cost savings to cities and towns, enrolling more municipal workers in the GIC would give it even more negotiating and buying power because it would have more members, she said.

"It's very important in terms of getting quality care and driving a hard bargain with the insurance companies," she said.

If municipal workers were placed in the GIC, they would be given the same options for insurance that state employees like DiMasi receive.

"He's not asking any city workers to do anything in terms of premiums and co-payments that he's not doing," Guarino said. "It's a very good health plan."

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