Why I voted to control the cost of health insurance

Background

As a selectman, I supported a proposal to provide towns and cities with additional flexibility to manage health insurance costs by allowing adjustments to deductibles and co-payments to be made outside of collective bargaining. We argued for years to have the same control over these two elements of health insurance plans that the state enjoys.

The Massachusetts Municipal Association backed such a proposal and the Sandwich select board penned a letter to the governor and legislators a couple of years ago requesting their support to pass this critical reform which would allow towns and cities to save an estimated $100 million per year.

Over the past ten years, the state’s Group Insurance Commission (GIC) has managed to control its average annual health insurance cost increases to six percent. That is triple the inflation rate over the same period, but far less than the average municipal increases of 11 percent annually. In many towns, the entire 2½% property tax increase allowed under Proposition 2½ is used up to pay for health insurance premium increases.

Why do towns and cities struggle with annual premiums climbing at a rate nearly double that of the GIC? A significant part of the answer is that most of these plans feature zero deductibles along with co-pays at levels not seen in the private sector since the 1980’s. A deductible is the amount paid by the plan participant each year before insurance kicks in. Co-payments are paid by participants for office visits, prescriptions, emergency room use, etc.

How this can save money for everyone

Something lost in the heated discussions over the past two weeks is that adjusting deductibles and co-pays is not a one-way street. Those adjustments result in lower premiums. Here’s an example of how this can work:

Employee in Barnstable pays 50% of his Blue Cross Blue Shield family health insurance premium for a preferred provider organization (PPO) plan. This plan has a zero deductible. The equivalent PPO plan offered by the GIC is provided by Harvard Pilgrim and carries with it a $250/person, $750/family annual deductible. However, the premium is $150 less per month for the participant. In five months, the deductible is covered and the participant puts over $1,000 in his pocket from the premium savings over the next seven months. The town reaps savings as well—a win-win situation.

The House Ways and Means proposal differs from the governor’s proposal in that towns and cities are not forced to join the GIC. It is an option, but not a requirement, even if the municipal costs are higher than the GIC’s. The governor’s plan forces municipalities into the GIC if their costs are higher than the GIC’s most utilized plan. On Cape Cod, where Blue Cross Blue Shield is the preferred provider by many, a forced conversion to the GIC could be problematic because Blue Cross Blue Shield is not one of their offerings.

Why this is not a repeat of “Wisconsin”

The situation in Wisconsin is far different than what we’re dealing with here:

1)      For one thing, the teachers there were paying an average of six percent of their health insurance premiums and were making no contribution at all towards their retirement. Here, most public-sector employees are paying from 20% to 50% of their premiums and everyone is contributing to their pensions.

2)      The Republican-dominated legislature along with the Republican governor voted to strip the unions of all collective bargaining rights. The proposal in Massachusetts only deals with health insurance deductibles and co-payments; it puts the unions and a retiree representative at the table with management to bargain changes to deductibles and co-payments for 30 days; and it escrows 10-20% of the first year savings for use by the unions to assist members who are negatively affected by the changes.

3)      The House Ways and Means proposal does not affect collective bargaining with respect to the premium split (contribution rate), health insurance plan offerings (unless a town joins the GIC), waiting periods, or any other aspect of health insurance.

Is there a better alternative?

Can we accomplish these changes across the state under our current bargaining laws? In my opinion, and I base this on experience as a selectman and finance committee member, we cannot. And I do not come to this opinion because of bad dealings with unions in the Town of Sandwich.

In fact, my experience has been quite the opposite. Our municipal unions agreed to two consecutive years of zero cost of living allowance (COLA) increases in order to protect jobs during this economic recession. Firefighters, police, DPW workers, secretarial staff, and members of the other five municipal unions voted to sacrifice the increases in exchange for the town manager and select board’s promise to avert layoffs and we made good on that promise.

I am working to find answers to the larger issue of runaway health insurance costs but, in the meantime, we must put measures in place right now that will result in immediate relief for our towns and cities.

Conclusion

I understand the reaction by unions to this proposal, but not on the financial aspects of it. We will all come out ahead because granting municipalities this authority will close budget deficits and save jobs. Union jobs. Of that I am 100% confident.

Rather, the pushback goes to the core reason why unions exist, which is to collectively bargain wages, benefits, and working conditions for their members. Any diminishment of the right to collectively bargain is naturally going to be a fundamental issue for our unions and their members. I understand and respect that.

As a state representative, I have to weigh the overall benefit of moving forward with this plan, the benefit of saving money and jobs versus the curbing of collective bargaining rights on two specific elements of health insurance plan design.

I come down on the side of saving the jobs of firefighters, police, teachers, and other municipal workers.

What is the common thread?

Two overrides on town meeting warrant

I provided a short tutorial on three types of overrides that come up often at town meetings and elections. Read that post by clicking here.

On the Town of Sandwich’s May 2^nd annual town meeting warrant appear two overrides: one for roof and window repairs and replacements at the Oak Ridge and Forestdale schools, and the other for replacing the HVAC system at the library.

The school building article calls for a debt exclusion (an override for capital expenditures paid for over multiple years) and assumes a reimbursement of nearly one-half of the project costs from the Massachusetts School Building Authority. The total estimated cost of the project is $2.5 million, before the MSBA reimbursement.

Our second override is a capital exclusion, which is collected directly from taxpayers via an assessment on property taxes for one year. No financing is necessary. The library HVAC system replacement will cost an estimated $450,000.

How do you plan to vote on these two overrides at the ballot box on May 5^th? Weigh with your comments here and register your anticipated vote in the poll at the right.

Working half-days

CPAs describe our “busy season” as a time when we work half-days; that is, 12 hours a day, 7 days a week.

Closing in on my twelfth hour last night, I found myself dozing, head on the desk, dreaming about another line of work.

Flight 1040 to control tower…

Flight 1040 to control tower…

Control tower?

Is anyone in the control tower????

zzzzzzzzzzzzzzzzzzzzz.............................

Copyright 2010 Randy Hunt

Health insurance plan design authority is key element of FY2012 state budget

With support from the Massachusetts Municipal Association, the Massachusetts Taxpayers Foundation, and many mayors, town managers and select boards—but not from public sector unions—the House Committee on Ways and Means unveiled a key component of its FY2012 budget yesterday.

Selectmen/councilors/mayors would be given the power to adopt, as a local option, plan design authority over existing health insurance plans. No town meeting approval would be required. Co-payments and deductibles would be limited to what the Group Insurance Commission (GIC) sets for its most utilized plan.

The authority would also be granted to move a town or city into the GIC without a collective bargaining process. However, as currently drafted, authority to make these plan design changes or to move into the GIC would be effective at the end of any collective bargaining agreements currently in place (not to include “evergreen” clauses).

Ten percent of the costs avoided (“savings”) would be returned to employees during the first year to pay for health care related expenses.

Towns that adopt this local option would still be required to collectively bargain the premium split unless the town joins the GIC, which currently has a 75/25 split.

Union members and lobbyists are already filling legislators’ email boxes with messages urging lawmakers to not take away collective bargaining rights. Being called “Wisconsin-esque” in its anti-union tone, the House Committee on Ways and Means in Massachusetts is a 32-member committee with 26 Democrats and 6 Republicans, making it very different from the Republican dominated legislature of Wisconsin.

The following comparison of health care insurance costs was compiled by The Boston Foundation and was included in the legislators’ briefing yesterday. Municipal plan numbers are the average of 14 Massachusetts communities. GIC figures are the average of its two PPO plans. Private employer numbers are from the Foundation’s 2010 survey.

HEALTH CARE INSURANCE COST COMPARISON	Municipal Plans	State GIC	Private Employers
Premiums
Individual	$7,785	$7,098	$5,592
Family	$20,925	$17,285	$15,324
Co-Payments
Primary care	$11	$20	$20
Specialist	$14	$20-45	$20
Generic drugs	$8	$10	$13
Preferred brand drugs	$16	$25	$28
Non-preferred brand drugs	$31	$50	$47
High-tech imaging	$0	$100	$75
Outpatient surgery	$0-$128	$150	$199
Hospitalization	$0-$228	$250-750	$372
Deductibles
Individual	$0	$250	$744
Family	$0	$750	$1,618

Driving for charity: March 2011 - Children's Cove

I made a campaign promise, at the urging of Matt Pitta, WXTK Radio news director, to pass through my state representative travel per diem to a local charity each month. Unlike most of us who do not get paid to commute, legislators receive payments based on the distance they must drive to the Statehouse. My per diem is $45. Click here to see Who gets paid to drive to work?

March’s per diem payment of $405 represents nine trips to the Statehouse and I am honored to donate that amount to Children's Cove. Children's Cove is a freestanding, child-friendly facility designed to ensure that victims of child sexual abuse and their non-offending family members have access to support and services in a safe, respectful, and compassionate environment. They are committed to reducing the trauma endured by child victims, promoting accountability, fostering healing, and advocating on behalf of child victims of sexual abuse and physical abuse.

I was fortunate to be invited to their facility to meet with Stacy Gallagher, Director, and several staff and board members. Although I wish that such an organization would have no reason to exist, the reality is that many children are victims of sexual abuse and the Cove's warm and embracing atmosphere along with their highly trained and competent staff provide critical support and therapy for these children, making it possible for them and their families to put their lives back together and face the future with confidence.

I appeal to anyone who has been the victim of sexual abuse at any age, anyone who knows someone who has been a victim, and anyone who sees the importance of Children's Cove to join me by spreading the word about this organization and making a donation to help further the Cove's mission.

For more information and to donate: http://www.childrenscove.org/

Old Harbor Walk makes sense

Guest article by Kate Bavelock, Executive Director
Sandwich Chamber of Commerce

The Sandwich Chamber endorsed the concept plan for this boardwalk put forward by a volunteer who was also on the town’s Economic Development Committee and Visitors Services Board. We came up with the name Old Harbor Walk to avoid any confusion with the existing Sandwich Boardwalk.

The Old Harbor Walk is a walkway that would connect three economic centers between the Village and Marina District by way of Brady’s Island and an underperforming district along Route 6A from Jarves to Tupper.

The Old Harbor Walk hopes to incorporate scenic viewing spots, a restoration of Brady’s Island as a park/arboretum, educational markers on the coastal marsh eco-system, and a boardwalk leading across the marsh areas connecting Sandwich Village to other pathways to the Marina/Canal Bicycle Path and Merchants Square. The project is intended to increase visitors, to better accommodate visitors arriving by bike or public transportation and to enhance resident’s pedestrian and bicycle transportation options to move around town.

The concept plan was designed to bring more visitors’ revenue, leverage available federal and clean air act grants designed to get people out of automobiles and moving around on foot and by bike, and to enhance property values and give a boost to our business districts in those areas. Helping small-scale businesses thrive in Sandwich was not meant to give any one person revenue, but rather meant to help the whole community by building a healthy local economy with jobs, money circulating in the economy (our local business owners donate so much to the school programs, sports programs, food pantry, etc), and to avoid closed and empty storefronts in a historic Village. Some of the models we looked at in Florida and the Carolinas showed an average of $1.5 million economic benefit to the surrounding communities, according to National Park Service statistics.

The Sandwich Chamber felt there was a strong enough argument there to explore the concept further. An economic development plan which has a nice grant funding niche that would bring much needed revenue AND which would enhance residents pedestrian access to and among important areas of town and enhance quality of life for all certainly merited further study. This seems to be economic development nicely suited to the Sandwich community which values recreation, enjoying our wonderful outdoor spaces and scenic vistas and makes new opportunities for all to enjoy our great coastal marsh system - from school children on an educational field trip along the walkway, to seniors having a safe place to walk, to being fully handicapped accessible for wheelchairs, strollers and youngsters on bikes.

The planning also focuses on protecting our coastal marsh system and enhancing its ecological health. Much research on phragmites abatement and expanding the existing culverts to improve saltwater flushing was going on as part of the overall design of the walkway. The project planners were aware of the time and costs to permitting in ecologically sensitive areas and were willing to do the hard work necessary. Again, projects in other communities including a current one at Hingham’s Worlds End Park, show that it can be done within the framework of resource protection and environmental enhancements.

With an understanding of the stretched town staff and decreasing town resources, the plan sought to include realistic sources of income for future maintenance. This included plank inscription fundraising, corporate sponsorship opportunities, temporary art booths similar to Hyannis Harbor and possibly event permits for outdoor concerts, small weddings, etc.

Having stated our support of the project, we have asked at this time for the CPC grant article on the Town Meeting warrant to be postponed. There are issues that we feel we need more time to work on including technical questions on railroad crossings, more specific understanding of the before-mentioned grants, more thought on scale and phases of the design, opportunity for the County’s bike planning to be further along to work together, and most importantly more communication with both residents and town leadership so we have the best possible plan.

Thanks to all who support this wonderful project – I look forward to continuing to work through important issues with many community members.