As has already been noted hereabouts, Governor Patrick recently made a major announcement regarding municipal health care. This is from the Gov’s press release (no link):
The Administration’s health insurance plan design proposal will require all cities and towns to either join the GIC or institute a program of equivalent value and cost by the start of fiscal year 2012. Additionally, this bill will require cities and towns to move eligible municipal retirees into Medicare. Many municipalities have not enrolled their eligible retirees in the federally-funded Medicare program, even though both the municipalities and retirees have contributed to the Medicare system. By moving all eligible retirees to Medicare, cities and towns will save an estimated $15-30 million annually.
Combined, these two measures will allow municipalities to capture savings totaling over $120 million that will help sustain local services and retain jobs. This proposal will also give labor a meaningful role in developing the solution, and assure that municipal employees have continued access to adequate, affordable health care.
So it’s a two-parter. First, move eligible retirees into Medicare. Is there any argument against doing this?
Second, unions and management have to work together to find something that saves as much as GIC by July 1. If they do, great. If not, they join GIC (or, if I understand correctly, at that point the municipalities also would have the option of unilaterally implementing their own plan that achieves equivalent cost savings).
So step 2 is a major departure from current law, under which a municipality can join GIC only with 70% union buy-in. But Patrick’s proposal lets everyone work together for six months before the move to GIC is mandated.
Details remain to be worked out, of course. It strikes me that there has to be some way of ensuring that the 6-month bargaining period isn’t just a sham by which management can simply stall until the July 1 date arrives. But assuming that those details can be resolved, Patrick’s plan strikes me as sensible. It lets everyone participate in good-faith negotiations to solve what everyone agrees is a major problem. As the Governor says, “labor is entitled to, and deserves, a meaningful role. They will have it, but not a veto.”
So that’s the “sense” part of the title of this post. The “silliness” comes from the Boston Globe’s editorial page, which thinks that Patrick’s plan doesn’t go far enough:
there is still concern that Patrick’s plan would give the unions too much room to plow the savings back into other benefit enhancements. The Massachusetts Municipal Association goes one better with a bill allowing cities and towns to design plans comparable to the state’s, but free of union interference.
More than $100 million annually washes down the municipal drains because state elected officials have allowed themselves to be pushed around by municipal unions. It’s maddening for taxpayers whose health benefits aren’t nearly as generous. And now they face cuts in basic city services unless the governor and Legislature untie the hands of their local officials. They should do so as quickly as possible.
I just don’t see any basis for this kind of hysteria, which reads like a press release from the Baker for Governor campaign. Under Patrick’s plan, the parties are expected to negotiate in good faith until the beginning of the next fiscal year. If negotiations fail, the cities and towns hold the ultimate trump card: at that point they can join GIC if they want to. How can it be a bad thing to allow the parties to try a negotiated solution first?
Kudos to the Patrick administration, which appears to be taking an adult approach to a very serious problem. From the quotes in the Globe story, the mayors seem pleased. What do they know that the Globe doesn’t? I’m guessing a lot.
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p>This is not in my area of expertise and far above my pay grade, but I seem to recall an argument made in my Town Meeting against Medicare, involving retirees who have moved out of state having much more limited coverage and care. Again, I don’t recall the details and could be way off, and I’m not taking a stance either way, just adding grist for the mill.
so no changes between states. PP noted GIC and possible Medigap coverage, maybe that’s the question? Not sure.
The incentive for the cities and towns is if they get a deal before July 1, they could get a deal that was “mutual” in some sense, and perhaps start enjoying the savings earlier (I don’t know enough about when deals would have to be signed with insurers to affect budgeting — contracts, fiscal years, etc.). The unions should see the handwriting on the wall here and recognize that they won’t get a materially better deal that GIC-level costs/benefits.
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p>I’d be worried that doing anything more to ensure the process is “fair” risks creating a cure worse than the disease (cough, binding arbitration, cough).
Right now, communities must decide to join by November to start on the GIC when the next fiscal year starts in July.
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p>Presumably this gives them a chance to negotiate with health-care providers based on size and demographics.
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p>I haven’t read the actual proposal, if there is one, so maybe there is an accelerated schedule. But you can’t just turn on a dime and do this.
Maybe municipal retirees have better benefits than Medicare offers, because they negotiated those and were promised them during a lifetime of working for the city/town? How is it fair to screw them out of what they were promised.
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p>Don’t kid yourself about labor being able to negotiate with municipalities. Municipal officials have to make the barest effort to say they negotiated in “good faith”, and then they win in the end. Labor has no voice under this proposal.
someone or some entity goes overboard critizing some small details of an idea they otherwise strongly support, particularly when there are legitimate roadblocks by others that could stop the entire plan. Seriously, the Governor is pushing for something the Globe wants, and the legislature could stop it. DeLeo and Murray both seem willing to pass something similar to what Patrick has proposed, but there’s going to be a lot of push back in those chambers from certain members who won’t want to go against the unions on this one. Where’s the priorities? How does this help pass GIC reform?
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p>No one who’s a strong union supporter wants to be the person who denies them room to talk about health care at the bargaining table, and like it or not, once the switch is made to GIC, that’s what happens.
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p>On the whole, it’s something we don’t really have a strong choice about doing… but at least we can be apologetic about it and make sure we let the unions know we’re still appreciative of what they’re doing — instead of going the Boston Globe route, assuming they’re ebil and go out of our way to let them know we won’t be happy until they’re utterly defeated or destroyed.
If they were serious about forcing GIC onto employees, they would offer to have everyone get the same premium split that state employees have. But they don’t want that. They just want employees to have worse insurance at greater cost.
in some cases, though its likely that will be balanced by more for salaries.
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p>(Something to be bargained over, as always.)
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p>It is not inferior care.
in some cases, though its likely that will be balanced by more for salaries.
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p>(Something to be bargained over, as always.)
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p>It is not inferior care.
I’m covered under the GIC (through my wife’s plan). The benefits are fine, when we switched from my employer paid insurance to hers we didn’t have to switch doctors, or go through all that many hoops, but there is a down side.
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p>Our monthly premium used to be $248 – starting a year or so ago it went up to $370; copays went from $15 to $25 ($45 for our daughter’s eye doctor); and we have a deductible of about $1,000 for the family (it might be $750 per person with a $1,500 family total – I’m not sure, but we expect to spend around $1,000).
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p>So for us, the GIC will cost about $2,300 more in 2011 than it did in 2009, that’s a lot of money. The average local government employee makes about $49,000 a year (Go to the BLS and search series ENU2500050310), if they had a plan similar to our old plan and were forced to join the GIC under our new plan, they effectively receive a 4.8% cut in pay.
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p>Given the state of the budget, that might be necessary, but let’s not pretend it’s something else. The GIC saves money by forcing employees to carry a higher burden of the cost. As the Boston Foundation pointed out:
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p>I’m not saying that a 76% increase in our costs isn’t justified, but don’t tell me it isn’t a 76% increase in our costs.
It is unbelievable how folks spin these cuts. In my town, North Andover, the teachers got a 9% increase in pay over 5 years and had their HC percentage go from 15% to 25%.
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p>The Eagle Tribune spun it as “Teacher get 9% increase in pay and a 10% increase in HC costs.” 10% – when it is really 67%!!
Do you believe anyone in the private sector is not impacted in the same way? I think that is the point, the move to the GIC is to most people shifting to the norm.
When you’ve got a union contract, excepting state employees covered by the GIC, you’ve got a say in your compensation. The boss comes and says, we’ve got to save X dollars, you get to fight over IF you’ve actually got to save that and HOW you’re going to do it.
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p>Now, if you read my post, you’d see that twice, I acknowledged that the cost savings might be justified. Surely the cost savings are justified, however, there are lots of reasons why insurance might not be the place to find it.
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p>Imagine a small town where an outsized percentage of workers utilize a large number of high cost prescription drugs. Now they could join the GIC and save X dollars and see the out of pocket costs of the workforce go up by X+Y. Or they could keep their current plan and take a paycut that’s the equivalent of X. The net savings to the system would be the same, but the circumstances of those workers would have been considered. The Governors’ proposal doesn’t allow for this, or any other creative, locally based solution.
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p>It also doesn’t address the structural problems. The cost savings in the Governor’s proposal come from shifting costs to employees. When the Boston Foundation did their study, they didn’t claim any cost savings from increasing the pool of workers (in fact they mention that the actual illness levels of the workforce could make the group MORE expensive to insure). Now, maybe Patrick’s plan does assume cost savings by increasing the pool, although it if did, I imagine he’d have mentioned that.
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p>So instead of introducing legislation that would further regulate insurance rates; fixing the problem of undersupply of health professionals; increasing access to lower cost clinics; breaking up the monopoly of care provision that is the Boston teaching hospitals; AND pushing employees into a single buying group, he only pinches employees paychecks.
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p>I won’t let the race to the bottom of private sector compensation set the standard for what is fair. We may have to cut pay, but when we’re doing it, let’s call it a pay cut.
unions and towns could in fact work out a solution in your prescription drug example:
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p>They could have a plan with similar costs and adopt that instead. The time is now, hopefully some smart cities and towns are evaluating this and when the time comes for negotiations they could offer alternatives if needed.
What I’m proposing would be a more expensive plan than the GIC – the cost savings come from reducing costs in another part of the contract – reducing vacation, enacting furlough days, job sharing. That’s not allowed under the proposal.
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p>It’s come up with an insurance plan of similar value, or join the GIC – cost savings that come from other areas are irrelevant. Which by the way screws the workers from towns that have sacrificed past wages, vacation, or other compensation in order to keep rich insurance benefits in the past…
where salaries are lower to reflect health-care benefits that are more generous.
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p>I think this is a good point.
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p>The thing is, there are substantial savings from the GIC–I mean real savings, not transfer of costs to workers (which I think are sham savings). Less money to health-care companies for equivalent services, which can instead be spent on salaries.
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p>In my town, management has proposed dividing those savings in such a way as to compensate workers and retirees for additional costs. The unions refused to deal.
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p>I hope that my town will essentially extend the same offer, precisely because salaries for some unions are lower than in comparable towns, which was negotiated years ago in return for generous health benefits.
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p>Taking that into account is not only fair, it’s practical, because services will suffer over time if we do not offer competitive compensation.
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p>There’s no question, however, that if the Gov’s plan is enacted it will change the dynamics of negotiations in every town–because it changes the consequences of not reaching an agreement.
why didn’t it happen? That’s the question you should ask.
But I’ll just focus on one. The Governor could have proposed a progressive income tax to fix the structural budget gap – tax the millionaires and stop handing over money to corporations and maybe we don’t need cuts. Why he didn’t, and why he doesn’t seem to be planning on it, by the way, is the real question we should be asking.
might have done what you suggest, but I am glad Patrick is at least trying to get something done now.
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p>You do know that a progressive income tax is expressly not authorized by the constitution of the Commonwealth?
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p>That it takes 4 years, at best, to amend it, including the votes of two legislatures and another by the voters?
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p>That the last time this issue was put before the voters, it failed?
Labor never had a veto, and never will. Perhaps he’s confused negotiations with a veto. Unless Deval Patrick believes that people should not have a “Veto” over whether they use their own labor, he’s purposefully misusing the word in an inflammatory sense.
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p>Is Deval going to do something about the mismanagement of public worker pensions and health care funds that got us into this mess, or are his fellow politicians going to be ignored so as to target people dumb enough to work in public service?
I’ve seen towns blocked by teachers from joining the GIC where police, fire and town workers agreed to join, they in essence vetoed it.
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p>Not sure I would agree that is the chief culprit but you need to start somewhere and a reasonable start is joining the GIC.
A reasonable start is to unilaterally heap more expenses on a group of people who foolishly believed that both sides should follow their word when they write a contract.
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p>Hey, I’m sorry that in so many towns local politicians were too busy appealing for votes to responsibly manage their commitments, and that has resulted in higher expenses than townie politicians claimed to expect. It’s nice that the governor is bailing them out by breaking contract law, but the only thing this is a start to is disrupting the strongest political force against mass privatization remaining.
where the unions, led by the teachers ASKED the town to consider the GIC and the town refused to talk about it.
What’s missing from any of this is that Governor Patrick is endorsing by legislative fiat the wholesale ability to break contracts entered into by the municipality with unions. Imagine the hue and cry if the governor proposed a plan by which all long-term contracts between municipalities and private companies could be unilaterally changed favorable to municipalities.
…for the law to say that various town employees must join the GIC at the conclusion of their current contracts?
I think you underestimate the extent to which municipalities and government agencies can get out of contracts in a way that private parties can’t. For example, under the doctrine of “termination for convenience,” a government agency can generally terminate a contract by giving a certain number of days’ notice, and it will be liable only for the contractor’s out-of-pocket expenses, not for its lost profits. A private contractor that wants out of a contract has to put the other party in as good a position as it would have been in had the contract been performed, i.e., has to pay the other side its profits. This is a simplification, of course, and as far as I know termination for convenience doesn’t apply in the labor context, but it’s wrong to think that the government doesn’t get special treatment in its contracts.
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p>TedF