More Than Double Previous Estimates

FEBRUARY 1, 2013: In the 18-months since the passage of Chapter 69, Acts of 2011, cities and towns have saved an estimated $250 million in health insurance costs.

Known as Municipal Healthcare Reform, Chapter 69 paved the way for municipalities to increase copayments and deductibles up to the level set by the state’s Group Insurance Commission (GIC). It also allows for cities and towns to join the GIC, if the state plan can provide additional savings.

While only a handful of municipalities have chosen to join the GIC in recent years (36 in total), a great number have opted to tackle plan design changes either through coalition bargaining (Section 19) or by using traditional collective bargaining.

Association officials have appointed retiree representatives in nearly 150 municipalities, where local public employee committees have been formed to negotiate insurance changes with local officials. Under the PEC process, retirees have a seat at the bargaining table and an automatic 10% weighted vote.

When the law first passed in 2011, state officials estimated a total savings of $100 million. With fewer than half of the state’s 351 cities and towns now having implanted the law or ushered in their own changes, the savings estimates are now 150% of the expected savings.

“Back in 2011, our Association and the public employee unions argued that the $100 million in projected savings was a low estimate. Now we know the municipal savings was actually 2.5x higher and growing,” says Association Legislative Liaison Shawn Duhamel. “If fully implemented, we could be looking at savings coming close to $500 million. And make no mistake; much of the savings for municipalities has been a direct cost increase to retirees and active employees.

“This huge cost shift must be taken into account as further reforms are being considered. Retirees can only be expected to shoulder so much of the burden.”

Members can look to the May 2013 Edition of the Voice for further information on this issue, along with a listing of savings achieved per community.