House Shows Resolve on Municipal Healthcare Costs

This week, the House convincingly passed a reform amendment that would allow municipal managers greater control over municipal employee insurance plan design and easier entry into the GIC (the state employees’ insurance pool) if need be.

Big Labor has reacted (once again) with what is seemingly its single bargaining tactic: white hot outrage. They’ve already begun to frame this as “another Wisconsin.”

Don’t buy it.

First, a careful reading of the amendment reveals that municipal managers have the power to change insurance plan design up to a cost level equivalent to the largest state plan. In other words, municipal employees will now have an insurance plan either equally costly, in out-of-pocket terms, or less costly than the most popular one given to state employees. Further, they will retain the right to collectively bargain premium cost sharing. This state of affairs hardly squares with the apocalyptic rhetoric we are hearing from some corners on Beacon Hill

Second, if this amendment is indeed the creation of some Wisconsin/Tea Party boogeyman, it’s well-camouflaged. Few would mistake Mayor Menino and Mayor Driscoll of Salem for hard core conservatives. Yet, they, along with many colleagues, have come out in favor of plan design (even threatening a referendum campaign). In addition, the drivers of the amendment, Speaker DeLeo and Ways & Means Chairman Dempsey each have labor voting records of roughly 70% over the past three years, not exactly the mark of individuals deeply hostile to all things union.

There’s a colloquialism called Herb Stein’s Law that reads “if something cannot go on forever, it will stop.” Municipal healthcare has hit that point. Over a seven-year period, the state raised education aid to municipalities by $700 million. Sounds great, right? Makes one think of new teachers, better textbooks, nicer classrooms, etc. Except over the same period, school-related health insurance costs went up by $1 billion, consuming all of the state aid and more. What’s the result? Layoffs, cuts, and fees even with increased state aid.

Pictured more broadly, healthcare had risen from roughly 7% to 14% of municipal budgets over the last ten years. In an environment where municipal revenues are capped by Proposition 2.5, that means other areas of government services are losing out to health insurance costs. Something had to be done.

The House deserves credit for this action. We’ll see if the Senate and the Administration display a similar level of resolve.