Should cities and towns be allowed to ask retirees to pay more for health care?

THE ARGUMENT

AUGUST 26, 2016

YES

Mayor of Amesbury

SCOTT WINTERS

Ken Gray

Our state legislators are at it again — rewarding favored constituencies and forcing local property owners to foot the bill — as if cities and towns don’t have enough unfunded mandates already.

As part of the 2011 law giving cities and towns greater power to control their insurance costs, municipalities were allowed to set the contribution rates retired municipal employees pay toward their health insurance. In Amesbury, retirees pay 20 percent while the city funds the remaining 80 percent. While Amesbury has no plans to change that, many communities need flexibility.

The price of health care has long been a huge issue for cities and towns. Costs are high, unpredictable, and are rising much faster than inflation, making them extremely difficult for municipalities to absorb without sacrificing other critically needed city services. The old law was effectively an unfunded mandate and a double whammy for local property owners: while their own personal health insurance costs are rising dramatically, they are also forced to absorb the increasing costs of retirees’ plans through their property taxes.

The 2011 law is a good solution. Local control means local leaders are held accountable to local retirees and property owners.

However, when the 2011 law was originally passed, a three-year moratorium was put in place, delaying until 2014 implementation of the provision relating to retiree contribution rates. In 2014, the moratorium was extended for two more years. It was finally set to go into effect this past July 1 when yet another two-year moratorium was inserted by lawmakers into the state’s fiscal 2017 budget. Governor Charlie Baker vetoed the extension, but his veto was promptly overridden. The law will now take effect on July 1, 2018, unless, of course, it doesn’t.

Then-Governor Deval Patrick and the Legislature thought it wise in 2011 to give local government an important tool to manage their health insurance costs. Unfortunately, for the second time in two years, our legislative Lucys have pulled the football away from us municipal Charlie Browns. Cities and towns that had planned on saving funds for the coming year on the basis of the moratorium ending will have to make it up elsewhere in their budgets.

I’m rooting for the law to finally take effect in 2018, but I’m betting on the Lucys.

NO

Frank Valeri

Saugus resident, Mass Retirees Association president

Frank Valeri

Municipal retirees should not pay more for health insurance because they are already paying more than their fair share.

Across Massachusetts, the average pension benefit for retired municipal workers is just $22,000. In our small towns, the average rarely breaks $20,000. And since our public workers do not participate in Social Security, retirees’ pensions are often stretched to the penny.

In the state Municipal Insurance Reform Law of 2011, cities and towns were given great power to control their local health care costs without the need to bargain with unions or retirees. These powers include the ability — through changes to insurance plan design — to increase copayments and deductibles up to levels set by the state Group Insurance Commission – which are on par with costs paid by private sector workers.

Municipalities also can opt to join a regional insurance group or the state GIC as a means of further controlling costs. Some 43 cities and towns now belong to the state GIC.

The 2011 reform also stipulates that municipalities choosing to implement the law cannot increase both out-of-pocket costs and insurance premium contribution percentage rates for retirees. This so-called “moratorium” protects municipal retirees from unfair and unaffordable increases in their insurance costs.

At present, the average municipal retiree pays 30 percent for his or her monthly health insurance. Those retirees eligible for Medicare also are responsible for their Medicare Part B premium, which currently costs $104.90 per month for most retirees, with many paying higher costs because they do not receive Social Security.

Local retirees pay an average of over $2,700 a year in health insurance premium costs. For a couple, costs double to $5,400, not counting copayments or deductibles, which now average some $900 a year per person.

We believe the moratorium provides a temporary protection for retirees while a long-term solution is developed. Our association will continue to work with Governor Charlie Baker, the Legislature, local officials and our union allies to pass a fair, stable, and sustainable solution for public retiree health insurance.

What we cannot support is the continued cost shifting onto retirees that some municipal officials believe is the answer to balancing local budgets. Cities and towns already have the tools needed to lower insurance costs in a fair manner.

Source Boston Globe, August 26, 2016

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