City Officials, Public Unions Take On Rising Health Insurance Costs

Mayors and town managers say they will have to lay off more employees unless the Legislature gives them the power to reduce health insurance costs without having to negotiate with unions.

It seems that everyone has a plan to save money on public employees' health insurance, and all were at the State House Tuesday to argue for their plan.

Mayor Thatcher Kezer has managed to use collective bargaining to save Amesbury a bundle on health insurance. He agreed to raises for Amesbury's employees in exchange for higher health insurance premiums, deductibles and co-pays. So, he said, unions became his partners in lowering Amesbury's health care costs.

"Reducing the cost of municipal health care is the most important issue facing cities and towns right now."

Boston Mayor Thomas Menino

"What we were able to do in Amesbury was to succeed through the negotiating process for a small shift," Kezer said, "a small change in our plans, and it saved us about $300,000 last year, when really, what I needed was a half million to $750,000 in savings that I could have gotten if I could have gone to the $15 co-pays that I wanted."

But the costs are still rising fast. Kezer was at the State House Tuesday, asking the Legislature for more power to design Amesbury's health insurance coverage.

Amesbury is the state's smallest city. It has a population of 17,000 and employs about 500 people. Kezer has to close a $1.9 million deficit in Amesbury's schools. He said if he can't get more authority to save money on health insurance, he'll have no choice but to lay people off.

"As a mayor, I understand one thing about municipal government," Kezer said. "We are a service delivery organization, not an employment agency, but I need these employees in order to deliver the services."

Gov. Deval Patrick has proposed giving mayors and unions limited time to negotiate savings on health insurance. If they can't agree, then the municipal employees would be forced to join the state employees' health insurance plan. Patrick has already pushed through legislation that allows cities and towns to join the state plan. On Tuesday, Dolores Mitchell, who runs it, said few have taken the governor up on his proposal.

"You know, there's the old adage that says, 'If you build it, they will come,' but it turns out that that ain't necessarily true. Some came, but not very many."

Not many came because 70 percent of a city or town's employees have to agree to move over to the state plan. Since teachers usually make up more than 30 percent of a town's employees, the teachers' union can block the move every time.

Sen. Kenneth Donnelly, of Arlington, a former firefighter, said the unions voted down joining the state plan for good reason.

"Many of the unions sat down and looked at what it would cost for their sicker members," Donnelly said, "for people that get older, if people had families, if you had a spouse with catastrophic illnesses, and those costs are astronomical."

Unions have their own proposal that would give employees back half the savings they agree to negotiate with a city or town.

Mayors and town managers are asking for the freedom to design employees' health insurance plans without having to negotiate them.

Among those pleading for help from the Legislature Tuesday was the mayor of the state's biggest city.

"Reducing the cost of municipal health care is the most important issue facing cities and towns right now," said Boston Mayor Thomas Menino.

Menino said over the last 10 years, his city's other costs have gone up by 27 percent, but health insurance costs have more than doubled.

"If we do nothing across the commonwealth, cities and towns might as well change the name of our government buildings from City Hall to City Health Insurance, because that's the only service we'll be able to provide for our constituents," Menino said.

Menino walked a fine line between pushing for savings and not antagonizing public employee unions. He said if unions do not have a seat at the table, the middle class will be hurt. He captured the tension between the desires of those who run the state's cities and towns to deliver services at lower costs and the fears that state legislators have of antagonizing the state's powerful public unions.