Wednesday, April 27, 2011

The Health of the Bargain...

Beacon Hill (WMassP&I)
Yesterday, the Massachusetts House of Representatives effectively voted to give cities and towns the unilateral right to set deductibles and co-pays for their employees health insurance.  Additionally, communities would no longer required to seek public employee approval to transfer insurance to the state's Group Insurance Commission (GIC).  The 111-42 vote surprised organized labor, while drawing caution from the Senate and Governor Deval Patrick.

The effort to allow communities to join the GIC has been building for years.  It has been consistently road blocked by the public employee unions, largely without explanation.  That the legislature has decided to grant this right over the objection of the unions is not really the news.  While the unions still oppose it, in all likelihood, they knew it was never an important loss to them.

By way of information, Springfield joined the GIC during the Control Board's tenure.  When asked what the deductible/co-pay provision's impact would be on Springfield's budget, the office of Mayor Domenic Sarno had no comment.

What is more striking is the ability to set deductibles and co-pays unilaterally.  Well, technically it is not unilaterally. Under the amendment, which can be read here, municipalities and other government bodies would call the affected public employee reps together and begin negotiating.  However, after 30 days, if no agreement is made the employer's offer wins.  Notably, none of this amendment takes effect unless the governing body like a city council or town meeting "accepts" it as is the language of such local administrative laws.

Speaker DeLeo (WBUR)
Unions are screaming that this is like Wisconsin or Ohio.  House Speaker Robert DeLeo contends that this is a necessary tool to save cities and towns during yet another tough fiscal crisis and that this is exactly the same rights the commonwealth has with its employees.  Frankly, however, neither of them are entirely right.

The unions are right that the ability of municipalities to set their own rates is like what has happened in Ohio.  That state's SB 5, among its many draconian provisions, essentially forces unions to accept the local community's first offer if an impasse ensues.  However, there are some important caveats in the Massachusetts bill.  The unilateralism only appears if the community joins the GIC.  Realistically, only a few communities gain anything by NOT joining, but still.  Additionally, unlike SB 5 in Ohio, virtually all of labor's rights to bargain is intact.

At the same time, DeLeo's push does not appear to be as much about giving cities and towns the tools they need as much as painting a picture of fiscal responsibility.  DeLeo and the House, like the Senate and Patrick have left a 7% cut in local unrestricted aid on the doorstep of municipalities.  Consequently, he feels pressure to give municipalities some legroom by delivering this reform.  Originally the amendment included an arbitration provision, which may have salved unions or at least made their complaints seem petty.  That arbitration clause was jettisoned leaving the 30 day period a fine example of solid window dressing. 

Sen. Pres. Murray (Official Website)
The Boston Globe reported that DeLeo said this bill was among the best moves the legislature could make to control costs.  However, that is simply untrue.  Gov. Patrick has been pushing reforms in the area of health care costs, which have driven premiums up, including those of government workers.  While Senate President Therese Murray was totally down with getting a version of Patrick's bill passed ASAP, DeLeo demurred.  The Speaker is not against the bill, he simply does not view it as much of a priority.  However, passage of that bill, if effective would provide municipalities as well as private employers and the self-insured considerably more relief than this legislative language would.

The governor's bill would not provide immediate results and so some form of this legislation may be necessary.  However better protections could have been built into the system.  Limits on the increase in deductibles and co-pays could relieve employee anxiety.  An arbitration provision could also do the trick.  However, such a provision would need sufficient weight to yield a fair result to the municipalities.  Arbitrators have historically favored labor without much to back it up.

MA House Chamber (wikipedia)
Locally almost all House members voted for the amendment.  This result is probably less a reflection of members' true conviction in the legislation and rather a display of the parliamentary (as in British Parliament) nature of the Massachusetts General Court.  We have discussed in the past how the leader of the body tends to not only decide which legislation moves, but what passes at all.  Although the Republican caucus in the House largely joined the majority to pass the amendment, the yes votes among some staunchly left-leaning members has DeLeo's fingerprints all over it.

The cool reception from the Senate and the Governor indicate that this provision as written will not survive into the final budget.  However, its inclusion has nevertheless whipped labor up into a frenzy.  It appears that labor has the facts and, for the moment, history on its side.  However, it cannot afford to overreach.  It must draw attention to the phony involvement it has been given in the process.  Ideally, they would ally with Patrick's call to reduce medical costs overall as a better health payment system will benefit all of their members.

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