2011 is the year for cost-saving municipal health plan design authority

Friends,

Tough to compete with all the posts about how to re-energize the party, but I want to keep trying to move the ball down the field on this issue – it’s a huge opportunity to achieve significant cost-savings and to enact commonsense public policy for the taxpayers.

Nick DeSilvio of the Chelmsford School Committee and I recently penned the following op-ed piece in support of municipal health plan design authority. It appears in the latest edition of the Chelmsford Independent.

Happy New Year!

Eric

Opinion: Time for health plan design authority

By Eric Dahlberg and Nick DiSilvio

Posted Dec 27, 2010 @ 01:46 PM

Chelmsford – Last week, Chelmsford kicked off fiscal 2012 budget planning with a joint meeting of the Board of Selectmen, the School Committee, and the Finance Committee. This joint meeting, which occurs annually each December, serves as an opportunity for the town manager, accountant, and finance director to provide an overview of the town’s fiscal situation.

Two figures regarding the FY 2012 budget stood out. The first is that we expect a $1.4 million decrease (10 percent) in state aid. The second is we expect a $520,000 increase (10 percent) in health insurance spending.

The situation is unsustainable. Spending on health insurance continues to grow at a rate far greater than overall expenditures. Chelmsford will spend 11 percent of its entire budget – 11 cents of every dollar that we pay in taxes – on health insurance in fiscal year 2012. That figure will grow to 25 percent – fully a quarter of our operating budget – in just a few years if this trend continues. The consequences are dire: more and more taxpayer dollars swallowed by health insurance means less and less for schools, public safety, and other critical municipal services.

We would like to get a handle on out-of-control health insurance spending at the local level, but state law prohibits us from making changes to our health plans without agreement from our town employees’ unions. It’s a stupid law that local officials would like to see changed. Unfortunately, the Legislature has been unwilling to do so, even as the economy has deteriorated, state aid has been cut and local officials across the commonwealth scream for something to be done. The reason for Beacon Hill’s intransigence on this issue is obvious: many legislators are terrified of offending the unions.

Fortunately, the grave fiscal facing our state and its 351 communities in fiscal year 2012 presents the members of the Legislature with an opportunity to put their fears aside and implement a straightforward reform: they can pass a simple one-page bill that grants health insurance plan design authority to cities and towns. [It should be noted that Chelmsford’s four state reps, to their credit, have previously expressed a willingness to consider such legislation.]

Plan design authority would empower local officials to make cost-saving changes to municipal health plans without having to go through the collective-bargaining process. If we were to exercise this authority in Chelmsford by amending our health plan so that it resembles the typical plan offered by the state itself (the type of plan, incidentally, that’s offered to our state reps and senators – hardly shoddy coverage), we would save an estimated $1 million annually. In fiscal year 2012, that would almost make up for the expected 10 percent cut in state aid. In the longer term, that’s money we could use to improve deficient services, to restore school infrastructure, or to replenish our stabilization fund.

It is high time that the 200 members of the Legislature put aside special-interest politics, step up, and pass this commonsense, cost-saving reform. If not now, when?

Eric Dahlberg is a member of the Chelmsford Board of Selectmen. Nick DeSilvio is a member of the Chelmsford School Committee.

Link to the op-ed on the Independent’s site is here: Opinion: Time for health plan design authority

http://www.wickedlocal.com/che…

About Eric R Dahlberg

  • Eric, the editorial written by Nick and you is a good place to start in helping municipalities get a handle on health care costs which are threatening to overwhelm municipal budgets unless measures are taken now.

    However, I think we need to go further in the following areas:

    1) Require funding of post employment health care benefits currently rather than the all too prevelant “pay as you go” approach being used today.  Yes, this will be expensive, but soo too are the benefits being provided under these plans and its time we start recognizing the true costs of providing today’s municipal services today and not sometime in the future.  For far too long municipal leaders have granted benefits whose ultimate cost is hard to quantify rather than salary increases whose budgetary pain is felt today.  The state mandated the funding of public pensions funds in the 1980’s and set target end dates for being fully funded (dates which continue to be extended under the guise of “municipal relief” but that is something for another day).

    2) Start the transition of pension benefits to something more along the lines of a 401(k) (403(b) in public sector) where the employee would contribute what they wanted and the employer would match up to X and contribute another fixed percent every year.  Combine this with a move of public employees into social security and you will have everyone on the same playing field.  I am not advocating taking benefits away from those who have earned them, but transitioning away from the current approach over time.

    It all comes down to understanding the costs of current services and who is paying for them.  We have avoided this discussion largely by having benefits whose costs are shifted to the future and therefore do not show up in budgets for years.  Unfortunately we are fast approaching a time where a significant percentage of a municipality’s budget could be devoted to paying for employees who are retired and no longer providing any services to the municipality’s residents.

    We have precious little time for changes to be implemented and have a real impact on the coming wave of financial turmoil facing our cities and towns.  Discussions need to be held at all levels of government.  They are not easy discussions, but the must happen.  Hopefully, your letter and others like it will get people thinking about the issues and elected leaders acting on them.