Municipal Health Care Benefits – Can Taxpayers Afford Them Anymore?

Just in time for municipal budget season the Massachusetts Taxpayers Foundation and the Boston Foundation have come out with a report comparing municipal health care benefits for 14 communities with plans offered by the Group Insurance Commission, the Federal Government and the Private Sector.…

While most would have anticipated that the benefits provided to municipal employees were more costly to the municipalities and their taxpayers than plans offered in the private sector, I, for one, was shocked at the 37% cost differential between the average private sector plan cost and the cost of these taxpayer provided benefits.  And this does not even begin to factor in that these municipal employees also receive these taxpayer funded benefits after they retire, a benefit rarely provided in the private sector.

This is not to say that municipal employees do not deserve fair benefits, they do.  However, it is time to recalibrate the definition of “fair” as the taxpayers are being asked to pay higher insurance premiums resulting from government health insurance regulations be they Romney Care or Obama Care, the effect is the same, higher costs for the same or less care while facing the call for higher taxes to fund the benefits provided to municipal employees.

Let’s look at Somerville as an example of the differences in the benefit costs:

The comparison point will be the HCHP HMO plan offered to Somerville employees.  I chose this plan as it is the least costly of the two HMOs offered by Somerville. The private sector (PS) is represented by the AIM survey HMO results in the MTF report.

Cost Individual Plan – Som $8,661 (85% paid by Som)

Cost Individual Plan – PS $5,436 (71% paid by PS)

Cost Family Plan – Som $23,480 (85% paid by Som)

Cost Family Plan – PS  $14,748 (70% paid by PS)

Just shifting to the plans offered in the private sector without changing the percentage of premium covered would save the City of Somerville over $7,400 per family plan recipient!!  Think about it, they get the same plan as you and I, but pay less for it and the City still saves $7,400 per family!  

Now why would the plans offered to Somerville cost so much more than the plans offered to private sector employees.  Taking a look at co-payments and deductibles provides the answer:

Annual Deductible – Som $0

Annual Deductible – PS $914 (I) $1,897 (F)

Office Visit Co-Pay – Som $10

Office Visit Co-Pay – PS $20

Specialist OV Co-Pay – Som $10

Specialist OV Co-Pay – PS $20

High Tech Imagining Co-Pay – Som $0

High Tech Imagining Co-Pay – PS  $94

Outpatient Surgery Co-Pay – Som $0

Outpatient Surgery Co-Pay – PS  $273

Inpatient Co-Pay – Som $0

Inpatient Co-Pay – PS  $483

And what about prescription drugs:

Generic Co-Pay – Som $5

Generic Co-Pay – PS  $13

Preferred Brand Co-Pay – Som $10

Preferred Brand Co-Pay – PS  $28

Non-Preferred Brand Co-Pay – Som $25

Non-Preferred Brand Co-Pay – PS  $49

The numbers from premium costs to out of pocket costs for co-pays (or non-co-pays as the case may be) are very telling.  Without prompt attention to this matter on the state and local level these expenses will continue to chew away at municipal budgets leading to reduced services, higher taxes or most likely both.

Somerville’s elected municipal leaders have voiced their choice for how to deal with the issue.  They have voiced their support for a constitutional amendment to provide for tiered income tax rates in MA so that the “rich” can pay their “equitable” share.

While I am not opposed to looking to additional revenue sources when all avenues have been exhausted, they have not even made a token effort at bringing the costs of their municipal health care plans in line with those provided to the very constituents from whom they would ask for more in tax dollars.

I believe that information such as that provided in the MTF report is a valuable tool in bringing government provided benefits in line with the realities of the day.  We need this issue front and center on every municipal leader’s desk every day.  It should be on every budget agenda this spring and if it is not, constituents should raise the issue and point to this report asking “what are we as a city or town doing to control these costs”?  The time for complacency has long since gone by.  We are playing catch-up now and the sooner we start seriously addressing these issues the sooner we can restore balance to our municipal budgets, until then, I am fearful we are only playing shell games, the kind that no one wins in the end.

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