Selectmen Move on Health Insurance Costs

by William Dowd 2/3/12

Just in case you missed it, the Selectmen took formal action at its meeting on January 30 to put in motion a process to bring over $1.4 million in savings on health insurance premiums to be shared between the Town and its employees.

After reviewing savings estimates prepared by Town Administrator Paul LeBeau and Treasurer Mary Bousquet, the Selectmen voted to send the proposed plan changes on to the Insurance Advisory Committee.

The Insurance Advisory Committee is made up entirely of employees and retirees. Their job is to review the proposal, and then move it on to a Public Employee Committee for negotiation with the Town. Interestingly, the Public Employee Committee is made up of only representatives from the various local employee unions and a retiree. For some reason, the legislature decided to not give non-union employees a voice in this process. Go figure.

Based on the time limits prescribed in the law and the vote of the Selectmen on January 30, it is expected that the savings would be in place by July 1, 2012, the beginning of the FY13 budget.

As is true in most health insurance cost control initiatives, the word “savings” is deceiving. Most of the “savings” in premiums comes from shifting costs to those who use health care services by a.) increasing co-pays in the doctor’s office and for prescription drugs, b.) imposing up front deductibles and c.) providing only partial coverage for services that have been covered at 100%. So while everyone who pays the premiums – Town and employees – will pay less on that score, those who go to the doctor or hospital, or get prescriptions filled will be paying more.

But then most of the taxpayers in Town know all about this. They’ve experienced these kinds of changes themselves in the health insurance plans they’re covered by where they work. In fact, for many of them, in the time since the Town’s plans were last updated, they may have had several increases in co-pays and/or deductibles on their plans. Keep in mind that the Town plan with the largest number of subscribers still has a doctor’s office co-pay of $5 and prescription drug co-pays of $5 and $10. How long has it been since you’ve had those kinds of co-pays?

In fact, it was just this inability to update the plan design at the bargaining table that brought about the reform last summer that the Town is now invoking. Unions had taken a very hard line on plan design changes, and under the prior law, their permission was required. Now, after proper notice and a reasonable period of negotiation, the plan design can be updated over the objections of the unions.

The Selectmen, Town Administrator and Treasurer are to be commended for getting us to this point. But as arduous as it has been to do the plan analysis and prepare the proposal, that was the easy part of the process. The action now moves to negotiations where the unions have already been very vocal about opposing plan design changes. This is going to get very difficult, and the unions will be pushing to turn back at least some of the proposed changes.

Some will say “negotiations mean compromise”. The theory being that under all circumstances, the proposing party’s proposal is just the starting point, and they’ll just have to back off along the way. However, in this circumstance, the “proposal” is just to get the plan design updated to today, not three or five years from now. The Town’s proposal is not some unrealistic reach, backing down from which gets to reasonable. The Town’s proposal is to get the plan design to today’s mainstream.

And it’s important to point out that under the law, in addition to the premium savings employees will see in their paychecks, the Town is required to give back to employees 25% of the total savings in year one to soften the impact of the change. But that is fair consideration for the long term cost control the Town will see in future years.

The Selectmen are going to need lots of support to pull this off. Remember that the employees involved are neighbors, friends, and trusted public servants. The unions will be applying full muscle to water down the proposed changes, and preserve more of the status quo. The negotiations take place in secret; we don’t get to watch or hear how things are going. We only get to see how it turns out.

Health insurance is eating up our annual budget. Maintenance of our buildings gets delayed, technology improvements get put on hold, needed capital improvements get postponed, fees get increased, local charitable groups get leaned on to step in and pay for things the budget can’t, and training and development for employees gets trimmed. These are just some of the real ways the Town is responding to the ever skyrocketing costs of health insurance. For next year, without any plan design changes, premiums – and therefore the health insurance budget – are going up 8.5% to 9.1%. Moving to bring the health insurance plan designs fully up to date is critical if we’re going to maintain the kind of community and services we’ve come to enjoy.

I urge you to reach out to the Selectmen and urge them to push forward and capture all the available savings in this important step in cost control.

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