The new state budget will give Massachusetts town and city leaders more power over how much municipal employees pay for health coverage in a bid to limit the pain that soaring insurance costs are inflicting on local budgets.

The new state budget will give Massachusetts town and city leaders more power over how much municipal employees pay for health coverage in a bid to limit the pain that soaring insurance costs are inflicting on local budgets.

The plan will allow towns and cities to change copays and deductibles that workers pay for health coverage or shift employees to the state’s Group Insurance Commission.

Local unions will still have a say on the changes during a 30-day discussion period and on a review panel if an agreement cannot be reached. But ultimately, the new rules give municipal leaders more leeway to make such changes, which until now have been subject to collective bargaining.

The new rules come after a last-minute agreement between Gov. Deval Patrick and legislative leaders on changes to the measure, which the House and Senate agreed on earlier this month.

Municipal managers and tax watchdogs, who had called on lawmakers to give towns and cities more flexibility to design health plans, praised the final product.

“I think the end result is a strong reform that is balanced,” said Geoff Beckwith, executive director of the Massachusetts Municipal Association. “It comes with real savings opportunities, and there is a real role and a voice for labor, but it’s not a veto.”

Unions, too, said the final plan will help communities save money, but protect retirees and employees with major health problems from huge escalations in cost.

“We think this is a win-win all around,” said Shawn Duhamel, legislative liaison for the Retired State, County and Municipal Employees Association of Massachusetts. “It’s not every single thing we were looking for, but the process is never going to be 100 percent in your favor. We think this is a fair resolution.”

The measure will affect municipal workers of all stripes, ranging from police and firefighters to teachers and librarians to highway crews.

The Mass. Municipal Association has estimated towns and cities could see $100 million in savings if they opt to make changes, or 6 percent or so, depending on the community. It will be up to municipalities whether to opt into the new system.

Michael Widmer, president of the Massachusetts Taxpayers Foundation, stressed that the plan will require any new copays and deductibles to be on par with the most-used plan in the state’s Group Insurance Commission.

“It’s not a race to the bottom or anything like that, which just says we’re going to gut health care for municipal employees and retirees,” Widmer said. “To the contrary – it preserves generous plans, but at the same time will allow cities and towns to save large amounts of money in year one and growing after that.”

Patrick, legislative leaders and union representatives last Friday announced four amendments to the plan, which the governor planned to file with the Legislature on Monday as he signed the state budget. Lawmakers quickly passed the changes and the governor signed off on the final package on Tuesday.

According to the Mass. Municipal Association, the amendments will:

· Tweak how mitigation funds for retirees, employees with major health care needs and low-income workers are calculated. Towns and cities that opt into the new plan would set aside up to 25 percent of the insurance savings they see in the first year after changing copays and deductibles and use that money to help offset the impact on vulnerable workers.
· Require communities that want to switch employees to the state’s Group Insurance Commission to demonstrate that the move would save 5 percent more than possible by making the maximum changes to local insurance plans.
· Freeze any increases to the percentage that retirees contribute toward their health care plans until mid-2014.
· Change language meant to clarify that municipalities cannot unilaterally change basic coverage, such as mental health or chiropractic services, under the new plan. Such changes would still be subject to bargaining with unions.

Beckwith described the amendments as “clarifications and refinements” while leaving strong reform measures intact. Widmer agreed.

“There’s always compromise, of course, in any complex and politically difficult piece of legislation, which this definitely qualifies for,” he said.

Duhamel stressed the importance of mitigating any effect on retirees, saying the average pension statewide is $18,000.

“These people are not rich by any stretch,” he said. “Any increase in their out-of-pocket costs makes a big difference.”

Tom Gosnell, president of the American Federation of Teachers of Massachusetts, also said protections for retirees and workers with serious illnesses are important. The overall problem of the rising cost of health care remains, he said.

“That’s a major American problem – it’s not just a problem in the Metro Boston area,” Gosnell said. “Believe me, we will work with anybody to control health care costs.”

Cities and towns may not opt to change health care plans right away, Widmer said. The Patrick administration still needs to issue regulations on when the changes can go into effect, he said.

“I don’t think there will be a rush to do it in the first 90 days,” he said. “But I would think and hope the vast majority of cities and towns, if they haven’t already reached some agreement with their unions, would look at this closely in the next six to 12 months.”

(David Riley can be reached at 508-626-3919 or driley@wickedlocal.com.)