Cities and towns can manage skyrocketing health care costs by joining the Group Insurance Commission (GIC), which provides health insurance and other benefits for 275,000 state employees and other groups.  As of 2007, municipalities are now able to join the GIC, and to take advantage of lower health insurance costs negotiated by the state.  Municipalities that wish to join must get the support of the unions representing most (but not all) of their employees.  

A recent Massachusetts Taxpayers Foundation report underlined the crisis in municipal health insurance costs. Their 2005 survey of 32 cities and towns, undertaken in cooperation with the Massachusetts Municipal Association, found that employee health care appropriations had risen 63% since 2001, at the same time that total municipal budgets had only grown 14%. Eighty percent of all property tax revenue growth from existing properties allowed under Proposition 2½ went to one line item – health insurance for employees – and one-fifth of communities responded that health insurance costs ate up all the revenue growth allowed by Proposition 2½.

Municipalities considering a switch to the GIC may find the process daunting.  MAPC currently operates a “Municipal Health Insurance Action Center” that provides background materials, analytical tools, model agreements, and case studies.  MAPC also provides assistance directly to cities and towns by conducting analysis of the costs and benefits and facilitating conversations among management and unions

MAPC and stakeholders should monitor participation in the GIC and reevaluate the program over time, with an eye toward amending the legislation.  Among the options that might be considered in future years: decreasing the threshold for union approval; or requiring GIC participation for municipalities that have very high annual health insurance increases (e.g., more than 25% beyond the state’s increase) to transfer employees, dependents and retirees to GIC coverage.

Municipalities can also save money on their health insurance costs by requiring all retirees to enroll in Medicare, as allowed by existing law.  This move shifts a significant portion of health care costs to the Medicare system; though municipalities may still need to provide an extension plan so that their benefits are comparable to those in the municipal plan.  A legislative change is needed so that enrollment of retirees in Medicare does not require a municipal legislative vote, but instead be at the discretion of the same authority (e.g., mayor or board of selectmen) that is authorized to make other health insurance decisions.  Over time, the Commonwealth may also consider requiring all cities and towns to enroll retirees in Medicare. 

6.a    MAPC should expand its assistance to municipalities wishing to join the GIC

6.b    MAPC should draft legislation amending Chapter 32B § 18 to facilitates cities and towns enrollment of retirees in Medicare

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