Education conference the good the bad and the ugly

Bargaining Health Insurance Under the 2011 Reform Law

The Good, The Bad, and The Ugly

March 24, 2012 Educational Conference

Reform Law Overview How Has Bargaining Changed? Preparing For Implementation Case Studies

◦ The Good – Chelsea◦ The Bad – Chelmsford◦ The Ugly – Salem

Lesson’s Learned

Table of Contents

Continued rise in healthcare costs Massachusetts economy driven by the

healthcare industry◦ Educational institutions with hospital partners◦ Robust Bio-Tech industry leading to new, innovative and

costly procedures◦ Healthcare access around every corner

Lingering recession Decreased municipal revenues Steady diet of calls for reform to public

employee benefits

Reform Overview – What Drove This Legislative Change?

Beacon Hill Dilemma– March 26, 2011

Massachusetts Municipal Association [MMA] wants to remove health insurance from collective bargaining

Municipal leaders pressure Legislature for cost relief

Governor Patrick wants to reduce municipal health care costs without taking insurance from collective bargaining

Labor calling for protection of collective bargaining How did all these interests merge?

◦ Chapter 69 of the Acts of 2011 Municipal Health Insurance Reform

Reform Overview Adds New Sections to MGL 32B – governing

municipal health insurance; Sections 21 – 23◦ Section 21: Procedural language on adoption and

implementation◦ Section 22: Allows for unilateral implementation

of copays and deductibles matching that of the GIC

◦ Section 23: Allow for the unilateral transfer into the GIC

Detailed regulations provide a guideline for the process of implementation

How Has Bargaining Changed Bargaining is limited to 30-days Management is “Encouraged to bargain in

good faith” – This is NOT traditional bargaining

If agreement can’t be reached, municipal proposal shall be implemented by a 3-person review panel

Union’s leverage is severely weakened Reform law has no mechanism for dispute

resolution or impasse procedures

Over 125 Cities, Town’s, and Regional School Districts have adopted the legislation since July 2011

Management is preparing and so should we! Contact your AFTMA Field Rep. for assistance Plan an organizing meeting with your local unions to

become educated and prepare for the inevitable adoption of the law

Watch local meeting agendas for health insurance discussions◦ S.C. meetings◦ Town/City councils◦ Directors for collaborative schools

Preparing For Implementation

City’s Position: Delay adoption of reform law to allow for

bargaining with unions Concluded that GIC would achieve the most

savings - $1.6 Million to City Wanted to balance savings against the impact to

employees and retireesUnion’s Position: Stay out of GIC Protect Retirees Multiple year protection against further changes

Case Study 1: “The Good” City of Chelsea

The Process Union coalition organized themselves and

sought help from affiliate unions and counsel City and Union’s worked collaboratively to

explore options outside GIC Reviewed costs and plan design options in

area communities Union Coalition never wavered on their

advocacy for retirees and lower wage workers


The Outcome 3-year Section 19 agreement – NO GIC Moved all coverage to Harvard Pilgrim with low

copays Implemented hospital copayment with 100%

reimbursement by the city Achieved additional savings by adjusting employee

contributions (2.5% school-side and 5% city-side) Matched GIC Savings for city of $1.6 Million Grandfathered existing retiree contributions Partner with city to explore additional savings options Successor agreement language


Keys to Success Coalition got organized and educated

early and met often Willingness by management to work

with the unions Recognition by all that changes had to

be made True bargaining – Give and Take from all

the parties


Town Position: Adopt new reform and implement changes as quickly as

possible Wanted changes in February rather than wait until end of

the current fiscal year Chose to ignore signed MOA on health insurance changes

made the year before Proposed GIC-Benchmark level copays and deductibles Union’s Position: Delay implementation of changes Request Town to honor Health Insurance MOA Provide mitigation for employees and retirees Multiple year protection against further changes

Case Study 2: “The Bad” Town of Chelmsford

The Process Town had no interest in “bargaining” as we

know it – viewed 30-day obligation to bargain as a courtesy.

Coalition met regularly outside bargaining to prepare and become knowledgeable about the issues

Attempts at compromise on plan design failed

Reached agreement on the 29th day of the 30-day cycle


The Outcome 1 year, Section 23 agreement Adopted GIC-Level copays and deductibles Implemented Mitigation plan that provides a pre-

loaded medical debit card to all subscribers◦ More for Retirees, less for Active◦ Leftover mitigation money will be distributed back to

subscribers via a check Unions incorporated exploration language to review

whether joining the GIC is reasonable Achieved an estimated savings of $1.5 Million to the

Town and $800,000 for subscribers All subscribers will have lower premium costs


Why “Bad?” Management’s belief that legislation must be

adopted and exercised to the fullest extent on behalf of the taxpayers

Unwillingness to compromise on the part of the town

No leverage for the union’s within the reform law

Recognition that there was no way to avoid the implementation of GIC-level copays and deductibles


City’s Position: Force transfer to GIC Minimal mitigation Implemented reform law as close to GIC

commitment deadline as possible Union’s Position: Sharing of the “savings” to lower premium

costs for all subscribers Improve Retirees Protect members against impact of GIC plan

designs (copays & deductibles)

Case Study 3: “The Ugly” City of Salem

The Process Union coalition organized and met before bargaining to prepare City proposal was driven by money, no empathy for impact to

employees or retirees Coalitions use of experts at the table got an angry response

from the city – We knew more about Healthcare than they did No commitment by City to bargain in “good faith” Union’s arguments and proposals were not heard by decision

makers Remarks from the City during bargaining:

“We will not entertain any proposals from the PEC” “You have no leverage, we hold all the cards”“Members will have to choose, CHANGE doctors and pay

lower premiums or KEEP their doctors and pay more premium!”


The Outcome Transferred to GIC for three years 5% concession by city on PPO contributions Health Reimbursement Arrangement for some

higher cost copays City agreed to pay HRA administrative expenses Employees and Retirees will be forced to pay

higher premium costs unless selecting a limited network HMO

City saves $1.5 Million and employees/retirees share only $122,000 in lower premiums!


Why “Ugly?” City appeared angry that coalition used

knowledgeable representatives to bargain Coalitions requests to meet with the Mayor to

discuss reasonable compromise was ignored Reform’s intent to lower everyone’s premium was

ignored by the city Denial to accept proposals from PEC and treat the

process as a negotiation No acknowledgment of significant changes in both

plan design and contributions made by unions over the past three years


Union Coalitions must be well prepared and informed

Success can be achieved if management is willing to compromise and coalitions present a united front

Eventually, every city and town will explore this law:

◦ Mass. Municipal Assoc. and Taxpayers Foundation are encouraging everyone to adopt this law as soon as possible – “get it done and move on”

Lessons and Realities

Engage other unions in discussion to prepare for the inevitable adoption of the law

Use your resources – AFTMA field staff and published materials

Understand your plans and costs Stay proactive instead of reactive

What to do Now?

Health & Medicine

Education conference the good the bad and the ugly