|
August 03, 2007 10:48 pm
|
Photos
Eagle-Tribune file photo
|
Editor's notes: Costly commitment sidebar for third part, and sidebars Cahill: Sound system undermined by loopholes; Early retirement costs local taxpayers in N.H.
How one town cut costs, improved benefits
“You have to be creative and see if you can maintain the same level of benefits and save money."
By Edward Mason
CNHI News Service
BOSTON, Mass. — Rising health care costs and unions reluctant to accept change pose a twin threat to municipalities on a tight budget.
But North of Boston cities and towns can overcome union resistance, cut costs and preserve benefits for their retirees. All they have to do is look to Lynnfield, their neighbor to the south.
Facing a budget crunch in 2003, Lynnfield selectmen moved the town’s 112 retired teachers out of the state’s Group Insurance Commission and into the town-sponsored health insurance plan.
William Gustus, the town administrator, said getting out of the state insurance plan was something the town had to do.
“It allowed us to moderate our overall health insurance increase every year since,” Gustus said. “We have much better control than we did with the state. They set the benefits and sent us the bill.”
The state plan theoretically uses its buying power to get good prices — it buys health insurance for all state employees and most retirees. But that doesn’t always work for the cities and towns with teachers in the state plan because of the cost-sharing ratio.
In Lynnfield, retirees on the state plan paid only 10 percent of the cost of insurance while the town paid the rest. Under the town’s plan, retirees pay 15 percent. The 5 percent difference translated into $150,000 savings per year, Gustus said.
A number of North of Boston communities face the same problem. Teachers in the cities of Gloucester, Lawrence, Peabody and Salem, and the towns of Amesbury, Andover, Newbury, North Andover, Rockport and Salisbury are all covered by the Group Insurance Commission.
Earlier this year, Gloucester City Councilor Jason Grow proposed shifting teachers to the city health plan, which pays only 75 percent of premiums. The council rejected the idea in May when a crowd of more than 100 current and retired teachers protested at a hearing punctuated by boos and hisses. But the new head of the teachers union has indicated a willingness to accept the change if retired teachers are grandfathered at the current premiums.
Change wasn’t easy in Lynnfield. The Lynnfield Teachers Association was concerned about paying more and receiving less.
“I can tell you, having dealt with that issue the entire summer, it was painful,” said John Qualters, then the association president. “Dealing with the anxiety of people on fixed income — and the thing that scares them to death is a shift in health insurance.”
The teachers were also suspicious of Gustus because they believed his contract included a bonus for cutting health insurance costs. Gustus said his contract incentives were related to other savings, not health care.
Lynnfield selectmen voted to make the health coverage change in November 2003, despite union opposition.
After the retirees became familiar with the local plan, however, their resistance turned to acceptance. The benefits were as good, and in some cases better, under Lynnfield’s own plan.
“It has worked out,” Qualters said. “I haven’t had a single complaint.”
Lynnfield officials are also happy.
“It allowed us to fund government,” Gustus said. “We avoided an override that year and (were able) to fund our other activities, as opposed to retrenching.”
Gustus said Lynnfield’s experience offers a lesson to other cities and towns that are trying to save money.
“You have to be creative and see if you can maintain the same level of benefits and save money,” he said.
Added Qualters: “Each side also has to understand where the other side is coming from.”
Edward Mason writes for The Eagle-Tribune of North Andaover, Mass. E-mail him at emason@eagletribune.com
|
