1. The Good, The Bad, and The Ugly
March 24, 2012 Educational Conference

2.  Reform Law Overview
 How Has Bargaining Changed?
 Preparing For Implementation
 Case Studies
◦ The Good – Chelsea
◦ The Bad – Chelmsford
◦ The Ugly – Salem
 Lesson’s Learned

3.  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

4.  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

5.  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

6.  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

7.  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

8. 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 retirees
Union’s Position:
 Stay out of GIC
 Protect Retirees
 Multiple year protection against further changes

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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)

17. 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!”

18. 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!

19. 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

20.  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”

21.  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