PEABODY — The president of a fiscal watchdog group yesterday promoted a move to save cities and towns millions of dollars by letting them design employee health care plans without union approval.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, said giving local leaders control over the health insurance they offer, or letting them join the state plan, is the key to significant savings as many municipalities face substantial cuts and potential layoffs.
Business and political leaders gathered yesterday at the Peabody Marriott hotel for the North Shore Chamber of Commerce's economic and public policy breakfast forum, where he pushed to "allow municipal officials to design health care plans outside of collective bargaining."
"It's a huge savings," Widmer said.
The state adopted such a plan, called Group Insurance Commission, or GIC, and many local mayors have been lobbying hard for the Legislature to pass a bill that would give them the same rights.
It could save about $1.2 million in Salem, Mayor Kim Driscoll said, and as much as $2.5 million in Beverly, Mayor Bill Scanlon said. Peabody Mayor Michael Bonfanti said the city has already saved about $1.5 million through higher co-pays and increasing employee insurance contribution from 10 percent to 15 percent — but those changes took about two years of union negotiations.
Driscoll said the city could save $800,000 by increasing co-pays from $5 to $15 and brought the idea to unions last year, but all eight turned it down.
"We've had reasonable discussions with them," Scanlon said of Beverly unions joining the GIC. "But they don't have an interest."
At least, not without the city sacrificing so much that it's not worth it, he said. To be fair, talks did lead to increasing co-pays from $10 to $15, but Scanlon would like the authority to create a plan that would be equal to, or better than, the state's GIC. Employee contributions would continue to be a part of negotiations.
"I get insured by it, too," he said. "I don't want a crummy plan."
However, Widmer admits, it's no surprise that employees are not easily hooked on a plan that could give them less.
"It's a very difficult sell for unions," he said. But cities and towns are in a tough financial spot, and in municipal health care lies the opportunity to generate the most in local savings.
"The numbers demonstrate dramatically that we can no longer afford the high level of health care and pensions in the public sector," Widmer said.
He applauded Gov. Deval Patrick's pension reform proposal as a step in the right direction, but warned that the majority of spending in next year's budget comes from one-time revenue sources slated to run out.
"It's good for 2011, but we're really simply delaying the day of reckoning for 2012," he said.
Widmer also pointed to a proposal to appear on November ballots that asks voters to reduce the state sales tax from 6.25 percent to 3 percent.
"I think there's a reasonable 50-50 shot that this will pass," he said. If so, it would mean $2.5 billion less in revenue. He stressed the need to reform unemployment insurance, reduce the costs of doing business in the state, and to start putting a portion of capital gains into a rainy day fund instead of into the state budget, where it gets spent.
Widmer also had some good news.
"I think we have finally hit the bottom," he said. He encouraged local leaders to take advantage of this financial crisis.
"The public is clearly looking to our officers to make major changes to how government is structured and financed," he said. "These are wild and wily times, but this is the moment of opportunity."
Staff writer Cate Lecuyer can be reached at clecuyer@salem news.com.
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