Two North Shore towns saved a bundle on steadily climbing health insurance costs by transferring their workers' coverage to a larger state-run pool, according to a report released yesterday.
The study found that Swampscott had realized $1 million in health insurance savings and Wenham had saved $100,000 in the first year of switching from town-administered health plans to the state's Group Insurance Commission.
Those savings are significant sums. In Wenham, for example, the total cost of employee health and life insurance is $532,466 for fiscal year 2011.
Altogether, the 15 communities across the state who have made the switch have saved a combined $35 million compared to what they would have spent on their municipal-based plans, according to the report by The Boston Foundation and the Metropolitan Area Planning Council.
It was a rare piece of good news for town and city managers struggling to find creative ways to balance budgets amid soaring employee health insurance and pension costs.
"The most significant accomplishment in this decade to maintain services and retain jobs without impacting taxpayers has been to join the GIC," said Swampscott Town Administrator Andrew Maylor.
Though the report estimated that Swampscott had saved $1 million in its first year in the GIC, Maylor believed the figure was actually less, about $850,000.
Nonetheless, Maylor said the savings means towns like Swampscott can save jobs.
"It took us a long time," Maylor said of the 17-month process to persuade union leaders and retirees to collectively agree to the switch. "But it was worth every ounce of energy and effort.
"At the end of the day, it means we can employ more people. We can sustain our service level without asking taxpayers for another override."
Three years ago, state lawmakers gave cities and towns the authority to join the GIC, as long as 70 percent or more of union leaders and retirees agreed to the switch.
While 15 communities have made the transition, yesterday's report claims further progress has been stalled because of the 70 percent threshold and the concessions cities and towns have to make to receive approval from the unions.
"If you can't get them to agree to move a $5 copay to $10, it's hard to imagine you'd be able to get folks to move to (the GIC)," Salem Mayor Kim Driscoll said.
While Salem's teachers and American Federation of State, County and Municipal Employees unions agreed to increase their copays from $5 to a tiered plan ranging from $10 to $20, leaders of the police and fire unions rejected the deal.
Meanwhile, Driscoll has been one of the forces pushing "plan design," a change that would allow city and town managers to unilaterally adjust copays and deductibles without union approval.
Unions reject that idea because they say it takes them out of the collective-bargaining process.
Robert McCarthy, the president of the Professional Firefighters of Massachusetts, said that at least the mechanism for communities to join the GIC allows both sides a voice at the negotiating table.
"It proves my point that collective bargaining works," McCarthy said of yesterday's report. "When management and labor sit down as professionals, much can be accomplished."
But the GIC did unilaterally raise copays last year, which stopped several communities from joining the system, McCarthy said.
One potential remedy, he said, would be for communities to set up reimbursement accounts where employees undergoing certain procedures would receive relief.
"We have concerns," McCarthy said. "If a loved one comes down with cancer and has to go to the hospital every day, that's a copay. That can get quite expensive."
Staff writer Chris Cassidy can be reached at firstname.lastname@example.org.