SALEM — Mayor Kim Driscoll's marathon effort to reform municipal health insurance crossed the finish line yesterday when she notified the state that the city's 1,200 employees and retirees will join the state Massachusetts Group Insurance Commission in July.
The transfer from the city's current health insurance program to the state's will save Salem an estimated $1.3 million next fiscal year, the mayor said.
The decision to join the GIC was the result of an "amicable agreement" between the city and a public employee committee made up of union representatives and retirees, according to a statement from the city.
"It's a good compromise," Driscoll said of the three-year agreement. "It's hard to get unanimity, but I think we have reached an accord that is going to save us money and save jobs, and that's good for everybody."
Union leaders were noticeably silent on a contentious issue that has raised concerns that health care costs could rise for some city workers.
Two union presidents, Joyce Harrington of the Salem Teachers Union and Lt. James Walker of the Police Superior Officers Union, declined to comment on the new pact.
Although how much city employees pay for health insurance will depend on which plan they choose, the cost of copays and deductibles will go up for some workers.
Under the agreement, however, the city will set aside money to reimburse workers for the largest copays: outpatient surgery, inpatient hospital admissions, and MRIs and CT scans.
The mayor made health insurance reform a priority after taking office six years ago and discovering a $4 million deficit largely due to health costs.
After picking away at the problem over the years, she met with unions last year to try to convince them that new legislation that eventually passed last summer would be good for them and the city. The new plan replaces a system in Salem that required all eight municipal unions to approve contract changes, which made health care reform challenging.
"It will provide us short-term and long-term stability," Driscoll said of the state plan. "Health insurance costs have increased so dramatically over the last several years that we needed something stable to avoid big spikes in what for us is a $12 million budget item.
"I really applaud our employees for working with us," she said.
Driscoll said the agreement "respects the needs of our employees and also respects taxpayers."
The mayor said the new plan provides more options for workers and lower premiums for many.
"There definitely will be an opportunity for employees to save money depending on the plan they choose," she said.