While health insurance reform is on the national table, the city and its unions are also discussing some major changes in the way that health insurance is offered to city employees.
As the administration has bemoaned for years, health insurance has become the single, most expensive proposition each year in the City Budget. Increases of 10 percent – which amounts to millions – are common from year to year.
Partially, that’s because city workers typically have the Cadillac of health plans, most of them choosing the HMO Blue Plan. According to Mayor Tom Ambrosino, that plan will cost $21,000 per employee next fiscal year.
Of that total cost, the city picks up $17,850 of it, the employee $3,150.
Ambrosino said it cannot continue much longer, and this week he advocated heavily for the state to approve what is called ‘Plan Design.’
“That’s really an issue that has to be addressed at the state level soon,” he said on Monday, with an eye looking towards his upcoming City Budget proposal. “Cities and towns have to have Plan Design. We have to have the ability to design health plans without union interference…It would save millions and millions statewide at no cost to the Commonwealth. We would save $4 million per year with Plan Design.”
Currently, health insurance is a major bargaining chip for local unions. Over the past few years, most every city union has negotiated good pay increases in exchange for slightly upping their health insurance costs.
With Plan Design, that bargaining chip would be cashed out.
Already, the mayor has been talking with the various unions about such a move – apparently in preparation for any state approvals. Union officials indicated that the mayor has agreed to present a mock plan to them some time in mid-February.
Until then, most union officials are declining to talk too much about it.
Jim Caramello, president of the Revere Firefighter’s Union, said he and his members are taking an open mind into the discussions.
“The city needs relief, especially in health care,” he said. “The point is we’re open-minded. It’s not egregious for the union to say that instead of saving $100 on health care and keeping it all, that the city would save $50 and then trickle some of the rest back to us in the form of raises. That’s bargaining. That’s not being greedy. That’s working together.”
Caramello said that in certain circumstance, a Plan Design or more options might be better for some employees.
For instance, a younger person without a family could benefit from having a smaller policy, rather than having to pay for full coverage for a family.
Likewise, an older worker – maybe an empty nester – might benefit financially from a plan in which only themselves and a spouse were covered.
“It may work out to be an advantage to both the city and the members,” said Caramello.
However, he said they would not be in favor of anything that would compromise the health care of the workers.
But that just may be what Plan Design is all about.
Ambrosino said that the crux of the idea is that co-pays and deductibles would be raised.
Right now, city workers pay a $5 co-pay for a doctor’s office visit, and $25 for an emergency room visit. Co-pays for prescription drugs are $5, $15 or $25 – depending upon the medication.
Deductibles are basically non-existent in the system.
Under Plan Design, Ambrosino said the power lies in being able to increase co-pays and deductibles without having to bargain with the unions.
For instance, he said a doctor’s office visit would probably go from $5 to $15, and an emergency room visit would go from $25 to $75.
Meanwhile, deductibles would begin to be charged for hospital stays, with employees picking up the first $250 or so of the bill.
So, where is the savings?
Well, the savings, said the mayor, comes in the fact that with higher co-pays, people would be discouraged from seeking medical treatment. Ambrosino said in a previous interview that city employees – because of their good health plans and low co-pays – probably utilize health care services too much.
The key for Plan Design is, like the old adage about eating an apple a day, it keeps the doctor away.
“Probably that’s where a lot of savings come from – that there would be less utilization,” he said. “If it costs someone $25 to go to the emergency room, there’s no disincentive for showing up there every time they have a cough or something. If it costs $100, they might think twice before going to the emergency room.”
He said the same could be said for doctor’s office visits – that $5 is just too cheap and promotes unnecessary trips for treatment.
Ambrosino said that the one assurance in the system is that any locally designed health plan has to be comparable to the state employee health plan.
“If it’s good enough for state employees and good enough for state legislators, it should be good enough for city employees,” he said.
That, of course, remains to be seen.