Last modified: Monday, April 28, 2008 2:44 AM EDT Bill may stop health care money bleed BY MAITE JULLIAN FOR THE SUN CHRONICLE BOSTON - As the state begins its second year of health insurance reform, concerns are growing over the increasing costs of the program. For cities and towns, the increase is hitting even harder as insurance costs for town employees are higher every year. "The problem is that health care is eating up every year a larger percentage of the budget," said Mark Fisher, North Attleboro's town administrator. "The cost of health care is escalating more than revenues. It's a tremendous burden." Last week, the Senate passed a bill in an attempt to control and reduce health care's costs. It would, among other things, establish an electronic medical record system, ban gifts from pharmaceutical companies to health care workers and require public explanation of insurance premium increases. "The bill deals with the overall cost of health care in Massachusetts, especially the state's costs to provide funds for the reform," said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association. "If the medical costs are moderated, it will help cities and towns but it's a long-term measure." Michael Widmer, president of the Massachusetts Taxpayers Foundation, said that he supports the bill. But he doubts it will have much impact on cities and towns. "It's a good bill but it will take years to implement," he said. "Health care costs are a national problem. There is no easy and quick solution." If everyone is concerned by the increases of premiums and medical care costs, cities and towns are paying the biggest price. A study by the Department of Revenue compared health care expenditures at the municipal and state level. It found that the total municipal costs increased by 91.17 percent between 2001 and 2006. The commonwealth had a 48 percent increase. According to a Massachusetts Taxpayers Foundation and Boston Municipal Research Bureau's joint report of August 2007, "the annual growth in health insurance costs of municipal employees exceeded the allowable 2.4 percent growth in local taxes by 8 percent a year on average from 2001 to 2004." "The health care costs double-digit increase is showing up more and more in their budgets," said Widmer. "It's one of the major causes for the cities and towns' financial problem." The report also said that health care costs for municipal employees jumped 63 percent from fiscal year 2001 to 2005, while municipal budgets increased by 15 percent. Local employees' health care costs increased from 7.4 percent to 10.6 percent of municipal budget during that time. According to the Department of Revenue, each year some towns are faced with 10 percent to 20 percent increases to their insurance premiums. In North Attleboro, premiums have increased by 8 to 9 percent between 2008 and 2009. In 2009, health care costs represent 13 percent of the town's budget. Even if revenues and local aid are increasing, it is not enough for municipalities to keep up. The soaring costs have sent local officials searching for options to decrease their costs. North Attleboro is currently part of the Health Care for Southeastern Massachusetts, a conglomerate of 18 other communities that purchase health insurance jointly. Beckwith said that more than 250 cities and towns are part of multi-purchasing groups. North Attleboro and Attleboro are also currently studying the option of joining the Massachusetts Group Insurance Commission (GIC), which provide health insurance to state and municipal employees at lower costs. "Increasing co-pays and premiums is on the table for discussion as well as joining the GIC," said Bill Bowles, Attleboro's finance chairman. "It would obviously help us but it would be at the expense of the unionized personnel." To join the GIC, municipalities have to go through a bargaining process with the unions as required by law. To join the insurance group, 70 percent of the employees and retirees have to agree. But GIC plans are less generous than the local ones. "The state has increased co-pays and deductibles that state employees have to pay," Beckwith said. "And unions are reluctant to these increases." The Massachusetts Taxpayers Foundation and Massachusetts Municipal Association both promote the idea of giving municipalities the same powers the state has by eliminating the collective bargaining process, which would allow more towns to join the state's health insurance commission. "Cities and towns do not have the same option and the possibility to make changes and if they could, they would save costs," Beckwith said. "The biggest way to help communities is to give them the authority to set the plans' design without approval from unions." But even if cities and towns are considering the option, one concern remains. Local officials and unions seem reluctant to join the state's insurance group as it has all the power to change its plans. "We have to let the state know by October 1st that we will join the GIC by July 1st of next year, but the GIC can change its plans in between," Fisher said. "Higher co-pays and deductibles do not have to be negotiated. The GIC has benefits but also negatives."