Sunday, February 28, 2010

Health Care Costs

This morning's Boston Globe carried the first of a two-part series on the horrendous effect that rising health care costs are having on municipal budgets.

What a mess!

What really caught my eye was the chart accompanying the article. Just look at how high a percentage of total budgets that health care costs comprise in municipalities across the state.

No wonder everyone is unhappy - tax rates keep going up, but services are being reduced, due to promises made years ago.


Special report

Runaway health costs are rocking municipal budgets

But there’s no will or willingness to roll back benefits granted in palmier times

By Sean P. Murphy Globe Staff / February 28, 2010



Elizabeth Debski spent eight years as Everett’s city planner, before losing her job in 2006 when a newly elected mayor installed his own team.

But Debski did not leave City Hall empty-handed. In addition to her pension, Debski, at 42, walked away with city-subsidized health care insurance for life. If she lives into her 80s, as actuarial charts predict, taxpayers could pay more than $1 million in all for her family’s health care benefits.

That’s not to say Debski manipulated the system. She simply took what she was owed under a municipal health care system whose generous benefits and colossal inefficiencies are crippling cities and towns across Massachusetts.

A six-month review by the Globe found that municipal health plans, which cover employees, retirees, and elected officials, provide benefit levels largely unheard of in the private sector. Copays are much lower. Some communities do not force retirees onto Medicare at age 65. Many citizens on elected boards - some after serving as few as six years - receive coverage for life, too.

As medical costs across the board rose over the past decade, municipal health care expenses exploded, draining local budgets and forcing major cuts in services, higher property tax bills, and billions in new debt.

“It has got to be dealt with,’’ said Richard Fortucci , the chief financial officer in Lynn. “Or we will all go bankrupt.’’

The cost of municipal health care more than doubled from fiscal 2001 to 2008, adding more than $1 billion in all to city and town budgets, according to state Department of Revenue data. A Globe survey of 25 communities found that they now devote, on average, 14 percent of their budgets to health care, up from 8 percent a decade ago. Somerville, for one, spends $20 million more annually than it did 10 years ago, now devoting almost 20 percent of its budget to health care.

So far, with powerful labor unions resistant to giving away hard-won benefits and a lack of political will in the state Legislature to force changes, efforts to overhaul the system have fallen short.

To be sure, many municipal employees, elected officials, and retirees are paying a greater percentage of their health premiums than ever. Still, almost all of the increase in municipal health care costs in the past 10 years has been shouldered by taxpayers, who are subsidizing plans that are often superior to their own.