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Area cities adopt changes to curb health costs

Amesbury, Chelsea, and Newburyport have adopted union-backed changes to their employee health insurance plans that they say will bring much-needed savings.

The changes in Amesbury and Newburyport, to take effect July 1, involve moving from a Blue Cross Blue Shield of Massachusetts plan with no deductibles to one that has deductibles and higher copayments.

Chelsea is adopting similar changes, and will be charging employees a larger share of premiums as part of its adoption of a city-run health plan July 1. For more than two decades, Chelsea has been part of Boston’s health plan.

Amesbury’s health-care changes were ratified by city unions last month after having been negotiated by the city and a committee of union representatives.

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“I’m very pleased that the employees were part of the decision-making, and agreed to make very significant changes to the health plan,” said Mayor Thatcher W. Kezer III.

Amesbury last fall negotiated an agreement that instituted a three-tier system for copayments based on the relative costs of the doctors and hospitals selected. Kezer said those changes were projected to save the city approximately $350,000 next year. He said with the new changes, the city is expecting to save about $850,000.

In Newburyport, the switch to the lower-cost plan was recommended by a union committee, approved by Mayor Donna D. Holaday, and then ratified by the various unions, according to Holaday, who estimated it will save the city $180,000 next fiscal year.

Referring to the members of the union panel, the Public Employee Committee, Holaday said, “I am so pleased because they really have done a nice job in terms of understanding what is in the best interests of the city.”

Both Amesbury and Newburyport purchase their insurance through the Massachusetts Interlocal Insurance Association, which made available the new lower-cost plan.

Haverhill also reached agreement with unions recently on health care changes that officials estimate will save the city $1.1 million annually.

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The recent changes are part of a growing number adopted by cities and towns since the state last July passed a law that gives municipalities new powers to revamp their health-insurance plans without having to secure union agreement.

The local-option law sets out a process for municipalities to either join the state’s Group Insurance Commission, or to make changes to deductibles, copays or other features of health plans that are comparable to those offered by the GIC.

As of March 19, 127 communities and regional school districts statewide had taken steps to adopt the law or to use traditional collective bargaining to achieve savings in their insurance costs, according to a report by the Massachusetts Taxpayers Foundation.

Since passage of the law, seven area communities — Lowell, Lynnfield, Marblehead, Medford, Salem, Somerville, and Wakefield — have joined the GIC, joining eight others — Groveland, Lawrence, Melrose, Saugus, Stoneham, Swampscott, Wenham, and Winthrop — that had previously done so, according to the GIC website.

Other communities have opted to make changes to their own health plans. Among them are Beverly, in addition to Amesbury, Chelsea, Haverhill, and Newburyport.

Chelsea and Newburyport both adopted the state law, while Amesbury has yet to do so. But all three cities achieved their health-plan changes without going through the formal process that the new law provides, which includes a 30-day union bargaining period.

Officials from all three communities said, however, that the law proved a valuable tool for them.

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Holaday said Newburyport’s union representatives “knew we could take this out of their hands if they couldn’t reach an agreement. It was very motivating for them to take the task very seriously, and they did really solid work.”

Amesbury’s Kezer said the state law provided “the leverage to create an agreement.”

He noted that the city’s unions four years ago agreed to increase the employee share of health insurance premiums. With passage of the state law last year, Kezer decided that rather than moving to adopt it right away, he would seek to work with unions first to see whether they could agree to additional savings.

“My position was if we can negotiate an agreement, I won’t need to file for the legislation to accept the law. I kept that option in my back pocket.”

Kezer said that as a result of a drop in claims that he attributes to an employee wellness program the city initiated last year, Amesbury’s premiums would not have risen next fiscal year even without the two negotiated changes to the plan. But he said with those changes, the premiums will drop, resulting in the $850,000 savings for the city.

Subscribers, meanwhile, should save just under $200,000 in total premiums, though officials note that those who seek frequent care will feel the impact of higher copays.

Holaday said Newburyport considered switching to the GIC, but dropped the idea after concluding it would not save the city more than it could achieve on its own. And, she said, the city has a longstanding relationship with the Massachusetts Interlocal Insurance Association, “and that’s where we wanted to stay.”

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The changes in health coverage that Chelsea is implementing will save the city just over $1 million next fiscal year, according to City Manager Jay Ash. The overhaul was ratified by union members after the city negotiated the details with a committee of union representatives.

“I’ve been working on this for almost a decade now, and I’m happy we were able to consensus on a program that will save the city substantial dollars and still provide employees with outstanding health care coverage,” Ash said.