PITTSFIELD, Mass. — Public employees will be paying a greater percentage of the health insurance split with a new six-year agreement with the city.
City officials and the Public Employee Committee, which consists of representatives from numerous employee bargaining units, has settled an agreement that will drop the city's percentage of health care for active employees and non-Medicare retirees by 5 percent over the course of the contract.
In return, the unions are getting a new lower cost option, retirees on Medex are retaining their split, and stability for the next six years.
"We came to something that made sense for all of our groups," said PEC President Brendan Sheran. "I am proud of the groups who came together to do this."
According to Director of Finance Matthew Kerwood, the city's cost was expected to go up by $2 million had the current agreement carried into the next fiscal year. That agreement is set to expire and the new agreement slashes that expected increase by $1.5 million.
"Our renewal for health insurance for FY19, if we made no changes, was going to up in excess of 8 percent," Kerwood said. "The opportunity was right for us to sit down and negotiate a change in not only contribution rates but also plan design."
The city's overall cost for health insurance currently is $24.5 million. The employees pay 15 percent of the annual premium and the city picks up the rest. Over the next six years, that will be ramped down to an 80/20 percent split.
Retirees on Medex, however, will retain the 85/15 split, which Sheran said was a key point of negotiation. He said the average retiree receives a pension in the $20,000 range so keeping the health insurance costs down was a priority.
Francis Kennedy, who represented the retirees on the committee, said, "Both the PEC and the city worked very well together to reach this six-year agreement. Keeping our retirees, who are on fixed incomes, at the same split was important to our group as a whole and the people I represent."
The city will remain with BlueCross BlueShield and the Massachusetts Interlocal Insurance Association but the plans themselves will change. Co-pays and deductibles will be shifting toward the employee. It also adds a high-deductible option, which is coupled with a health savings account.
Sheran said the city will be contributing to a health savings account, at different percentages throughout, for employees who take that option. The more employees who migrate to that plan, the lower the overall costs will be.
"It is actually a lower premium. And the city is going to establish a health savings account and contribute to it," Sheran said.
Kerwood said the city's savings are seen through a combination of both the changes to the plan and a reduction in the split. The city has been teetering on the edge of the levy ceiling, a restriction which limits the amount of revenue that can be culled from the taxpayers. And health insurance is a major driver in any municipal budget. The administration had set a priority on trying to curb those increases.
"I am deeply proud of the work that the city and PEC undertook to reach this agreement. Both the city and the PEC came to the bargaining table with a full understanding of the importance of this shared responsibility. As a result, we achieved a meaningful agreement that meets the needs of our employees and retirees, and one that offers vital savings to support the city's fiscal initiatives and long-term sustainability," said Mayor Linda Tyer in a prepared statement.
"This work is a testament to the resolve of everyone involved to ensure the right outcome."
Last year, health insurance went up 12.9 percent, or $3 million, which ate up much of the room the city had under the ceiling and that led to a significant amount of staff reductions to keep under that threshold.
"We worked closely and collaboratively with the unions," Kerwood said of the negotiations to avoid such a drastic increase in the coming years. "We all came to the table with a mutual understanding that we had to address the health care issue."
Sheran said those drastic spikes hurt the employees, too. They don't want to see premiums jump and by reaching a six-year term and phasing in the changes to the plan, the agreement hopes to make those increases less jarring.
"As we gradually make these changes, the spikes in insurance will be less. And ideally, there will be fewer layoffs," Sheran said.
The two sides could reach either a six-year or a three-agreement, and the PEC had pushed for the longer agreement for that particular reason.
"One thing that was important to us was to maintain as much stability as possible," Sheran said.
Director of Personnel Michael Taylor added that PEC members will join the city's Wellness Committee to develop new wellness programs for employees, which is eyed to help curb the city's health insurance premiums in the future.
"One particular highlight of this agreement for me is that members of the PEC will join and collaborate with the city's Wellness Committee to continue efforts in developing new wellness initiatives for employees that, futuristically, will help aid in reducing the city's health insurance costs," Taylor said.
"Moreover, it will also help in regards to better educating our employees on health insurance and wellness overall."
Both sides said they came to the table with a shared understanding that health care had to be addressed. And, ultimately, both feel they worked out an agreement that is mutually beneficial.
"Our agreement with the City of Pittsfield represents a collaborative effort to provide solid benefits to hard-working people while recognizing our community's current fiscal challenges," Sheran said.
"We are hopeful that the changes we agreed to in our historic six-year agreement will provide stability to workers and to the community we love. This is a prime example of the good work that unions do on behalf of their members, as well as the communities they serve. Our labor leaders worked hard to reach a deal that in the end is both a win for taxpayers and employees."
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