Health Care Trade Offs in Massachusetts

Like municipalities all over the country, Massachusetts cities and towns are going down the financial tubes. Health care costs for municipal employees is the top problem.

The quality of debate and the opportunity for public learning in the federal reform process has been pathetic. The President not been able to get us to understand the way health care costs strangle other public and private goods as a pressing moral concern. We (the public) can come to grips better with health "system" ethics and policy issues via our own states and municipalities.

In the past week the Boston Globe has run a terrific series of articles, op eds and columns that make it much harder for Massachusetts residents not to understand the opportunity costs bad health policy creates. Massachusetts cities and towns have created an economic cancer through poorly planned health insurance decisions about insurance for their employees.

In order to avoid paying higher wages, municipalities have provided health insurance that insulates employees from the cost of health care much more than other private insurance does. But what looked like a money saver for municipalities turned out to be a Frankenstein monster. Municipalities now devote, on average, 14% of their budget to employee insurance, compared to 8% ten years ago. Employees get lower wages than they could otherwise receive, and the inflated health care produces poor value for money. It's a bad deal for the towns, the taxpayers, and the employees.

Sean Murphy's articles lay out the key point. If municipalities were able to provide insurance via the Group Insurance Commission (GIC), the innovative agency that provides health insurance to more than 300,000 state employees, retirees and dependants, they could save at least 10% - 15% annually on their insurance costs.

Here's where ethics come in. These aren't just numbers on a spread sheet. If Boston could achieve what the GIC does, the savings could cover the City’s entire projected shortfall for the current fiscal year, or hire 420 new police officers, or create 32,400 additional summer jobs for youth, or double the City’s capital improvements for the schools.

These are morally meaningful tradeoffs. There's absolutely no reason to believe that the higher cost of municipal insurance produces better health outcomes than the GIC does. If this is true - and I'm sure it is - we're incurring substantial opportunity costs, without corresponding gains. That's unethical!

The municipal insurance programs are the product of years of collective bargaining, which is itself a key component of democratic society. Ideally, municipalities and unions will be able to agree that the current arrangements are harming the three key stakeholders - municipal governments, union members, and taxpayers. The Boston Globe's laying out the issues so clearly might nudge towns and unions in that direction. But if that doesn't happen it will be up to the state legislature to force an outcome that is not reached through cooperation.

A combination of our (the public's) sloppy thinking and manipulation by all those who profit from the health care cost cancer has led us to the delusion that it's immoral to think of money when we think of health care. The reverse is true. The way we've let health costs run rampantly over other public goods is a moral crime. Understanding the realities of municipal trade offs can help us move forward in our ethical maturity!

(See Sean Murphy's articles here, here, and here, Scott Lehigh's op ed piece here, and Kevin Cullen's column here.)