Jump to:Page Content
The Edward J. Collins, Jr. Center for Public Management at UMass Boston’s McCormack Graduate School of Policy Studies and the Rappaport Institute for Greater Boston at Harvard’s Kennedy School of Government commissioned and funded this report by Robert L. Carey, an expert on Massachusetts health insurance costs, to assess the effects of aggressive efforts by the Springfield Financial Control Board to control increases in the City’s health insurance costs. These efforts, the study concludes, yielded significant savings. The lessons of Springfield’s experience are particularly timely and instructive for other Massachusetts municipalities and state policymakers struggling to control government costs.
The study finds that, by joining the Group Insurance Commission (GIC), Springfield cut increases in its health care costs an estimated $14 million to $18 million over two years. It saved an additional $5 million per year by requiring eligible municipal retirees to enroll in Medicare Part B as a precondition of receiving supplemental health coverage from the City. These two actions, together, reduced increases in the City’s health care costs an estimated 15-19% annually, on average, with savings growth each year due to compounding. Furthermore, the study estimates that if the GIC continues its past pattern of keeping its cost increases lower than those experienced by other large Massachusetts cities, the City will save another $42 million to $64 million over the next three fiscal years, not including Medicare savings. It is especially noteworthy that Springfield’s employees and retirees also benefited from the shift to the GIC, because the GIC offered them lower premiums, reduced out-of-pocket expenses, and a wider choice of insurance plans.
Springfield’s experience offers important lessons to officials in other Massachusetts cities and towns trying to control their health insurance costs and to state officials considering changes in the laws that govern those efforts.