City of Rochester
News Release
Agreement would create Labor/Management Unit, Cap Growth of City’s Health-Care Contribution
(Tuesday, Nov. 20, 2012) – Mayor Thomas S. Richards and leaders of the City’s four employee unions announced today that the City will establish a self-funded health insurance program that could save the City up to $13.4 million over three years. It will also give employees an active role in finding meaningful reductions in the cost of health care.
“I am extremely proud of this arrangement because it allows us to continue providing excellent employee health insurance benefits over the long term,” said Mayor Richards. “Most importantly, it was developed in a spirit of consensus between management and labor, which means employees will have a direct influence in bringing the ever-rising cost of health care under control.”
“The result of this agreement is that both labor and management are working equally toward a common goal of providing high quality and affordable health care for their employees,” said Michael Mazzeo, President of the Locust Club police officers’ union. “The by-product is revenue savings for the city and the advantages of maintaining a healthy lifestyle for city employees.
The self-insurance funding mechanism will begin Jan. 1 and be administered in its first year by MVP Health Care, the City’s current health-insurance carrier. The plan will be managed by a joint Labor/Management Health Care Committee, which will be comprised of four members of the City Administration and leaders from the City’s four labor unions.
The new health-care plan is an innovative and collaborative solution to a major financial challenge facing most municipalities. Response from local governments to huge yearly increases in health-care costs has been to dramatically increase premiums, cut benefits or cut services to the public in order to afford the increases. This solution makes cost containment and preserving employee medical benefits a joint responsibility for both labor and management.
The cost savings are considerable and necessary to give the City a reliable number to budget from each year and for the employees to have a say in their health care.
The City’s expected health-care contribution for 2013 for active and retired employees is $53.5 million. The growth of the City’s contribution will be capped at 3.75 percent per year for two successive years. The cap represents half of the 7.5 percent estimated growth of the City’s actual health-care costs, which means the Labor/Management Health Care Committee will determine how to reconcile the difference between City’s contribution and the actual costs.
The Unions’ representatives on the Committee are: Locust Club President Michael Mazzeo; Firefighters Union President James McTiernan; Joseph Agnello of the International Union of Operating Engineers (IUOE); and Anthony Gingello, President of the American Federation of State, County and Municipal Employees (AFSCME).
The Administration’s representatives on the Committee are: Deputy Mayor Leonard Redon; Department of Human Resources Management Director Tassie Demps; Labor Relations Manager Sharon Burke; and Benefits Administration Manager Christine Martinelli.
By self insuring, the projected savings per year are: and Year 1 (2013): $1.8 million to $2.9 million; Year 2 (2014): $2.5 million to $4.5 million; Year 3 (2015): $4.2 million to $6 million. This will result in projected savings of $8.5 to $13.4 million over the life of the Agreement.
Capping the City’s contribution at a 3.75 percent growth rate may require a combination of measures to keep the insurance affordable and comprehensive for employees. Those measures will be decided by the joint Labor/Management Health Care Committee. For the most part, employees will continue contributing toward health insurance at their current levels for the first year of this program, 2013.
The arrangement will also give employees, through their union leaders, a financial incentive to place a higher value on healthy behavior and play an active role in containing health-care costs.
For instance, there could be an increased emphasis on wellness activities, nutrition and fitness programs. Employees could become more actively engaged as health-care consumers by doing such things as visiting urgent-care facilities instead of more-expensive emergency rooms when possible. Future health-plans may include more cost-savings measures, such as higher co-pays and deductibles, or rewarding healthy lifestyles with discounted premiums.
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News Media: For more information, Contact Gary Walker, Director of Communications, at 428-7405.