Everyone — families, employers, and governments alike — is facing rising healthcare costs.
While no single policy can solve healthcare inflation broadly, House Bill 1399 (H.1399), currently before the Massachusetts House Ways and Means Committee, offers a targeted and practical opportunity to address affordability for one group in particular: Medicare-eligible municipal retirees, whose healthcare costs are not only rising faster than inflation but faster than municipal revenues.
H.1399 provides municipalities with a voluntary opportunity to modernize retiree healthcare by pairing employer-funded Health Reimbursement Arrangements (HRAs) with individual Medicare coverage. This approach has been used successfully nationwide for nearly two decades and already serves more than 50 million Medicare beneficiaries, including hundreds of thousands in Massachusetts.
Importantly, H.1399 does not mandate any change. It simply allows municipalities to consider this option—and it should only be pursued if an actuarial analysis demonstrates, with 99.99% confidence (as actuaries never say 100%), that retirees would be equal or better off than under the existing group plan. Once an HRA funding level is established, the structure ensures benefits do not erode over time, as funding is adjusted annually for medical inflation.
For Medicare-eligible retirees, the potential benefits are substantial. A representative retiree could obtain the most comprehensive Medicare Supplement coverage available in Massachusetts — no networks, no prior authorizations, and near first-dollar coverage — along with a robust Medicare Part D plan, for roughly $275 per month in 2026. Comparable municipal group retiree plans now cost well over $500 per month and continue to rise more rapidly.
Because Massachusetts law already requires municipalities to subsidize at least 50% of retiree healthcare premiums, retirees in towns like Wellesley that provide a 50% subsidy could see average savings of approximately $4,000 per retiree per year (or about $8,000 for a retiree and spouse), without any reduction in benefits.
Municipalities benefit as well — not only because their share of premiums is lower, but more importantly through a reduction in long-term healthcare liabilities. OPEB liabilities, which represent retiree healthcare obligations for both current retirees and active employees, typically decline by 20–30% under this model. Lower liabilities improve long-term fiscal sustainability, strengthen municipal balance sheets, and can positively influence credit quality. In turn, this makes it easier for communities to fund capital projects, invest in schools and infrastructure, improve employee wages, shore up pension funding, and consider more robust COLA base increases for municipal retirees — without raising taxes or cutting services.
Some advocacy groups oppose H.1399, but doing so effectively prevents municipalities from even evaluating this opportunity — while simultaneously denying Medicare-eligible retirees access to equal or better benefits at substantially lower cost. Maintaining the status quo is not a neutral position; it virtually guarantees growing fiscal strain and diminished flexibility over time.
H.1399 is not a mandate. It is not a benefit cut. It is a measured, responsible option that deserves serious consideration.
Municipal retirees, local officials, and taxpayers who care about long-term affordability and fiscal stability should respectfully encourage their state legislators to allow cities, towns, and the Commonwealth the opportunity to evaluate H.1399 on its merits.
Thoughtful consideration — not obstruction — is what responsible governance requires.
The author, David Kornwitz, is chair of the Wellesley Retirement Board
