City of Boston, Union Leadership Reach Agreement to Manage Growing Health Care Costs

Mayor Wu and the Public Employee Committee (PEC) announced an agreement to curb growing health care costs, generating an estimated $10.6 million in savings for the City and its employees through the implementation of utilization management.

“Amid one of the most challenging budget environments in recent years, this agreement reflects the strength of our labor-management partnership and what’s possible when the City and our unions work side by side,” said Mayor Michelle Wu and PEC Chair Elissa Cadillic in a joint statement. “Together, we are taking steps to responsibly manage rising costs while protecting the health care coverage that our workforce depends on, and the high-quality core City services that our residents deserve.” 

Like municipalities across the Commonwealth, Boston is facing mounting inflationary pressures and significant cost increases heading into FY27. While revenues are projected to grow by only 1.5%-2.5% over FY26, costs—especially health care expenses—are rising significantly, driven in part by increased use of GLP-1 drugs for weight loss. This imbalance presents a major budgetary challenge for the City.  

Under the agreement, which the PEC voted to pass with unanimous consent, the City’s Blue Cross Blue Shield health plan will implement utilization management, an industry-standard cost containment tool that ensures prescription drugs are only prescribed when clinically appropriate. 

This reform is expected to save approximately $10.6 million for the City budget and employee premiums. The City committed to reinvesting the resulting employer savings to minimize the impacts of any targeted reductions driven by the overall budget challenges facing the City in the upcoming fiscal year.