In Amherst, health insurance costs likely to go up for school, municipal employees

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Staff Writer
Thursday, December 28, 2017

AMHERST — Municipal and school employees and retirees could face another significant increase in the costs for their health plans in early 2018 as the result of a continued drop in the Amherst-Pelham Health Claims Trust Fund balance.

Following 10 percent rises in both the HMO and PPO plans Oct. 1, and an earlier increase in the premiums for PPO plans last July 1, town and school officials are considering a third adjustment for fiscal year 2018. Individual plans would go up by $100, while families plans would rise by $200. The town and school budgets would cover 75 to 80 percent of that increase.

“At this point, we are hoping we will do just one more increase that would go into effect Feb. 1,” said Town Manager Paul Bockelman.

Bockelman said the possible increase was brought to the Amherst-Pelham Insurance Advisory Committee, which represents all employees, including school unions, on Dec. 20, but no decision was made on the recommendation. The advisory committee sought additional information before offering input.

“Our suggestion to the IAC… is to increase the rates a third time this year, which would be very onerous on employees and on the town and the school district, but we don’t really see major other opportunities because the trust is a stand-alone entity,” Bockelman said.

Bockelman said he explained that the health trust has continued to degrade and action is required, but the town and schools can’t just keep raising rates on the lowest paid employees.

Blue Cross and Harvard Pilgrim’s family PPO would rise from $480 to $530, with PPO individual going up from $201 to $226, HMO family increasing from $280 to $320 and HMO individual escalating from $117 to $137.

Other options are also being explored. Bockelman said he went out to bid for a fully insured health insurance program, which would allow Amherst to gain entry into a larger pool, but didn’t get any formal responses. He still met with the Hampshire County Trust, which has many smaller towns as members, and the Massachusetts Interlocal Insurance Association, which is fully insured,

In addition, the town is talking about consolidating all members into either Harvard Health or Blue Cross, making various plan design changes and setting price for products appropriately.

“These are all major changes that impact employees,” Bockelman said.

Previously, the town increased copays for specialists and copays for visits to the emergency department.

Bockelman said the status quo is not an option. As claims come in, the trust pays out, and a spate of “very large” claims is putting the trust in jeopardy.

“We’re providing the richest program in the Valley in terms of benefits at one of the lowest costs,” Bockelman said. “That mismatch is not sustainable.”

As evidence, the trust since August has fallen from $2.2 million to $1 million. As recently as three years ago, the trust balance was $7.9 million.

Co-Finance Director Sonia Aldrich said the rate change over the final five months of fiscal year 2018, if implemented Feb. 1, will bring in an additional $1 million. Starting July 1, that would mean revenues of $18.3 million, depending on enrollment changes

“We’re at a level field. At least we’re generating enough revenue to pay the expenses,” Aldrich said.

Health costs are also driving plans for the proposed town budget for fiscal year 2019, which Bockelman will present to the Select Board in January.

The consequences for the town and school budgets, he said, is that money won’t be available for certain needs, such as continuing to increase the money set aside for capital projects.

Scott Merzbach can be reached at smerzbach@gazettenet.com.