AMHERST — Given a fourth consecutive year in which health care expenses are outpacing revenues, and a projected year-end deficit in the Amherst-Pelham Health Claims Trust Fund balance despite multiple premium increases over the past year, major changes are looming to the insurance plan for municipal employees.
Town Manager Paul Bockelman told the Select Board last week that workers employed by Amherst, Pelham and the Amherst-Pelham Regional School District, and their spouses and dependents, will be affected by the adjustments that have been recommended by the Insurance Advisory Committee in a 9-0 vote.
“I see this as a step. I see this as a good attempt to address our health insurance problem,” Bockelman said.
The changes, Bockelman said, will control the cost of health insurance and bring the town more in line with communities that are part of the Group Insurance Commission, as well as the insurance plans offered by private employers.
Noting that the balance in the health claims trust fund is projected to end the year $346,156 in the red, Bockelman said the existing health plan is not sustainable.
“We would have to lay off people just to pay for health insurance, and I’m not willing to do that,” Bockelman said.
As recently as fiscal year 2014, the fund had a $7.9 million cushion, but that has declined annually since. This year the fund is scheduled to take in $15.66 million in revenue, but spend $18.24 million on claims.
A spate of very large claims, as well as many more modest claims, are putting the trust in jeopardy and have forced the premium rates to rise three times over the past year. Those increases not only affect what employees take home in their paychecks, but also the municipal and school budgets, which cover between 75 and 80 percent of insurance costs.
Stephen Gaughan, the representative to the advisory committee for Firefighters Local 1764, said the model, with its very low copays, moderate premiums and no deductibles, is deteriorating after serving the town and employees well for many years.
“Everyone benefited,” Gaughan said. “It was a plan that was good for employees and good for management.”
But it is no longer sustainable with rising health-care costs. Gaughan said he supports the changes because he could no longer guarantee to those he represents that premiums would be stable.
“It’s our hope that this will set us up for a number of years of stable premiums cost to employees,” Gaughan said.
The adjustments do three things.
First, Amherst will transition from a self-insured product to a fully insured product, Blue Cross Blue Shield and the Massachusetts Interlocal Insurance Association, which moves all risks from the town to the insurance company.
Second, the entire risk pool will be consolidated to one provider, Blue Cross Blue Shield, eliminating Harvard Pilgrim Health Care as an option, even though about half of the employees are enrolled in Harvard.
Third, there will be various plan design changes, including introducing deductibles, which will be $300 for individuals and $900 for families.
“This is probably the thing that has the most impact on our employees because it introduces a deductible, which we don’t have now,” Bockelman said.
Bockelman said the changes will also help control insurance costs by showing employees that where they seek coverage matters, noting that a Tier 2 hospital, such as Baystate Medical Center, is the most expensive, and has significantly higher copays than a Tier 1 hospital.
The premium increases for employees, even with a temporary two-year surcharge that is being assessed as part of the transition, will be less than if no changes were made.
As of Feb. 1, the monthly cost for family HMO is $320.13, individual HMO $137.12, family PPO $529.88 and individual PPO $225.65.
The change means smaller increases than doing nothing, Bockelman said, with the cost of the family HMO rising by $25.14 per month instead of $80.04; individual HMO by $7.24 instead of $34.28; family PPO by $30.62 instead of $132.46; and individual PPO by $8.71 instead of $56.42.
Scott Merzbach can be reached at smerzbach@gazettenet.com.
