North Reading has extra funds this year, because of relatively low insurance premium hikes.
NORTH READING, Mass. - April 08, 2008 - Some cities and towns across Massachusetts are getting a pleasant surprise as they put together their budgets this spring. For the last several years, communities have struggled to find money, often because they've had to pay big increases in health insurance premiums for municipal employees. This year, as towns braced for premium hikes, many have found that the premiums are barely going up, and some have enough money left over to restore services they had to cut back last year.
WBUR's Fred Thys reports on the experience in one town.
TEXT OF STORY:
FRED THYS: On Wednesdays in North Reading, by noon, there's a line of SUVs in front of the middle school. Parents are picking up their children because the school day is over. That's because last year, in order to pay for health insurance premiums, the town had to turn Wednesdays into half-days for elementary and middle-school students. This year, the town is saving so much money on health insurance premiums for its employees that next year, it can afford to restore art and music classes, and on Wednesdays, elementary and middle school children will go back to school all day. It's welcome news to mom Sharman Shaw, waiting at the wheel of a white Lexus.
SHARMAN SHAW: I think it's been an incredible pain in the neck. I hate this. I hate this, them coming out every Wednesday. They're losing time in their learning and it's just inconvenient, so they really need to be back in school full time, but the people in this town aren't supporting the schools. We need the overrides, and they're not doing it, so it's our children's loss.
THYS: In Massachusetts, under Proposition 2 1/2 , if a town wants to increase property taxes by more than 2 1/2 per cent, it has to get the voters' approval, and last year, the voters of North Reading chose not to override Prop 2 1/2. That's why they shortened Wednesdays.
But this year, thanks to the lower-than-expected hike in health insurance premiums, the town has an extra 350 000 dollars, enough that last week, the Board of Selectmen considered dropping a proposal to increase property taxes.
MEL WEBSTER: We feel this was almost a miracle, to be quite honest with you.
THYS: The chairman of the school committee, Mel Webster, was so relieved by the new infusion of money that he advised the selectmen to hold off on a tax increase that would pay for other things.
WEBSTER: Do we want the computer labs open? Do we want the librarian back and the middle school libraries open full time? Yes. But at the same time, we're thinking about kind of the psychology of the town, the economy, all those factors.
THYS: So how did this windfall come about? Stephen O'Leary told his fellow Selectmen that Blue Cross Blue Shield barely raised premiums because, thanks to a new law, towns can join the state's health insurance plan, and Blue Cross wants to hang on to its municipal customers.
STEPHEN O'LEARY: Now that we've got this competition going on, which is a great thing, Blue Cross Blue Shield has said: "Oh, how about a two-and-a-half per cent increase?" whereas over the years, we've been talking about twelve and fifteen per cent increases. Municipalities and people in general have been gouged by these companies for years. Now that there's some competition out there, we're finally realizing some of the benefits of that.
THYS: The unexpected benefits led to a spirited debate over whether the town should cancel a vote to override Proposition 2 1/2. In the end, the North Reading Selectmen decided to go ahead with the Proposition 2 1/2 override vote despite the town's improved finances.
Across the state, cities and towns are enjoying similarly pleasant surprises when their health insurance bills come in. Cambridge's premiums went up by a relatively low 7 per cent, Chelmsford's by 2. Swampscott's aren't going up at all. The premiums on two of Boston's health insurance plans actually went down. The Massachusetts Municipal Association reports that on average, towns' health insurance costs are going up by five per cent this year, half the increase they saw as recently as last year. Town officials say one reason is that insurance companies now have to compete with the state plan, called the Group Insurance Commission, or GIC.
But at Blue Cross Blue Shield, John Coughlin, who is in charge of contracts with cities and towns, says competition from the state has nothing to do with it.
JOHN COUGHLIN: The GIC has absolutely no impact whatsoever on our rating. We rate according to cost, what it costs. The GIC, although it is an option for folks, I really don't see that as having any impact whatsoever on the prices that any carrier would offer anybody else.
THYS: John Bruder, a health care consultant who works with unions, agrees.
JOHN BRUDER: I don't think that the Group Insurance Commission in and of itself is going to cause any of the health insurance companies of Massachusetts to make dumb business decisions. None of them are going to make a decision to lose money by offering some municipality a rock-bottom price to keep them with their company.
THYS: Bruder and town officials say communities are getting around to negotiating the kinds of things with their unions that private employers imposed on their workers years ago: they're increasing co-payments and deductibles, and forcing retirees onto Medicare. Those concessions from unions mean that this spring, there's a little bit of money left over for other things, such as keeping schools open for the full day.
This program aired on April 8, 2008. The audio for this program is not available.