Harwich Health Insurance Decision Raising Blood Pressure
05 03 08 - 11:37
by William F. Galvin
HARWICH - The cost for employee health insurance has been a major issue in recent years, with annual hikes of 10 to 15 percent on several occasions. In an effort to get control of those costs, the town has been encouraging employees to drop expensive master medical coverage and move to a preferred provider option (PPO) or health maintenance option (HMO).
Over the past year, Town Administrator James Merriam has spent a lot of time negotiating the removal of a master medical plan from health benefits with town employee unions. Instead the town is providing the option of joining the Cape Cod Municipal Health Care Group [CCMHCG], which Merriam says "provides many more plans for active employees and retirees."
Merriam has been successful in eliminating the master medical plan from the six union contracts representing general government employees. As of April 1, he said, master medical will no longer be provided.
"The town’s finances have been stressed because of town health insurance and this is an opportunity to save in a couple of ways," the town administrator said.
However, the Harwich Education Association, the bargaining unit representing the public school teachers, has yet to reach an agreement and has been working without a contract since July. There are 35 teachers who continue to access a master medical plan and another 70 retirees. Negotiations over medical benefits have not been easy.
"It is a shame that the town of Harwich is refusing to give their employees a cost of living adjustment unless they give up current health insurance plans and go to CCMHCG. The switch to CCMHCG will shift more of the costs to the employees, the same employees that switched to the HMO to save the town money in the first place," the town's insurance advisory committee chairman Thomas Gould wrote to selectmen last November, before most contracts were settled.
As of that time, Gould pointed out, more than 200 employees had agreed to switch from master medical to either PPO or HMO programs, saving the town more than $1.6 million.
In a letter written in mid-January, selectmen requested formal membership in the health care program. The group has since accepted the town employees as of July 1, 2008. The town has been given until March 14 to commit to CCMHCG.
The town has been examining its options, contacting Blue Cross/Blue Shield, the provider of the town's self-insurance plan, to see if they will continue to offer those services to the teachers until an agreement is reached. Blue Cross/Blue Shield notified the town on Monday it will not continue coverage for the teachers. Merriam told selectmen last week the teachers' issue will be settled by July 1. "It will happen," he said.
On Monday evening members of the insurance advisory committee were before selectmen with a list of recommendations for the board to consider when setting the FY09 insurance rates. Those recommendations include increases in co-pays and percentage increases for various insurance programs.
It also proposed a town-wide wellness program with incentives as a way to reduce overall insurance premiums by 5 to 10 percent. The recommendations for the program included free or reduced rates at the municipal golf course, town sponsored sports teams, extended lunch break walking clubs, providing bicycles for lunch breaks, and healthy cooking and eating classes.
The recommendations suggested monetary incentives for employees who switch to a spouse's health insurance plan. It further recommended if the town is successful in negotiating out master medical from the existing plans, it seek proposals from other insurance companies such as Harvard Pilgrim and Tufts and compare them with the self-insurance program and the plan offered by CCMHCG.
The insurance advisory committee also recommended the town stay with the self-insurance programs opposed to the CCMHCG, claiming it is less expensive.
"In theory, joining a larger group that has a greater purchasing power should yield a less expensive and superior product," Gould told selectmen Monday night. "In this case it does not. We must be practical and realize the cost savings."
He said if the co-pays and the prescription drug plans of the programs are designed, the CCMHCG plan projects a $52,785 savings. Gould also urged selectmen to consider the potential cost associated with the absence of chiropractic coverage in the CCMHCG Network Blue HMO where now town employees have that access.
"We anticipate a 20 to 25 percent migration of HMO subscribers to the more expensive PPO in order to meet their needs," he said, adding the cost would be $98,667 to $123,333 in the first year. This will increase the town's FY09 health insurance budget to $5,298,576, $176,118 more than the self-insured plan.
Gould said last year they recommended increases that have built up the town's health insurance trust fund to close to two months' premiums. He also said the town's claims are down by $182,000 for the same year.
Gould said he met with Merriam and Town Accountant Davis Ryan before Monday night's meeting and presented his figures to them. Gould said he was reminded he is a firefighter/paramedic and not an accountant.
"We do have a separate set of numbers and may have different results, different scenarios," Merriam told selectmen at the conclusion of the presentation. "We'll get an extension (on the commitment to CCMHCG) because this is too big a decision to be done in a week."
Merriam was instructed by selectmen to put together those numbers and present them to the board so they have both sides of the story when weighing how to proceed with health insurance for FY09.