Is health insurance really a budget buster?
14 05 08 - 10:37
Newton - Mayor David Cohen has continually pointed to health insurance as a driver in the need for this override. In his State of the City address in October, he said, "over the last decade, our health insurance costs have risen an average of 11 percent a year."
In his most recent budget address, he said he expects to spend on health insurance next year "more than double what we spent just eight years ago."
But this year, the city is saving $4.1 million in health insurance costs.
"It's not the budget-buster that everyone makes it out to be," said Finance Committee chairman Paul Coletti. "Health insurance costs are no worse than any other item in the budget."
Cohen agreed that health insurance this year is not as big of a deficit-driver as it has been.
"It's really when you look over the past 10 years that it's more than doubled," Cohen said, adding he is expecting health insurance costs to rise in the future.
"Health care is volatile," said Alderman John Freedman. "For FY09 it's not a [driver], but it has been over the last five-10 years, and we'd be fools to think it wouldn't be in the future."
Chief Administrative Officer Sandy Pooler said that Newton isn't the only community that overbudgeted for health insurance. "A number of communities are much lower than they have been," Pooler said.
With the extra money, the mayor's office is considering giving employees a "two-month holiday" on paying their premium, Coletti said. According to Cohen, giving employees this holiday or carrying the money over to next year has the same financial outcome for the city.
But Coletti said it sends the wrong message to employees. Looking into the future - where employees might have to contribute more to health insurance - it's not smart to give them a break now, he said.
Coletti pointed to two other factors that are driving the need for an override: the school budget and salaries.
The school budget - which would climb by 6.6 percent this year - is really the culprit for breaking the bank, Coletti said "This override is being driven by the increase in the school budget."
He added, "I want to be careful what we are calling our biggest budget-buster."