EagleTribune.com, North Andover, MA

October 23, 2013

Salem selectmen grapple with rising health cost

Town considers cheaper alternatives

By Doug Ireland
direland@eagletribune.com

---- — SALEM — Town officials are seeking less expensive options as they debate how to deal with a 14.9 percent increase in health insurance costs.

But one of those options was rejected by selectmen Monday night after human resources director Molly McKean presented them with an insurance plan she said would cut the town’s expenses.

Selectmen voted, 4-1, to table the proposal. McKean said it would effectively kill the plan to seek additional employee health insurance coverage for next year through Legal Shield. Selectman Michael Lyons was opposed.

“If it’s tabled now, it’s not possible to put it into effect for 2014,” McKean said.

Selectmen decided to schedule a nonpublic session for Oct. 30 to discuss the plan further, offering McKean some hope the plan could be approved in time for next year.

The proposal would save the town thousands of dollars a year in insurance coverage and reap savings for employees as well, she said, but it would mean initially offering workers cash incentives to join.

The savings would depend on how many town employees opted for the plan, which does include high deductibles, she said.

Under one scenario, those who join the family plan could receive a $500 cash incentive and the town would contribute $3,000 a year to a health savings account. The $3,000 could be rolled over to the next year if not used to fund health care costs.

But Selectmen’s Chairman Everett McBride Jr. and Selectman Stephen Campbell were opposed to giving employees $500 to join the plan.

“Most of the benefit of the change seems to be going to the employees and a smaller share is going to the people who pay 85 percent of the cost,” Campbell said of taxpayers. “I can’t sell this to the people who are paying the taxes.”

Town Manager Keith Hickey said the town is considering less costly insurance options after offering a “Cadillac plan” to employees for years. He supported McKean’s proposal, telling selectmen that Salem would benefit in the long run.

“There is a savings to the community and there is a savings to the employee,” he said.

Hickey said the town needed to offer less expensive benefit plans after providing employees more vacation and sick days in recent years as a substitute for raises.

“Now, it’s coming back to bite us in the rear end,” he said.

The 14.9 percent increase in health insurance expenses through the town’s carrier, Cigna, was 2.2 percent more than anticipated, costing an additional $93,963. The town has paid approximately $4.6 million for employee health insurance this year, according to finance director Jane Savastano.

Lyons said McKean’s proposal was an ideal way to rein in escalating costs.

“Something has to change,” Lyons said. “I think she has the right path to get us where we want to go.”

Keller said he and Hargreaves only voted to table the measure so it could be discussed further in nonpublic session.

Selectmen also voted, 4-1, to approve an increase in fees for some town licenses and permits — the first many had been raised since the 1990s.

They include higher annual licensing fees for many restaurants, salvage yards and massage therapists. At the Ingram Senior Center, the annual fee for many out-of-town members to attend will rise from $35 to $40.

Campbell was the only selectmen opposed to the increases, saying the data provided by the town’s staff did not justify raising the rates.

“Whether you call it a tax or fee, it is an increase to someone who is living or doing business in this town,” he said.