EagleTribune.com, North Andover, MA

October 11, 2013

Salem facing big health insurance hike

Selectmen say they won't go back to LGC

By Doug Ireland
direland@eagletribune.com

---- — SALEM — The town has been slapped with a 14.9 percent increase in health insurance costs, meaning it will have to pay an additional $93,963 next year.

But not even the hefty cost hike was enough to convince some selectmen to consider less expensive insurance plans offered by the Local Government Center.

The municipal insurance carrier and the town have been embroiled in a bitter legal battle involving nine other communities. Salem and the other towns are fighting for refunds in a reimbursement dispute that landed in the state Supreme Court.

The New Hampshire Bureau of Securities Regulation ruled last year that the LGC violated state law by improperly collecting money and retaining unnecessary surplus funds. The organization also improperly transferred assets, subsidizing one insurance pool at the expense of the others, and spent millions of dollars on unauthorized items, the bureau said.

The LGC was ordered to reimburse $53 million to all communities except the 10 that had recently dropped its insurance plans. Salem Town Manager Keith Hickey, a member of the LGC’s board at the time, had recommended the town find a less expensive insurance carrier. The town switched carriers and Hickey resigned from the board.

Salem is still owed approximately $300,000 to $400,000, according to Selectmen’s Chairman Everett McBride Jr.

The LGC’s group insurance pools are intended to help reduce costs for municipalities and school districts in providing coverage to employees and retirees through certain providers.

When Hickey announced to selectmen at their meeting Monday night that the health insurance plans offered by Cigna increased more than 14.9 percent over last year, he suggested switching to other companies.

The town had expected an increase of at least 12.7 percent and tried to budget accordingly, Hickey said. The town has paid approximately $4.6 million for employee health insurance this year, according to finance director Jane Savastano.

One of the carriers Hickey recommended was LGC, drawing angry responses from McBride and Selectman Stephen Campbell.

“I would never go back to a company that treated the citizens of this town so disrespectfully,” Campbell said.

McBride agreed.

“I can’t disagree with that,” he said. “They burned us. We got out of the LGC and I’m not going back. I’m not paying their fees. I’m done with the LGC.”

Selectman Patrick Hargreaves said the town should consider LGC if it received more cost-effective insurance coverage. Selectman Michael Lyons agreed.

“I say if it’s going to save us a lot of money, go for it,” Hargreaves said. “It doesn’t hurt to get a bid.”

Campbell became angrier.

“How could you trust somebody who did this to you?” he asked Hargreaves.

Hickey said he would proceed with plans to receive insurance quotes from Harvard Pilgrim Health Care.