LONDONDERRY — With two union contracts potentially coming up for voter approval in March, town officials are struggling to work with federal changes to the health care system.
This week, town councilors and Town Manager Kevin Smith discussed the matter publicly, along with Tom Delaney, a consultant with Workplace Benefit Solutions. The Granite State firm has a full staff of attorneys and actuaries, and its clients include municipalities such as Salem and Nashua, as well as Catholic Medical Center and Dartmouth-Hitchcock.
Smith said the town hired Delaney to analyze the town's benefits options. Delaney presented his initial findings during Monday night's Town Council meeting.
Delaney said the overall trends indicate a 10 percent increase in health care costs across the region, though Londonderry's costs are significantly higher than average.
Right now, $11,300 is the average annual health care cost for a single New Hampshire worker. For municipalities specifically, costs are $15,600.
It costs $21,761 per year to cover the average Londonderry employee, Delaney said.
"Despite public perception, there's no single reason for this. It's a combination of reasons," he said. "Things like an increase in consumer demand, along with the government mandates make this happen."
The town spends $3.6 million on employee health costs each year and, if nothing changes, projections indicate that number will increase to $5.2 million by 2018, when the so-called Cadillac Tax, which places a 40 percent tax on every dollar spent over the single-rate threshold of $10,200, goes into effect.
"The goal now is to take incremental small steps so we can avoid such a hefty increase down the road," Delaney said, noting that factors such as employee ages and health conditions influence costs.
"Cost variation is also tremendous in such a small geographical area," he added. "Are we taking advantage of generic drug offerings? And are we using emergency rooms more, instead of cheaper alternatives like urgent care centers or 24-hour nurse hotlines?"
According to Town Council Chairman John Farrell, Londonderry's health premium costs increased by $740,000 this past year.
Smith said costs would likely increase again next year, noting that the town is negotiating a new employee contract with the firefighters union.
Negotiations with that union are at an impasse, Smith said, though an agreement had been reached earlier this week with the town's police union.
Smith said the one-year-contract with the police union includes a 1.8 percent cost of living increase, though no other major changes from the current agreement.
Information on the police contract's final costs weren't available this week, as the council and Budget Committee continued working to finalize all budget items in time for the Feb. 8 town deliberative session.
Farrell said the one-year police contract was recommended to allow the town adequate time to address Affordable Care Act changes.
"We can work together from there," he said.