NASHUA — After an 11% hike in health insurance costs, city officials are being urged to consider potential adjustments during upcoming union negotiations.
“We know that there was a total increase in the budget of $7.5 million — $3.3 million represented healthcare and we know that is an 11 percent increase, and that is a problem,” said Kim Kleiner, Nashua’s administrative services director. “It is a problem with sustainability moving forward for us as we start to look at other priorities that we have within the city.”
Mayor Jim Donchess is asking the financial services division, administrative services division and employer boards to start looking at union contracts and healthcare plans collectively, Kleiner told an aldermanic panel on Monday.
“... (It) is going to take a joint action of all of our employer boards and our City Hall to make this happen,” Kleiner said, “and we need to have those discussions before we get actively into a negotiations situation.”
Richard Dowd, chairman of the aldermanic budget review committee, said this year’s $3 million increase in health insurance costs was catastrophic to the city budget.
The recent 11% hike came on the heels of last fiscal year’s 6.4% increase in health insurance costs.
Tom DeLacey, principal consultant with Workplace Benefit Solutions, said a 9% hike is possible next year, but there are steps the city can take to reduce that amount.
“Nine percent is just not sustainable when inflation is 1 or 1.5 percent,” DeLacey told the committee.
Annual increases for health insurance have hovered around 9% for the past 10 years, according to DeLacey.
The city, however, has typically managed well below that, with the exception of the last three years where the costs have swelled, he said.
“I think we need to take action to get back to where we are controlling costs,” DeLacey told the committee.
Steps the city has taken in the past included benefit design changes such as increasing co-pays for office visits, increasing inpatient deductibles, increasing emergency room co-pays and adjusting pharmacy co-pays.
It also implemented a high-deductible plan with a health savings account as an option. DeLacey called that the best alternative for the city, but it is currently optional for city workers.
He promoted the SmartShopper program in which workers are encouraged to choose low-cost providers. He said there are other ways to educate workers and get them to be a part of the solution by choosing independent labs, ambulatory surgical centers or generic prescriptions.
“To get a change like moving people to an HSA takes a lot of negotiation and a lot of political willpower too,” said Alderman Ben Clemons, adding he would support an HSA where the city pays 75%.
“We need to have some real discussions,” echoed Kleiner.