NCPA - National Center for Policy Analysis

HEALTH COSTS HIT TOWNS IN WALLET; EMPLOYEES ASKED TO SHOULDER MORE

January 4, 2007

By 2011, Wellesley, Mass. (13 miles west of Boston), predicts it will have to spend one-fifth of its tax revenue on health insurance for town employees.

Staggering under annual rate increases of 10 to 15 percent in the last several years, municipalities like Wellesley are pushing for tightened insurance plans and asking unions to accept a bigger slice of the health care pie.

According to Marc V. Waldman, Wellesley's treasurer/collector:

  • For this fiscal year, which ends June 30, Wellesley expects to spend $10.7 million on health insurance, up from $9.4 million the previous budget year.
  • The costs will rise again next year by another 10 percent.
  • Over the next four years, 20 percent of the town's tax levy will be spent on health insurance for its nearly 900 eligible workers.

In part, this reflects the soaring cost of health care in Massachusetts, which is a third higher than the national average, according to a study released last November by the state Division of Health Care Finance and Policy:

  • The study said the average cost per person in Massachusetts was $7,075 in 2004.
  • From 2000 to 2004, health care spending statewide increased 38 percent per capita, compared with a 32 percent increase nationwide.

"Everyone realizes we have a problem, but no one has come up with a solution," said David C. Wilkinson, comptroller for the city of Newton, Mass.

  • About 4,800 employees have health insurance through the city, said Sanford H. Pooler, Newton's chief administrative officer.
  • The annual cost for each active worker is close to $11,000, of which Newton picks up $8,800.
  • That's an 8.9 percent, or $727 per person increase over fiscal year 2006.

Source: Christina Pazzanese, "Health costs hit towns in wallet; Employees asked to shoulder more," Boston Globe, January 4, 2007.

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http://www.boston.com/news/local/articles/2007/01/04/health_costs_hit_towns_in_wallet/

 

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