BELCHERTOWN – Just two-plus months after residents narrowly approved a $2.9 million Proposition 2 1/2 override, town officials are now grappling with an unexpected midyear rise in health insurance rates that will force the town to come up with an additional $911,000 this fiscal year.
“I’m concerned not only for this current budget, but with the override that we just passed, we expected next budget season to be relatively smooth,” Town Manager Steve Williams said during a Select Board meeting on Monday. “This is a about a third of what we received in the override, so it’s a devastating hit for the budget. It’s going to affect everybody and every decision we make going forward.”
Belchertown gets its health insurance from the Hampshire Country Group Insurance Trust, which provides health coverage to 12,000 individuals across 73 Hampshire and Franklin county cities and towns, water and fire districts, regional schools and other government entities.
On July 30, the trust members voted to raise insurance rates by 20% to avoid bankruptcy. Rises in pharmaceutical costs, high amounts of GLP-1 drug claims and over double the amount of $100,000 claims put a significant financial strain on the trust’s reserves. In the past six months alone, the trust’s three months of reserves dropped to three weeks of reserves, a total loss of $10 million.
“There’s a delay or a lag when we get the claim, actual claim history,” Belchertown Human Resource Director Joanne Misiaszek said. “We were talking and discussing with them the likelihood of an increase, but we had no idea it was going to be at 20% and it came very quickly, like within a month and a half.”
In May, Belchertown voters passed a $2.9 million override by 21 votes. The increase in property taxes prevented further cuts to town and school staff and delayed the closure of Cold Springs School. Insurance costs made up a sizable portion of the budget, costing the town $238,500 and the school district $815,770.
Williams outlined three possible options to cover the $911,000 gap: dip into the stabilization fund, use free cash or cut staff. Leaving the trust, Misiaszek said, is not possible this year because membership of other insurance providers is closed for the year, and Belchertown still has claims that need paying.
“Joanne and I have evaluated the Hampshire County Group Insurance Trust rates versus other rates on other plans, and we are still either more affordable or within the same range as southeastern Health Group, Stanton Valley Berkshire Health Group, GIC and WSH,” Williams said.
However, Select Board member Nicole Miner criticized the trust’s failure to maintain a year’s worth of reserves and investigate plan designs more carefully. She encourages the trust to review their options and find a more sustainable plan for trust members and insured individuals.
“There’s so much room to increase the deductible, have the employer fund the tail end of the deductible, everybody’s rates go down [and] the employees get to keep a loan deductible plan,” she said. “That’s the kind of stuff that has to be looked at. So moving forward, there are options, and they’re within the trust itself.”
The Select Board plans to discuss the insurance payments further at a Sept. 8 Tri Board meeting with the School and Finance committees. If leadership decides to use stabilization funds or free cash, a special Town Meeting must be held to approve the allocation.
Emilee Klein can be reached at eklein@gazettenet.com.
