Across cities and towns, health insurance expenses are climbing at such a rapid pace that government leaders widely acknowledge the current trajectory cannot be sustained indefinitely. Employee unions have resisted municipal efforts to alter existing health insurance arrangements, though many officials view this resistance as ultimately futile—they expect cities and towns will eventually need to scale back their contributions to employee health coverage. Chelsea has experienced particularly steep increases in employee health insurance costs. According to city manager Jay Ash, this expense represents the single fastest growing line item in the municipal budget over the past ten years. Despite increased employee contributions to their own coverage, the city’s health insurance costs have ballooned from 5% of the Chelsea budget in 2000 to 13% by 2010. The city now spends more than $10 million annually on health insurance coverage, with expenses continuing to rise sharply. Along with other Massachusetts municipalities, Chelsea is looking to the state for assistance in managing health insurance expenses. Last year, the city introduced an incentive program offering employees as much as $3000 to decline city-sponsored health insurance or, in the case of new hires, to forgo enrollment. During 2011, the city will distribute $14,000 in such incentives while realizing approximately $170,000 in health insurance savings. “This is one of the many ways we’ve needed to be creative,” Ash stated. “State law can be so constricting,” he continued.
Reducing runaway cost for city paid for health insurance
