Health-insurance hikes cause headaches for muncipal budgets

Nov. 29--Spikes in health insurance rate from the state insurance program have local municipal leaders juggling higher-than-normal costs as they work to stay within an already tight tax cap.

Dan Depew, Town of Wallkill supervisor, said when he began planning his budget this year he was looking at projected increases from the New York State Health Insurance Program, or NYSHIP, of about 8.5 percent.

NYSHIP is the nation's largest public-sector health insurance program outside the federal government.

It covers about 1.2 million active and retired state, local government and school district employees and their dependents, most of whom are enrolled in NYSHIP's Empire Plan, according to the state Comptroller's Office.

Depew said that when NYSHIP provided its final rate increases around Nov. 10, the rate spike was bigger than expected.

Rates for NYSHIP's family plan will see a 12.17 percent increase, and those in the single plan will see a 11.23 percent increase.

Other plans, like Medicare plans for single people or those covering two family members, will see decreases.

The higher-than-expected increases added about $136,000 to the $3.4 million in health insurance costs Depew planned for.

But the announcement from NYSHIP came too late for Depew to adjust the town budget, which was already tight because of the state tax levy cap.

"We left $40,000 on the table to stay under the cap," Depew said.

Mike Sweeton, Town of Warwick supervisor and head of the Orange County Association of Towns, Villages and Cities, said Warwick will try to exceed the tax cap just to pay for increases in health insurance.

While the cap only allowed for a $128,000 increase in the tax levy, health insurance alone will cost $148,000 more, he said.

And what about governments that adopted budgets early, before they knew the final rates?

"Those who adopted a budget are stuck with it," Sweeton said.

Health insurance increases next year are a nationwide issue and not unique to NYSHIP. But the program's rates in particular affect local budgets, where public-sector unions often spell out the program's coverage in contracts.

Jian Paolucci, a state Civil Service Department spokesman, said Empire Plan rates for 2017 will increase an average of 8.4 percent from 2016, consistent with 2017 and lower than the estimated increase of 9.1 percent told to localities on Aug. 31.

He said the department does its data analysis on claims in September and early October to get the lowest rates.

"Although health-care costs continue to trend upwards nationwide, the department works hand-in-hand with the Division of Budget to ensure that premium increases remain as low as possible by identifying future plan savings and operational improvements," Paolucci said.

Depew said NYSHIP releases its final health insurance rates too late in the year for some towns to meet budget deadlines.

He said Wallkill will now have to take money out of contingency and possibly out of fund balance in order to pay for the increases.

Port Jervis Mayor Kelly Decker said he had been preparing for a 7.9 increase in health insurance from NYSHIP.

The final figures took him by surprise, too. Decker said the state needs to step in with more aid to municipalities.

"The state of New York is making it very difficult for municipalities to manage themselves," Decker said.

Decker said the state tax levy cap only allows Port Jervis to increase taxes by $5,900 next year. But NYSHIP's health insurance increases alone would represent a 3 percent tax increase -- $152,307.

Decker expects Port Jervis to exceed the tax cap, which requires a supermajority vote of the City Council.

The 12.17 percent increase for NYSHIP family plans was higher than Orange County anticipated, according to Justin Rodriguez, a spokesman for Orange County Executive Steve Neuhaus.

The county's budget line for an increase of $4.2 million for health insurance costs was off by $500,000. That increase represents just a small fraction of the county's $736 million budget.

Rodriguez acknowledged those increases are harder for smaller governments to manage.

Jim Quigley, Town of Ulster supervisor, said the increase in rates was an unpleasant November surprise.

"I went into budget season with a 7 or 8 percent increase with NYSHIP," Quigley said. "I share the frustration with my fellow supervisors."

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