Municipal healthcare costs loom as officials look to fiscal 2027 budget

NORTHBOROUGH — On average, municipalities predict an approximately 3 percent year-to-year increase in health insurance costs. However, with rising medical and pharmaceutical costs, Northborough's municipal health insurance has become a hidden problem.

Currently, the town spends about $9 million annually on health insurance, covering 320 employees across municipal departments and the schools. According to Borislow Insurance — the town's new insurance broker — the town purchases its health insurance alongside Southborough, as both cover the same school system.

Across Northborough, Southborough, and the school district, 900 people utilize the health insurance plan.

A 'surprise' rise in health care costs

In February 2025, town officials were expecting the typical 3 percent increase for its annual health insurance renewal for fiscal year 2026. They had heard rumors of a higher increase, Bacon said, but didn't foresee anything higher than a 12 percent increase.

That month, Northborough's healthcare proposal came in at a whopping 24.9 percent increase. After negotiations, the town accepted a proposal that had a 17.9 percent increase over the previous year's healthcare cost.

As the town began to look toward fiscal year 2027, Bacon said the town switched insurance brokers in hopes of striking a deal that favored the town.

According to Borislow Insurance, the town should expect to first see a 16 percent increase in its fiscal year 2027 health insurance proposal, but the firm added that, after negotiations, it expects the final increase to hover around 12 percent. Its predictions factor in rising medical and pharmaceutical costs, the town's history, and current premiums.

"A lot of it is dependent on our relationship with Harvard [Pilgrim], which is extremely strong, as well as the relationship that the town has," said Vice President of Borislow Insurance Susan Boisvert.

On July 1, municipal employees can expect Harvard Pilgrim, the town's insurance, will no longer be covering GLP-1 drugs, such as Ozempic, for weight loss. The medication will still be covered for diabetes and other diagnoses.

Across Northborough, Southborough, and the school district, 277 employees were on GLP-1s. Over the course of 10 months, it cost about $1.3 million to cover the drugs.