Municipalities contend with surprise bills as health costs rise

In July 2025, the Jaffrey-Rindge Cooperative School District received a surprise bill for more than $585,196, which it is still paying off.

It was from SchoolCare, a nonprofit that provides health insurance benefits to thousands of public employees throughout New Hampshire, including staff at Jaffrey-Rindge. As a program funded by locales, SchoolCare was short on cash, and had issued an assessment of $30 million from school districts and towns throughout the state. The nonprofit was dealing with a dramatic increase in high-cost heath claims that are part of an industry-wide trend.

The bill immediately raised concerns among Jaffrey-Rindge officials. Just months before receiving the bill, the school district had been through a razor-thin budget cycle that required cutting several staff positions and depleting its emergency funds to keep its sports programs intact. That’s why, when superintendent Reuben Duncan found out about the bill, he knew it would be a major new expense for the already budget-strapped school district.

“Emergency type situations in our mind [are] facilities issues, like pipes bursting, roofs having a problem, anything of that nature,” Duncan said. But in this situation, the district had no choice but to turn to its emergency funds to pay an insurance bill, even after it tapped into its emergency funds to keep sports afloat after budget cuts.

In 2025, dozens of similar bills were sent to school districts and towns throughout the state, including three in the Monadnock Region. Jaffrey-Rindge still owes SchoolCare roughly $390,000 from that bill, Duncan said. The school district’s total budget is about $32 million.

Pooled risk management programs

As a pooled risk management program (PRMP), SchoolCare offers a cheaper alternative to traditional private employer-based health insurance for the public sector.

In private employer-based insurance, employers buy insurance from an insurer and pay a portion of the premiums. Employees pay the other portion. In the event of a medical expense, the private insurer holds most of the risk of paying for care covered by the plan it sells.

In a PRMP, municipalities and school districts use taxpayer dollars to pay into nonprofits like SchoolCare that administer the coverage themselves by contracting with private insurance networks. Unlike employer-based insurance, the non-profit risk pools can return unpaid money paid to policyholders. But if the risk pool has a loss, it has to turn to its policyholders to make it up.

This means that municipal employees and taxpayers hold the risk, according to Bradley Herring, a professor of health economics at the University of New Hampshire.

Although private insurers help design the health insurance plan, “it’s ultimately the employer that’s at risk if their workers or dependents have above-average medical claims,” Herring said.

In years when there are fewer health care costs, the system is sustainable, Herring said. But if there’s a year with higher-than-expected claims, taxpayers are on the hook.

“These programs work until they don’t,” said Herring. “Somebody, somewhere has to be on the hook for the risk.”

While PRMP premiums are less expensive than traditional private insurance, they are more risky for local governments, school districts, and taxpayers, Herring said.

Although PRMPs are required to have a certain level of cash reserves, “there’s this risk and uncertainty where you’re rolling the dice, crossing your fingers, [and] hoping things are okay,” Herring said. “Even in the absence of rising health expenditures, this would still be a fundamental concern.”

A $30 million problem

In 2024, SchoolCare’s reserves dropped by $10 million as a result of rising health costs from members’ claims, according to SchoolCare Director Lisa Duquette. The organization raised rates by 2 percent in order to rebuild its reserves, she said.

But this wasn’t enough: the following year, claims far exceeded reserves. Duquette cited the rising number of claims that are higher than $100,000, which include cancer claims, anti-inflammatory medications, and GLP-1 drugs for diabetes; SchoolCare anticipates that the number of these claims are expected to continue in years to come, in line with industry predictions.

That’s why SchoolCare issued an assessment of $30 million, which Duquette said is enough to stabilize the risk pool, but “it certainly wasn’t fully replacing the reserves that were expected to be depleted.”

Throughout the state, 90 school districts and towns began receiving bills from SchoolCare, proportionate to their size. As of the end of 2025, 67 had been fully paid, Duquette said. The largest was to the Londonderry School District, which was billed more than $2 million.

Several payers, like the Jaffrey-Rindge School District, have been given time to incorporate their assessment bill into their 2026 budget. Most of them, Duquette said, have already made at least one payment.

Duquette said SchoolCare’s board is working to “ensure this won’t happen again in the future. ... As we’re looking to the future, we’re continuing to work on rebuilding our members trust.”

Local payers

The Town of Peterborough was also sent a bill from SchoolCare. It sought nearly $224,000, which was factored into the town’s roughly $21 million budget in 2026.

“We were very uncertain about where we were going to find the money,” said Peterborough Town Administrator Nicole MacStay. When the town received an email notifying them of the bill, “we were very surprised. ... There hadn’t been any communication with us.”

Duquette said SchoolCare recognizes these concerns, but was working on a quick schedule when it notified policyholders of the assessment.

The town’s SchoolCare plan covers roughly 60 of the town of Peterborough’s 74 employees, as well as several retirees, MacStay said.

Eventually, Peterborough managed to pay SchoolCare using its unassigned fund balance.

Town officials in Peterborough have been exploring other options to provide health insurance to employees while avoiding future bills. But given that none are as cheap as SchoolCare, Peterborough is staying with its current plan, MacStay said.

The town of Jaffrey was sent a bill from SchoolCare totaling about $88,000. “It was pretty short notice,” said Town Manager Jon Frederick. Of its 50 total town employees, about 40 of them have SchoolCare insurance.

Like Peterborough, Jaffrey was able to pay the bill out of its unassigned fund balance. But the town plans to budget for future “you don’t like to see that happen.”

Compared to Peterborough and Jaffrey, the Jaffrey-Rindge School District’s SchoolCare bill was challenging to find the cash for, according to Duncan.

In addition to the SchoolCare bill, the Jaffrey-Rindge school district had to budget for $439,789 in increases in health and dental insurance costs.

It’s found a way to pay most of these costs, but not without cuts in other areas. “It has an impact on everything we do,” Superintendent Duncan said.

© 2026 The Keene Sentinel (Keene, N.H.). Visit www.sentinelsource.com. Distributed by Tribune Content Agency, LLC.