North Attleboro facing possible $2M deficit in health insurance budget

NORTH ATTLEBORO — The town is looking at a potential deficit of $2 million in its health insurance budget this fiscal year because of skyrocketing expenses.

The forecasted shortfall is based on current rates and claims. The projection could improve if overall claim activity decreases, town officials stress.

Town Manager Michael Borg updated town council members this week on the health insurance situation.

The plan is to set aside $2 million from a key reserve fund known as free cash to cover the estimated shortfall.

The insurance costs take up about 11%, or roughly $13 million, of the town's budget.

Claims have been running above budget for several months, particularly in October when they were roughly $500,000, or 40%, over.

Overall, costs are nearly 10% over budget for the budget year through October.

"Claims are outpacing premiums. Several months are exceeding 100% of premium revenue," Borg said. "It will probably run into the future. We will end the year in a deficit.

"We see a couple of trends. We see people with multiple types of illness," Borg said, mentioning diabetes and heart disease.

Rising insurance costs are related partly to the growing popularity of expensive new weight loss drugs.

"It has created unanticipated costs," Borg said.

Also, costs have increased to go to doctors and emergency departments, with many employees going for such visits to nearby Rhode Island where costs are higher, Borg said.

"A number of employees live in Rhode Island," he said.

The town pays 75% of employee health insurance costs, with employees picking up the remainder.

The town has been taking steps to control the costs such as offering a high deductible plan and encouraging employees to enroll in their spouse's insurance plan, Borg said. Cash incentives are given.

"We are looking at wellness programs" and other options, Borg said.

Changes in benefits have to be negotiated with unions, he pointed out.

The town contracts with Blue Cross/Blue Shield.

Costs have climbed in the double digits percentage-wise and local officials expect that to continue next year.

"It will be another double-digit increase," Borg said. "The trend is well above revenue growth."

Councilor Laura Wagner called the increases "just staggering."

"It's obviously a major cost burden for our community and others," council President Justin Pare said. "It's something we will be grappling with this budget cycle and beyond."