Mass. Municipalities Pressured by Escalating Health Care Costs

May 15, 2007

Spending on health care is soaring for local communities in Massachusetts.

Since 2001, health care spending has nearly doubled, squeezing budgets and forcing cities and town to cut back in other areas, from public safety to government services.

The rising costs have also increased pressure on calls for property tax increases.

Employee health care costs in cities and towns shot up by 85 percent — from an average of $2.5 million in 2001 to $4.7 million in 2006, according to an analysis by The Boston Sunday Globe.

The steadily increasing costs have sent local communities scrambling to meet the rising demand.

In Weston, heath care costs are up more than 120 percent, one of the big reasons why the town decided to seek a $1.1 million property tax override from voters last year.

In Amesbury, health care costs have doubled to $4.9 million and the town had opted to delay filling as many as 10 open jobs.

And in Stoneham, health care costs have soared 130 percent since 2001, an increase of about $500,000 to $1 million – eating up virtually all of the town’s new revenue each year.

“That extra $500,000 we could have had would definitely save 10 positions a year,” said Stoneham town accountant Ronald Florino. The town has already eliminated about 12 jobs in the fire and police departments, trimmed hours for other employers and cut services.

On average, health care now eats up 9 percent of municipal budgets, up from 6 percent in 2001.

“Escalating prices are absorbing a larger share of revenue growth, which means fewer resources for other services, which puts more pressure on property taxes,” according to Samuel R. Tyler president of the Boston Municipal Research Bureau, a government watchdog group.

“It is the biggest fiscal crisis facing every city and town in Massachusetts,” he added.

Tyler is among a group of municipal leaders, unions and public retirees pushing for legislation to reel in rising health care costs.

Gov. Deval Patrick has also proposed similar legislation.

The group wants to give communities the option of joining the state’s health care plan, the Group Insurance Commission, as long as 70 percent of a community’s unions agree.

The larger state plan has held increases to 54 percent over the past four years compared to the average 85 percent hike in local communities.

Its size also gives the state plan more clout in negotiating deals with insurers and doctors.

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