Foxborough’s Budget Buster: Healthcare Costs

Foxborough’s Town Manager Kevin Paicos tackled the subject of how to pay for healthcare costs in a Q and A with Foxborough Patch:

The biggest issue facing any organization is healthcare costs. How do you expect this is going to effect the town this year? If heath insurance companies raise their premiums, what is the town going to do and what are your options?

Healthcare is our single biggest budget buster. We are proposing to our employees, a number of the labor groups already know, others will be told as we move along, that we want to increase the co-pays. Right now, if you are an employee of this town, you make a $5 dollar co-pay. A $5 dollar co-pay pretty much ceased to exist in the private sector a decade ago and even in government. That’s why we find it reasonable to ask our employees to make a $15 dollar co-pay, which is not even average. Average is $20 to $25. That is why we believe to it to be fair. What that will do is save 4 percent on the premium. Our employees pay a quarter of the premium and the town pays 75%, so it’s a win win.  And the premium savings from our employees is greater than the out of pocket average cost. It’s a savings on both sides.

Now that is small strategy that we think is enough to get our premium increased from double digit to single digit. That’s a saving for the town of about $150,000. Now we are still going to be looking at a 7 to 8 percent rate increase even with that. But in the short term, that’s what we are going to propose. We still might propose other co-pay changes, but that's the strategy for next year.

Is there a long-term strategy in place for Foxborough?

In 2012, we are looking at a complete re-design of our healthcare insurance system into taking advantage of tax incentives, combined with high deductibles and drastically reduced premiums. The goal is to hold the employee harmless, so the employee does not have a lot of out of pocket costs and keeps the same healthcare coverage. We will utilize federal tax code advantages to pay the difference.

It is pretty complicated stuff. And not a lot of towns have pulled it off. In fact the only town that has pulled it off is Wellesley. A lot of towns have looked at it, but they haven’t been able to do it. So we are looking at it. If we are successful at it, we are looking at a 10 to 15 percent reduction in premium, which is massive. We are still researching it and are very excited about it.

The good news is, you don’t have to sit around and be a passive victim to these huge premium increases. There are things you can do. I got out of government for two years and became a healthcare consultant. I consulted with cities and towns on how to reduce their healthcare costs. I have a lot of good ideas to bring to the town, and the employees have a lot of good ideas as well for reconstructing our healthcare system.