On Tuesday, selectmen issued the following statement, announcing a major change in the health insurance it offers to town employees:

Since 2000, the town’s cost to provide health insurance to town employees has risen from $700,000 per year to more than $2,000,000 per year. The premium increase next year was expected to cost the town $220,000 and the employees more than $50,000.

The Board of Selectmen began addressing this issue in 2008, when it formed a task force to evaluate options to address Harvard’s rising insurance costs, and an Insurance Advisory Committee to provide feedback from staff regarding the town’s insurance options. In 2008, the selectmen chose to make no changes to the existing plan offerings, and to readdress this in the fall of 2009.

The task force presented several options for changing from the current plan offerings. These included changing providers, moving to the Group Insurance Commission plan, moving to Minuteman Nashoba Health Group’s Rate Saver plans, or doing nothing. Yet doing nothing was not an option, given the significant increases both the town and staff had been experiencing in insurance premiums. At a meeting in October 2009, Town Administrator Tim Bragan proposed that the Board of Selectmen bring all four town unions together to jointly work out the best option for both the employees and the town. He then met with the School Committee and the superintendent of schools to get their support for this strategy, and acted as lead negotiator for the change in plan design.

In Massachusetts, only the Board of Selectmen has the authority to make changes to health insurance plan design, and those changes must be negotiated with employee unions. Likewise, the School Committee has the authority to negotiate percentages with respect to health insurance premiums with their unionized employees. It was vital to the success of the negotiation that the two boards work together to attain a successful outcome. Our collective goal was to provide the best possible health insurance at an affordable cost, and to minimize future cost increases, which were escalating beyond the ability to fund them from tax levy.

A team consisting of Bragan, Finance Director Lorraine Leonard, School Superintendent Thomas Jefferson, School Committee member Stu Sklar, and selectmen Ron Ricci and Marie Sobalvarro was formed to address the resultant changes to the plan design and their impact on town and employee premiums. Discussions with the unions started in December, and formal negotiations commenced in January with representatives from the teacher, police, Department of Public Works, and dispatcher unions. Negotiations continued into March, when a tentative agreement was reached with all parties.

The team negotiated a townwide contract that will keep next year’s cost to the taxpayer approximately the same as this year’s. Key elements of the agreement include:

• All employees will move to the Rate Saver plan, which will avert next year’s projected $213,000 cost increase.
   
• The cost aversion to the employee is approximately $1,400 for a family plan and $700 for an individual plan.
   
• The town will increase its share of the employee health insurance premium to 85 percent for health maintenance organization (HMO) plans, which is higher than the percentage it currently pays. The employees, in turn, will pay higher copayments and deductibles when using their health insurance. The total cost to the town is approximately the same, and employees will see a decrease in their premium costs. The town will pay 80 percent of HMO-style plans for all new employees.
   
• All employees on preferred provider organization (PPO)- or point of service (POS)-style plans will pay 50 percent of premium, a change from 30 percent. This style plan costs almost three times that of the HMO-style plan.

The cost aversion to the town for this year will allow the town to fund employee contractual salary step/column increases for the next year and to avoid layoffs. The Rate Saver plan has lower projected premium increases than the current plan, which will also help in future budget cycles.

This was a team effort involving union employees, union representatives from the Massachusetts Teachers Association (MTA) and the American Federation of State, County and Municipal Employees (AFSCME), the Board of Selectmen, School Committee, school superintendent, finance director/school business manager and town administrator. The Board of Selectmen thanks everyone involved for their efforts on behalf of the town of Harvard, for coming together to tackle a daunting issue, and for ultimately attaining a solution that benefits all.