, Salem, MA

Local News

August 4, 2010

Insurance pool helped save millions

Two North Shore towns saved a bundle on steadily climbing health insurance costs by transferring their workers' coverage to a larger state-run pool, according to a report released yesterday.

The study found that Swampscott had realized $1 million in health insurance savings and Wenham had saved $100,000 in the first year of switching from town-administered health plans to the state's Group Insurance Commission.

Those savings are significant sums. In Wenham, for example, the total cost of employee health and life insurance is $532,466 for fiscal year 2011.

Altogether, the 15 communities across the state who have made the switch have saved a combined $35 million compared to what they would have spent on their municipal-based plans, according to the report by The Boston Foundation and the Metropolitan Area Planning Council.

It was a rare piece of good news for town and city managers struggling to find creative ways to balance budgets amid soaring employee health insurance and pension costs.

"The most significant accomplishment in this decade to maintain services and retain jobs without impacting taxpayers has been to join the GIC," said Swampscott Town Administrator Andrew Maylor.

Though the report estimated that Swampscott had saved $1 million in its first year in the GIC, Maylor believed the figure was actually less, about $850,000.

Nonetheless, Maylor said the savings means towns like Swampscott can save jobs.

"It took us a long time," Maylor said of the 17-month process to persuade union leaders and retirees to collectively agree to the switch. "But it was worth every ounce of energy and effort.

"At the end of the day, it means we can employ more people. We can sustain our service level without asking taxpayers for another override."

Three years ago, state lawmakers gave cities and towns the authority to join the GIC, as long as 70 percent or more of union leaders and retirees agreed to the switch.

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