By Matthew K. Roy
Staff Writer
July 31, 2008 06:30 am PEABODY — The cost of health insurance for public employees has risen more than $14 million in the past eight years, and city councilors have appointed a committee to find out why. "It was shocking to me," Councilor Dave Gravel said, describing his reaction when he learned how much the coverage costs. One Blue Cross/Blue Shield family plan option comes with a $21,726-a-year price tag. The alternative plan for family coverage is a $17,217 yearly expense. "That is a lot of money," Gravel said. "There's something wrong because no plan should cost that much." Gravel, who is president and CEO of the consulting firm GraVoc Associates, said his company's employees receive health coverage that costs about $12,000 a year for a family plan. Councilor Dave Gamache was appointed chairman of the ad hoc committee. "What I hope to figure out is why the city pays so much when a private citizen can find coverage for much less," Gamache said. On Gravel's proposal, the council agreed to establish a committee to dig deeper into Peabody's health insurance numbers. "The goal is to first understand (the costs) so we can understand what can and can't be done about it," he said. Since 2000, the cost for Peabody to provide health benefits has risen $14.6 million, a 152 percent increase. The cost of covering 2,237 subscribers, including employees and retirees, is projected to be $24.2 million this fiscal year, according to a memorandum Human Resources Director Heidi Henson sent to city employees. Health benefits now make up 18 percent of the entire city budget. The city pays for 90 percent of an employee's coverage and the employee pays the remaining 10 percent. Compared to Beverly, Salem and Danvers, Peabody shoulders a greater financial load. Under the more expensive family plan — Blue Care Elect — Peabody's share is $19,554 a year per employee and $15,495 a year under the cheaper HMO Blue plan. "That, to me, is only the tip of the iceberg," Gravel said. "It has got to be something in the content of the plan that is doing this to the cost." Fact-finding mission The scope of the committee's influence will be limited. It will stick to "fact finding," according to Gamache. "It's not going to have anything to do with (union contract) negotiations," he said. Mayor Michael Bonfanti is authorized to negotiate with the city's unions, which he has been doing for the past year. Health insurance is a "major issue" on the table. Bonfanti appreciates the council's interest as long as the committee's work doesn't disrupt the work being done at the bargaining table. "I'd love to have the council on my side in trying to get a handle on this issue, but we're in the middle of negotiations so there has to be some discretion," Bonfanti said. "We're making some progress, and we just don't want to hinder that." Meanwhile, five of Peabody's 11 councilors — Edward Bettencourt, Michael Garabedian, Rico Mello, Barry Sinewitz and James Liacos — get their health insurance through the city. Gravel, who himself accessed the city's health coverage as a member of the School Committee, is now questioning whether councilors should have coverage paid for by the city. "Businesses typically don't offer health coverage to part-time employees," Gravel said. But there is no procedural remedy, beyond councilors declining coverage, to eliminate the option for councilors to take advantage of the city's health benefits. In 1959, the city accepted the state law that makes elected officials eligible to receive coverage through the city. Once Peabody adopted the provision, "it cannot be changed," Assistant City Solicitor Brian Barrett wrote in a response to a motion made by Gravel. Council President Arthur Athas in April wondered if the council could negotiate the health coverage offered to individual councilors and their families. But the city's lawyer found that the council could not seek benefits different from those offered to the union employees. The ad hoc committee will meet for the first time on Sept. 11. "I just want to be educated," Gravel said. "Once educated, you can make an informed decision." But there is one thing he has learned already. "I've never seen health insurance costs go down," he said.
City/town Plan Annual cost for individual Annual cost for family City/town pays Employee pays Danvers HMO Blue* $6,356 $15,943 70% 30% Beverly HMO Blue $6,596 $17,233 80% 20% Peabody HMO Blue $6,414 $17,217 90% 10% Salem HMO Blue $6,522 $17,646 77% 23% ** * Depending on the municipality, an employee could have a choice among multiple plans at varying prices. ** The Police Department and school paraprofessionals are still at an 80/20 percentage split
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