Town Treasure Richard Patullo with the Hampden Selectboard.
Photo credit: Town of Hampden, MA
HAMPDEN — The Hampden Selectboard is discussing health insurance plans and costs after “taking a pretty hard” last year, according to Town Treasurer Richard Patullo.
Patullo joined the Selectboard to discuss potential changes in health insurance plans at its meeting on July 13.
The town self-insures through the Scantic Valley Regional Health Trust, which is composed of six government entities — Hampden, Wilbraham, East Longmeadow, Longmeadow, the Hampden-Wilbraham Regional School District and the Lower Pioneer Valley Educational Collaborative.
The Scantic Valley Regional Health Trust provides its entities with a variety of health plans from insurance companies, such as Blue Cross Blue Shield, Harvard Pilgrim Health Care, Health New England and Tufts. Plans are self-funded by the trust and premium employees pay increases and decreases annually, depending on the trust’s usage.
“We have a consultant that manages this for us and we hire the various insurance companies,” Patullo said. “They manage the insurance program for us and we collect the premiums and pay them the actual claims. We buy self-insurance for people with very large claims, any individual over $150,000 we reinsure somewhere else.”
Patullo said there is flexibility on what is covered and what isn’t, adding the carriers suggested that GLP-1 medications for weight loss were “getting to be ridiculous” and that no policies carry them as of July 1.
He added that the health trust had “quite a bit of money in the bank” when he started 16 years ago and that around $4.3 million should be set aside for reserves — 12% of the previous 12 months of claims.
“When I first got on it, there was an extra $5 million in there,” Patullo said. “Hampden is about 10% of the trust … so of that $5 million that comes in, half a million of it was our money. I have endeavored to spend that money by reducing rates, returning it to the town for the last 15 years … Every year the insurance company would say, ‘oh, it’s going to go up 8%,’ and I say, ‘no, I don’t think so,’ so we’d have a 3% rate increase. I’d say ‘well it’s going to cost us a million,’ and it didn’t. It finally caught up with us in the last two years.”
He said that Hampden’s rate increases have been well below average, and that the town took a hard hit last year for the first time.
“We’re running at claims at about 120% of premiums,” Patullo said. “That’s why we ended up with a net of about 11% increase this year. I was shooting for 10%, but 11% is the best deal I could get … we are actually about $245,000 below the $4.3 million for reserves, but we’re now into a little higher premium rate.”
There are a few opportunities if Hampden were to change its health insurance plan. Patullo said he detailed deductible and non-deductible plans in an email to the Selectboard, adding that East Longmeadow uses the deductible plan and that it includes “a little bit of savings, not huge.”
“It’s amazing how much smaller the premium is,” Patullo said. “When you look at an individual having a $2,000 medical deductible and a $3,000 prescription deductible, they’re only going to save less than $1,000 a year. They’d be pretty healthy to win on that one, but that is certainly a possibility that we could go to next July.”
Chair John Flynn said “it’s not so much us, I’m thinking more for the school district, which is obviously a much larger percentage, which would pass down into their budget.”
Patullo said he didn’t know the school district’s numbers but that they’re a larger group and the town only gets 20% of the savings. He added that School Committee Chair Michal Boudreau and other members from the school inquired about a “low cost, low value” policy for younger employees.
“We are going to start looking at seeing if there is a low cost, less value option that we could offer young, healthy employees,” Patullo said. “Your average 25-year-old doesn’t go to the doctor as much as I do, so they’re really looking for the catastrophic. It will probably take us six months to get the answer to that question. We meet again next in September, and they’re going to see what is available in that option. I don’t anticipate it as being anything we force people into, but there might be people who would choose that, save themselves some money.”
