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April 01. 2014 10:10PM

Manchester's city health costs soaring

MANCHESTER — City health care costs are weighing heavily on aldermen, as new figures were presented Tuesday that project a $3 million budget deficit this year.

This is in addition to a $3 million gap looming in the next fiscal year, as Mayor Ted Gatsas revealed in the 2015 budget he unveiled on Monday.

Finance Director Bill Sanders presented the estimates at Tuesday's Board of Mayor and Aldermen meeting.

The latest forecast for the health care deficit tops earlier estimates. Costs are much higher than anticipated following union concessions that went into effect two years ago hiking premium contribution rates and co-pays.

"We have employees paying higher contributions and higher co-pays. Employee head count is lower, and we have a younger workforce because of the amount of retirements," Alderman-At-Large Dan O'Neil said. "Something is going on out there, and I think it's beyond our control."

Sanders replied that the problem is connected to larger trends in the health care industry.

"I think our plan design changes have helped a little bit, but if you look nationally, health care expenses are going up, approaching double digits," Sanders said. "Our advisers are saying costs will go up 8.5 percent (next year). That's not that bad, but it's difficult when you have a cap at 2 percent."

The city budgeted $7.9 million for health care costs in the current fiscal year, based on savings that were realized in the first year of the new union contracts. But the costs shot back up this year, and premium rates continue to climb. Health care costs are projected to hit $11 million this year; the projected allocation needed for next year tops $14 million.

Sanders said increased employee utilization is one of the things likely driving the rise in costs. He speculated that a retirement incentive the city has offered the past two years is leading to more usage.

"It could be that someone before retiring uses health care more because in retirement the costs are higher," he said.

Wellness coordinator

The rise in health care costs is leading some aldermen to take another look at hiring a "wellness coordinator," who would promote healthy habits on the part of municipal employees while keeping an eye on costs.

Earlier on Tuesday, the Committee on Human Resources voted unanimously to have the position, proposed by Ward 6 Alderman Garth Corriveau, be considered as part of the budget review process.

"We literally can't afford to keep writing checks," Corriveau told the committee.

The coordinator would be paid at least $48,000 a year.

The city already has a wellness committee made up of union representatives and department heads. It also participates in a program called COMPASS that promotes nutrition and exercise, and tracks employee use of the health care system.

Human Resources Director Jane Gile said the wellness coordinator post could build on the "foundation" the city has already established. But she said there's only so much that can be done to alter the habits of city workers.

"It comes down to advocating and working with the employees, but it takes time to change the culture," Gile said.

tsiefer@unionleader.com


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