By Geena Monahan—For the North Star Reporter
Town Manager Michael Borg asked the Town Council at its meeting on Dec. 8 to set aside $2 million in free cash in order to offset significant increases in employee health insurance costs, without which the town could face a substantial deficit by the end of the fiscal year.
Borg said the town’s self-funded health care plan is already running a structural deficit of about $155,000, with monthly medical and pharmacy claims repeatedly outpacing the premiums paid by municipal employees.
“We’re seeing several trends that are creating real financial pressure,” said Borg. “If the current pattern holds, we’ll end the year in a deficit.”
North Attleborough currently offers a 75/25 split, meaning the town covers 75% of employee health insurance premiums and employees pay the remaining 25%. Any budget shortfalls must be paid for by the town, with either reserves or future monthly revenue.
In recent months, claims have routinely outpaced premium revenue – 109.9% in August, 102.7% in September, and 139.8% in October.
In October, medical claims hit $1.64 million, pharmacy claims reached $548,695, and total monthly claims topped $2.4 million – nearly $690,000 more than the town collected in premiums.
“That one month alone shows why our reserves need to be strengthened,” said Borg. “If we have another month like that it’s going to be a tough, tough year.”
What’s causing the increase
Borg noted several factors that are driving the increases, with GLP-1 drugs topping the list. These medications – such as Ozempic and Wegovy – are traditionally used to treat diabetes, but are increasingly prescribed for weight loss and can cost more than $1,000 a month per patient.
In September alone, North Attleborough saw more than $100,000 in new GLP-1 prescriptions tied solely to weight loss.
“These are amazing drugs with real health benefits, but they come at a significant cost,” said Borg. “The sudden increase in prescriptions created unanticipated expenses.”
Part of the spike may be tied to Blue Cross Blue Shield, the town’s health insurance provider, which announced that coverage for GLP-1 drugs used strictly for weight loss will begin to end on Jan. 1, 2026. The company will continue to provide coverage for those who use the drugs to treat diabetes.
The town also saw several “high-cost claimants,” including two October medical claims that each reached $200,000 – the threshold that triggers the town’s stop-loss insurance. North Attleborough pays $2 million per year for that reinsurance policy, which covers extremely high treatments, such as heart surgery or organ transplants.
Emergency room use is another contributor, said Borg, due in part to the town’s close proximity to Rhode Island and the number of municipal employees who live out of state. When employees use Rhode Island hospitals under the town’s Massachusetts-based Blue Cross plan, a 14% surcharge is applied.
Premium projections made by the North Attleborough-Plainville Health Group for FY2027 prompted Borg to estimate a 13% to 15% increase. If increases hold closer to 10% the town would need roughly $2 million in additional funds – the same amount he asked to be set aside.
Last year, the town used $1.8 million from free cash to stabilize health insurance costs.
Keeping costs under control
To help control expenses, the town is encouraging employees to switch to a high-deductible health plan with lower premiums. New this year, North Attleborough offered a $4,000 contribution to employees’ health savings account – enough to cover the full deductible – and committed to offering at least 50% of that amount in future years.
Borg said the roll out of this new plan generated the town’s biggest savings, with 66 employees switching to the new option.
The town also offered incentive payments of $6,000 for families or $4,000 for individuals who obtain coverage through a spouse or, if younger than 26, a parent. About a dozen employees used that option.
North Attleborough additionally offers $300 gym membership reimbursements, though only 67 of approximately 800 eligible employees used the benefit last year.
“We have put this out in a number of ways,” said Borg. “We’re trying to figure out how to make it easier for our employees to take advantage.”
Councilor Laura Wagner asked if going out to bid next year could yield better rates, but Borg said options are limited.
He cited last year’s experience, when Tufts Health Plan declined to submit a quote, saying it could not match the town’s existing plan design. Adjusting deductible rates would require union bargaining, which Borg said unions rejected last year.
“There just aren’t many providers in this market,” he said. “It’s an issue we’ve raised with our legislative representatives. We need more competition.”
The Town Council is expected to vote in January on transferring the recommended $2 million in free cash to the town’s general stabilization fund, where it can gain interest before being withdrawn in the future for health insurance costs.
“This isn’t good news, but we do have some options we’re looking at,” said Borg. “We’re trying to protect our employees and protect the town’s finances at the same time.”