Photo: Logo for the Massachusetts Group Insurance Commission (GIC)

Belmont Town officials have long said a move from a self-insured health plan for town employees and retirees into the state-run insurance program was a matter of “when, not if.”

Well, that “when” is apparently now, as the Select Board voted Monday, March 23, to join the Massachusetts Group Insurance Commission (GIC) plan, as the headwinds of skyrocketing health costs facing smaller schemes have become too precarious to chance sailing into it alone.

Select Board Member Elizabeth Dionne said joining the GIC was never a “dogmatic decision, but it would always be a pragmatic one: it would come down to the numbers.”

“I think the math makes it quite clear, and the timing quite urgent, and the comparison similarities of the plans appear to be aligned enough that I don’t think we’re going to find a better window where we can wait to move to the GIC,” said Select Board Chair Matt Taylor as the board made its formal notification of an intent to engage in the process to change health insurance benefits for more than 1,200 Belmont employees under state law Chapter 30, 2b, Sections 21 through 23. 

The town will negotiate with a group comprised of union reps representing school and town employees.

Belmont employees and retirees are currently under a health insurance trust fund, which is a self-insurance mechanism that pays employee health claims directly rather than paying premiums to insurance companies. And Belmont’s self-insured plan has held over the past decade an advantage on premiums and costs over the GIC. 

But that one-time advantage has been stood on its head as the plan underwent a sudden and steep rise in premiums that was extensively previewed at a February public meeting. While Belmont has been able to offset the cost using the plan’s reserve fund, a small municipal plan has more exposure to cost fluctuations, which forces the plan to increasingly dip into the plan’s reserve account to manage the swings in claim expenses from year to year.

“Healthcare costs are affecting everybody,” said Taylor. Many municipalities are referencing it in their budget or override requests, noted Taylor, pointing to neighboring Lexington, where their health care costs have created a significant budget shortfall that is leading them to leave open positions unfulfilled and lay off up to 14 municipal workers. 

And Belmont is not immune to the cost shock. “It’s a real budget driver for fiscal years ’26, ’27, and a surprising one for fiscal year ’25 [as it] showed up mid-year,” said Taylor. Claims have increased from $13 million in fiscal ’21 to a projected $20 million in fiscal ’27, led by a huge jump in prescriptions of GLP-1s like Ozempic, reaching $850,000 in fiscal ’25, and specialty drugs that can cost $700,000 per case. There are also higher costs for technology and administrative positions and the aging population saddled onto plans.

The impact: claims for fiscal ’25 are trending 20 percent higher than the nine percent forecasted, with a corresponding reduction in the Health Trust balance and subsequent higher premiums in the coming fiscal year. 

As dark clouds increasingly hang over Belmont and other small plans, there is increasing pressure to move under the large state-run umbrella. GIC is the state-run insurance program for public employees employed by the state and municipalities, including school districts.

The biggest advantage of the state plan is its bulk. The GIC has approximately 460,000 members, including 100,000 municipal members from more than 50 cities, towns, and regional school districts, including Ashland, Brookline, and Woburn. This larger employee pool gives the plan a greater ability to negotiate for multiple plan options from major carriers.

And the future costs show a clear advantage in joining the GIC. The current town plan will see a 24 percent increase in fiscal year ’27 vs. a nine percent increase under the GIC plan. In the first six months (Jan. 1 to June 30, 2027), while an individual’s monthly premium under both plans will increase by $50 to $258, a family premium under the town plan would increase by $135 to $699, while under GIC, that family premium will jump by $77 to $641.

A transfer will bring savings in total town costs. The projected fiscal ’27 annual increase (starting on Jan. 1, 2027) in the town plan will surge by $3 million, totaling $18.1 million, while under GIC the projected increase will be $2 million to $17.1 million.

“There’s the basic economics of the GIC, which is, insurance generally, the more you pool, the better it works. We have found that there have been some idiosyncrasies in Belmont that made it not work for us historically, but we may have turned a page on that,” said Taylor. 

One of the big advantages this year is the state’s actually throwing in more money to help GIC balance its books as a standalone, self-insuring entity. “We do not have access to that. So at this point, it’s not free money, because it all comes from us. But I’d like to reaccess that money,” said Dionne.

Taylor said this is an ideal time to switch plans, as there are plans that are almost comparable. “As a self-ensuring entity, we’ve not been able to provide the same range of options, so I believe there are now eight plans that employees will be able to choose from.”

“A larger pool is a more stable, secure environment for a series of idiosyncratic reasons,” said Dionne. “Every year we’ve either formally or informally revisited this, and every year the numbers dictate against joining GIC. As recently as this last summer, we thought that was still the case. And then it not only changed, it changed quickly, and it changed for everybody across the Commonwealth.”

“The math works out … in favor of moving to the group insurance commission,” said Taylor, ultimately giving greater financial stability to the town.

Town officials are now preparing to move forward with the negotiations with the knowledge that they will need to convince employees that they will receive a better deal with the state-run plan.

“I think change comes with some understandable uncertainty and questions from our employees about what this means for me,” said Taylor. “There are plans that are remarkably similar to what the town offers for an HMO and a PPO, and then there are six additional choices. They’re not identical, but they’re pretty close, and I think at no point will it ever be perfectly identical.”

And the town will attempt to make those changes comprehensible.

“We’ve talked about education sessions, we’ve talked about material, and we’ve talked about creating a Web page for employees so they can just be a couple of clicks from getting to the information that they need,” he said. “We hope to have additional support for [Human Resources], as we recognize this is a transition. We are committed to making sure that the employees have all the information.”