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Hartford’s Insurance Conundrum

Hartford — Health insurance premiums for town employees continue to rise at an alarming rate, and now officials are questioning whether the town should continue to provide coverage.

The proposed premiums for next year came in 50 percent higher than this year’s, according to Town Manager Hunter Rieseberg. While the town has identified alternatives that would lower those increases, the town could still spend nearly $200,000 more than it does now. That is on top of a nearly $250,000 increase the town saw this year.

Hartford spends more than $1 million a year to provide health insurance for employees, Rieseberg said.

“It’s huge,” he said of the insurance expense. “We’re struggling with this year after year.”

The town buys its insurance through the Vermont League of Cities and Towns, which acts like a broker between municipalities and insurance carriers. Hartford has a plan with MVP Health Care, but is considering alternatives because of the increases. Of the 215 Vermont municipalities that buy insurance through the League, Hartford had the largest spike in premiums to renew its current plan for next year, said Ken Canning, the League’s director of risk management services.

MVP has provided little explanation about why the rates have gone up so much, officials said. Past claims experience and demographics factor into it, League officials told Hartford officials at a meeting last week. But the insurer has not been forthcoming with specifics.

Email and phone messages to MVP seeking response Monday were not returned.

For the time being, the town is unable to seek recourse through the new online insurance marketplaces launched in October as part of the Affordable Care Act. Only employers with 50 or fewer workers are able to purchase coverage through the marketplace. Hartford, which has 102 employees, is considered a large employer and would not be eligible to buy insurance on the marketplace until 2017.

The situation, which Selectboard Chairman Chuck Wooster called “a disaster,” leaves Hartford looking for creative ways to work within the existing system. Selectboard members say it has been a difficult mess to untangle.

“I’m really confused about what’s going on, only because I’ve never seen anything like it,” said Selectman Ken Parker, who owns an insurance agency in White River Junction. “I have a feeling the town’s being jerked around.”

League officials laid out several options for Hartford last week, all of which were more favorable than the initial estimate from MVP, but all still brought significant premium increases. Rieseberg compared it to a stick-up, in which the robbers “only get your wallet and they don’t take your watch.”

“It’s not good, but it’s not as bad as it started out to be,” Rieseberg told the Selectboard.

One scenario had the town renewing early with MVP by Dec. 1. Although the high-deductible plan would not meet the standards of the Affordable Care Act, it would be “grandfathered” and allowed to stand until Nov. 30, 2014. That would give Hartford officials more time to figure out what to do, but would do little to address the larger challenge.

“It just means we’d have an 11-month solution to a 12-month problem,” Wooster said.

The MVP early renewal option would still result in a 23 percent increase, or $182,000, and require a larger contribution from employees.

A second option, switching to a comparable Blue Cross plan to begin Jan. 1, would bring a slightly smaller increase of 21 percent.

A third option would be to drop health insurance coverage for employees altogether. In that scenario, Hartford would divide the money it spends on health insurance and give an allowance to employees, who would use it to buy insurance plans on the online exchange.

There are some drawbacks to that approach. Hartford would have to pay around a $50,000 penalty to the state for not providing insurance. Also, the subsidies provided to employees to buy insurance on the exchange would be taxed as income and potentially reduce the amount of federal subsidies for which individual workers might qualify.

Still, it is an idea worth exploring, said Selectman F.X. Flinn.

“The so-called nuclear option of getting out of the health care business was not fully explained or not fully costed out with the various options,” Flinn said of last week’s League presentation.

League officials recommended a fourth option that would affect some retirees who have continued on the town plan. In this scenario, retirees under the age of 65 would get money in a health reimbursement account and use those pre-tax dollars to buy insurance on the marketplace. Meanwhile, current employees and their families would be covered under a Blue Cross plan. That option would shave more than $26,000 off the Blue Cross proposal for next year.

No decision has been made, but time is getting tight. If Hartford chooses to renew with MVP, it would need to decide in the next couple weeks. Otherwise, Wooster said the board would probably make a decision by mid-December for coverage that begins Jan. 1.

Town employees are eager to learn the outcome.

Employees interviewed at Town Hall last week said they preferred to continue getting insurance through the town. Hartford Town Clerk Mary “Beth” Hill has been working for the town more than 20 years and said health care costs have been a great concern for her.

“You make one visit to the doctor and, depending on what it is, it could be thousands of dollars,” she said. “Obviously, everybody wants to keep (insurance). It’s every year that it goes up.”

Patricia Stark, in the Listers Office, said she hoped Hartford would keep offering insurance. Stark said she did not want to deal with the hassle of buying insurance through the marketplace, also called an “exchange,” and would rely on the “navigators” hired by the state to help enroll people.

“If I had to go through the exchange, I would not mess around with the computer,” she said. “I would get a navigator.”

Chris Fleisher can be reached at 603-727-3229 or cfleisher@vnews.com.