Andover Townsman, Andover, MA


June 5, 2014

Lessons learned from a healthy debate

Some very important lessons were learned — and some difficult questions are being raised — as a result of the debate this spring over dueling health insurance plans for town employees.

Last fall, for the first time possibly in decades, Town Manager Reginald “Buzz” Stapczynski agreed to put the town’s health insurance contract out to bid. The decision seems like a no-brainer, since putting anything out to a competitive bid almost always drives down the cost of the service.

With the cost of insuring the town’s 1,400 employees at 10 percent of the town budget — or about $15 million — it seems obvious that it should be put out to bid if it can save some money.

But it never had been. And that’s the first lesson here: From now on, health insurance contracts should be put out to bid every year. The Board of Selectmen recognizes that and is urging the town manager to start the process early for the next fiscal year. By September, selectmen want requests for proposals to go out to as many health-care providers as possible to bring in different kinds of plans to help the town save money. And they want it to happen every year.

The proof, as they say, is in the pudding. Last year, an RFP was put out. Two providers responded: The town’s long-term provider, the Massachusetts Interlocal Insurance Association, and Tufts Health Plan. At first, MIIA, which offers Blue Cross/Blue Shield, came in with a 9-percent increase. Tufts came in with a 4.3-percent decrease.

When MIIA heard that the Tufts proposal was so low, it dropped its offer to plus-4 percent, then threw in an incentive, dropping the increase to 2 percent if the town workers would agree to join MIIA’s enhanced wellness program. The town had saved money immediately by putting the plan out to bid. Tufts also adjusted its numbers, coming in with a minus-3.5 percent offer at the end — a proposal rejected by municipal unions.

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