The Finance Committee presented a dedicated slide on health insurance costs. Marblehead participates in the Group Insurance Commission (GIC). Over the last five years, premiums have grown significantly; the FY2027 increase is approximately 10%, contributing $1.7 million to the year’s cost growth across active employees and retirees. The committee’s insurance advisors confirmed GIC provides the lowest-cost coverage available to the town. Further cost reductions would require collective bargaining. The Finance Committee stated it encourages town negotiators to reference the structural deficit in ongoing contract talks.

Health insurance for active employees is budgeted at approximately $13.3 million based on March 2025 GIC enrollment of 1,308 members. The CFO included a cushion of approximately 4.5% for anticipated mid-year enrollment changes (e.g., 10 new family-plan enrollees could cost up to $330,000 of the ~$700,000 cushion).

The prior-year GIC premium increase was 11.6%. The Medicare supplement transfer for retirees is approximately $3,668,600 (5% of GIC Medicare supplement plans). The $250,000 OPEB (other post-employment benefits) trust contribution was removed from the operating budget and designated as an override restoration item. The CFO noted the board should consider a formal policy for OPEB funding once the pension catch-up obligation ends in 2036.

The town had been projecting a 15% blended health-insurance rate increase for FY27 planning purposes, consistent with estimates from other communities (ranging up to 18%). Following GIC design changes — notably no longer covering GLP-1 drugs — the administration revised its working assumption to 11%. The GIC’s most recent public signal was a blended rate around 7.5%.

CFO Benjamin noted that the final number depends not just on the blended rate but on the specific plans Marblehead employees are enrolled in and their individual/family tier, as well as April 1 open enrollment shifts. The town carries approximately eight active plans.

Employer-share split highlights:

• GIC active employees: ~66% school, ~34% town
• GIC retirees: ~70% school, ~30% town
• Life insurance: ~71% town, ~20% school

The board noted that pension costs are also increasing at approximately 8.6%, adding to the structural pressure. Board member Ziss noted discretionary budget after benefits is approximately $27 million out of the $47.8 million FY26 town-side budget.

PEC consultants Danielle Chalik and Sue Shalu presented to the Finance Committee on Marblehead’s health-insurance situation within the GIC.

Claims experience

• Marblehead’s claims-to-premium loss ratio was 114% in FY24 and 119% through April of FY25 (break-even is approximately 87%).
• In FY23 the town had approximately $836,000 in excess claims (claims over $200,000); in FY24–25 combined that figure fell to between $180,000 and $220,000, suggesting more claimants are approaching but not exceeding the $200,000 threshold due to rising unit costs rather than increased utilization.
• When the town solicited bids in 2023 at a loss ratio of 110–120%, no carriers responded; consultants noted the ratio has worsened since then, reinforcing that remaining in the GIC is the best available option.

Key cost drivers cited

• Insurer consolidation (Harvard/Tufts merger reducing competition)
• MassHealth reimbursement changes shifting costs to commercial sector
• Hospital system financial pressures and ongoing mergers/acquisitions
• Rising specialty and pharmacy costs, particularly GLP-1 drugs
• Rising unit cost per service rather than increased utilization

FY27 rate outlook

• GIC originally projected an 8–12% aggregate increase with no benefit changes.
• After voting to eliminate GLP-1 weight-loss drugs and adjusting deductibles/copays, the range dropped to 4–8%.
• Consultants estimated the final rate (to be announced Thursday) will likely land between 6–10%.
• Town’s budget had assumed a 15% increase; a reduction to ~8% would represent roughly $600,000–$800,000 in savings relative to that estimate, though it does not close the full budget gap.

Forward projection Consultants advised budgeting 10–12% annually for the near term, noting no structural relief in provider contracting pressures is expected soon.

Enrollment data shared

• Total enrolled: approximately 1,290 (703 active, 595 retirees)
• General fund active: 382 (school); remaining active split across town departments and enterprise funds

The board discussed the upcoming GIC (Group Insurance Commission) vote scheduled for February 26 on a proposed plan redesign that would increase employee copays and deductibles in exchange for lower premium rates.

Key points:

• The GIC’s publicized blended increase estimate of 15–18% does not directly translate to Marblehead’s cost, which depends on the town’s specific mix of enrolled plans
• Marblehead’s current internal projection is approximately 14–15% increase
• The town pays approximately 83% of premiums; employees pay approximately 17%
• If the plan redesign passes, out-of-pocket costs for employees rise but premium costs to the town are reduced
• The GIC governing board includes municipal and union employee representatives, making the vote outcome uncertain
• The town’s projected healthcare cost increase of approximately $1.9 million nearly equals the entire $2.2 million in new Prop 2½ levy capacity for FY27

The Finance Director reported that after a 20% increase last year vs. 12% in the GIC, communities staying in the private commercial market are seeing 23–26% increases. For municipalities in the GIC, presenters at recent conferences projected double-digit increases for the next two to three years, with estimates ranging from 15–17%. A 10% factor was used in the preliminary forecast but the Finance Director indicated 17% was more conservative and defensible based on available information. GIC rates are not set until the state votes in spring. The board discussed levers available: the Public Employee Committee (PEC) negotiates benefit structure with unions and retirees, but because the town is in the GIC (a state-run plan), the town has limited direct control over plan design or rates.

A board member (physician) delivered an approximately 45-minute overview of healthcare systems in Great Britain, Germany, Australia, Canada, the Netherlands, Singapore, Switzerland, and the United States, framing it as a trailer for a proposed community ‘mini MPH’ program modeled loosely on the town’s Citizens Police Academy.

Key themes included:

• Where power should lie in a health system: individual, government, or business
• Outputs vs. outcomes: systems bill for procedures (colonoscopies) but struggle to pay for long-term outcomes (prevented cancer)
• System types discussed:
  • National Health Service (UK, VA): government owns and employs; free at point of service; managed through wait lists
  • Social Insurance (Germany): employer-based sickness funds; originated 1883 under Bismarck
  • Dual public/private (Australia): universal Medicare plus regulated private insurance with premium guarantees for those who enroll before age 30
  • Single-payer monopsony (Canada): province-run insurance paying private providers
  • Managed competition (Netherlands): regulated competing private insurers, designed by Stanford economist Alain Enthoven
  • Medical savings accounts (Singapore): mandatory ~40% salary contribution; catastrophic top-up available; strong personal accountability
  • Market-oriented (US/Switzerland): most expensive per capita; US uniquely has medical debt as leading cause of bankruptcy

Board members discussed interest in offering the program in-person, potentially in partnership with Salem State for a certificate of completion, and targeting both older residents and younger adults to rebuild trust in public health post-pandemic.

Actuary Parker Elmo of a national municipal actuarial firm presented the annual GASB OPEB valuation for Marblehead.

Key figures: | Metric | Prior Year | Current Year | |—|—|—| | Total OPEB liability | $151M | $147M (prior) → $142M unfunded | | Funded ratio | — | 3.37% | | Trust assets | $4.5M | $4.9M (8.9% return) | | Discount rate | 5.74% | 5.51% | | Annual service cost | — | ~$3.3M | | Pay-as-you-go cost to retirees | ~$6M | ~$6–$7M |

The liability decreased due to higher-than-expected turnover (saving ~$10M) and a decrease in retirees and covered spouses (~$13M reduction), partially offset by a lower discount rate (+$4M liability) and higher-than-expected premiums (+$2.6M liability).

Elmo noted 19 active employees over age 65 remaining on non-Medicare plans, adding approximately $7M to the liability. He described the current liability level as near peak in percentage-of-budget terms given Massachusetts demographic trends.

On health insurance, Elmo stated that the 14% increase Alicia projected is actually at the low end of what he is currently seeing (15–30% ranges elsewhere), driven by GLP-1 drug costs, higher hospital utilization, and provider rate increases. He noted that Medicare Advantage plans are seeing provider withdrawals in some states, limiting that as a cost-saving tool.

For long-term funding strategy, Elmo suggested treating pension and OPEB as a single retirement liability bucket, noting that as the pension system approaches full funding (per state mandate), freed-up dollars could migrate to OPEB funding. He confirmed Massachusetts limits municipalities’ ability to change benefit eligibility, retirement age, premium share above 50%, or spouse coverage rules.

A board member provided an update on the evolving COVID-19 vaccine guidance landscape:

• On September 20, ACIP (the CDC’s Advisory Committee on Immunization Practices) shifted from broad recommendations to an individual risk-based approach. The previously seated panel was replaced; a proposal to require a prescription was narrowly voted down.
• Massachusetts DPH issued a standing order allowing all pharmacists to vaccinate all eligible individuals without a doctor’s prescription, and requires insurance coverage for COVID vaccines.
• Mass DPH guidance aligns with AAP, AAFP, and ACOG, and reflects consensus from a new Northeast Public Health Collaborative (CT, ME, MA, NJ, NY, PA, RI, NYC).

Mass DPH recommendations summarized:

• Adults 18+: vaccination recommended for all, especially those 65+, never-vaccinated, or higher-risk
• Children 6–23 months: vaccination recommended (risk comparable to 65+ group)
• Ages 2–18: risk-based approach; low-risk individuals may also be vaccinated
• Pregnancy/postpartum/lactating: vaccination recommended at any stage

The board member noted a forthcoming segment on influenza vaccine guidance and myth-busting.

The health director presented ‘Bloom for All,’ a mental health and wellbeing app used by the City of Peabody following a teen suicide. Key features:

• Covers personal wellbeing, mental and behavioral health, parenting, elder care, and financial wellness
• Each user receives four free counseling sessions; after that, the app assists with insurance navigation for ongoing care
• Available 24/7 on mobile devices; confidential
• Connected to McLean Hospital and Boston Children’s Hospital
• Includes self-guided video therapy, journaling, and parent education modules
• Youth-accessible components included
• Annual cost for Marblehead: $15,000, covering approximately 1,200 town employees plus all ~20,000 residents
• Pre-approved by the state for use of opioid settlement funds

The director plans to present to the town’s opioid task force for funding approval. Board members noted the app could help address the waitlist at the Marblehead Counseling Center. The board voted unanimously to direct the director to evaluate and implement the program as expeditiously as possible.

The chair and a physician board member discussed hosting a public seminar series — tentatively three or four sessions of roughly 90 minutes each — to explain the structure and costs of the U.S. healthcare system to Marblehead residents. The chair cited U.S. healthcare spending at approximately $5 trillion annually, representing roughly 17% of GDP, with approximately $1.4 trillion flowing through private health insurance at an administrative (medical loss ratio) overhead of approximately 20%.

Topics proposed for individual sessions included:

• Who pays and who spends (hospital, physician, insurer, out-of-pocket shares)
• Insurance structure: Medicaid vs. Medicare; Medicare Parts A, B, C, and D
• Defensive medicine and malpractice’s effect on utilization
• International comparisons (Canada, Netherlands, Singapore, Germany)
• Changes to Medicaid and Medicare and implications for lower-income residents

A physician board member noted that AI-assisted note-writing has improved documentation efficiency in her practice. Both physicians highlighted the gap between primary care physician compensation and specialist/subspecialist compensation as a driver of primary care shortages.

Venues discussed included the public library, the Council on Aging (COA), Salem State’s Explorers continuing-education program, and Marblehead Housing Authority properties. One suggestion was to hold a 6:30–7:30 PM seminar immediately before regular Board of Health meetings. Recording sessions for YouTube was also raised.

Director Andrew and the board chair reported on a meeting held earlier in the day with UMass Boston regarding the Community Health Needs Assessment (COMM) project. Key timeline:

The survey is estimated to take approximately 15 minutes. Three response modes are planned: online via QR code, paper hard copy, and phone-assisted completion. Suggested outreach tactics included roadside signs, a laptop station at the Senior Center, presence at the Y and sporting events, and possible small incentives (e.g., gift cards or beach/dump stickers) to boost response among the harder-to-reach 18–30 age group. UMass Boston noted that communities with the best outcomes are those that plan ahead to act on recommendations.

Citing a Boston Globe editorial, Chair Massaro noted a 13.4% health insurance rate increase and described it as an opportunity for the board to help the community understand the U.S. healthcare system. He noted that GLP-1 diabetes and obesity drugs are a primary driver of cost increases nationally. The board discussed differences between the U.S. and Canadian healthcare systems, mental health parity, dental coverage gaps, and the complexity of high-deductible plans. Massaro proposed that the board develop plain-language educational materials and potentially hold community sessions on topics such as where healthcare dollars go, the difference between nursing roles, and the structure of public versus private health delivery.

Select Board member Dan Fox presented a home rule petition to establish a means-tested senior property tax exemption. Key program parameters:

• Eligibility: Age 65+ (co-owner 60+); domicile in Marblehead for at least 10 years; assessed home value at or below town average (slightly above the state circuit breaker threshold of ~$1.1M); no secondary properties or significant outside assets
• Income limits: To be set annually by the Select Board, expected to align with state circuit breaker limits (~$72K single / ~$91K head of household / ~$109K married)
• Benefit: Reduces tax burden so that property taxes plus 50% of water/sewer do not exceed 10% of income, after exhausting state benefits
• Funding: Additional appropriation to the tax overlay (~$200,000 estimated in Year 1)
• Estimated cost per household: ~$22/year across ~9,000 households
• Estimated participants: ~80–85 in Year 1 (based on 20% take-up rate vs. 418 current state circuit breaker recipients)
• Timeline: Requires state legislative approval after town meeting; likely effective FY27–28

Research included interviews with assessors from six comparable municipalities. The program applies only after all state exemptions are exhausted and is reviewed annually by the Select Board.

Approved 8-1 (Mr. Jenko opposed).

The town’s health insurance situation was discussed during the State of the Town presentation:

• The GIC is projecting an average 10% increase across plans for active employees (range: 8–12%).
• Retiree plans may increase 12–30%.
• The town is enrolled in the GIC under a two-year agreement entered after a prior competitive bid process drew no bids due to the town’s claims history.
• The PEC (Public Employee Committee) agreement expires in June 2026; state notification deadlines at the end of calendar year 2025 require action this year if changes are to be made.
• The town intends to go out to bid for insurance carriers to create price competition, which would lower costs for both the municipality and employees (via the premium-share split).
• Overall health insurance costs for both school and town employees remain carried on the town-side budget.

A board member reported on the most recent mental health task force meeting:

• A high school student (Ariel Khan) was added to the task force membership, referred by a board member; she is applying to colleges and interested in psychology and business.
• Brett Mullen from Granite Recovery Centers (New Hampshire) presented on difficulties in treatment and recovery services, noting mental health providers are in short supply nationally and globally, a trend accelerated by the pandemic.
• The task force is working toward expanded membership and plans to use the student’s perspective to understand mental health challenges facing Generation Z.
• A guest speaker (Mark Leba) who teaches on Tuesday nights is tentatively scheduled to present at the January 14 meeting.

The Town Administrator explained the Public Employee Committee (PEC) agreement covers health benefits for town and school employees through coalition bargaining with unions and retirees. The prior five-year agreement with the GIC (Group Insurance Commission, the state facilitator) was expiring.

After hiring a consultant and going out to bid, no carriers submitted proposals. The reason cited: the town’s three-year claims experience would represent a net loss to any incoming insurer.

Agreement terms (two-year extension):

• Remain with GIC
• Remove legacy transitory language from prior carrier conversion
• Eliminate 60-day waiting period for new employees per new state law
• All other terms unchanged

Approved with one board member recused. The town intends to go back out to bid in two years hoping improved claims numbers attract carriers.

The Other General Government budget (including health insurance, debt service–related items, contributory retirement, workers’ compensation, and property insurance) was approved at $21,448,507.

Health Insurance was the primary discussion topic:

The CFO noted FY24 actual health costs are tracking to approximately $9.4M for actives, implying a roughly $2M lapse back to free cash. FY25 was budgeted at approximately $10.2M after applying an 8–10% plan rate increase, leaving about $1M as a buffer — which the CFO described as the minimum acceptable reserve for such a volatile line item.

The committee chair presented analysis showing certified free cash has been approximately $8.7M in FY24, with $5.5M used to balance the budget, $1M to capital, and roughly $2M remaining. The CFO projected that if the health insurance line tracks to budget in FY25, free cash generation for the following year could fall to approximately $3M — well below the board’s policy target of approximately $5–5.5M (5% of operating budget).

The town is considering transferring the schools’ share of health insurance (estimated at 60–65% of total) to the school department budget in a future year to improve cost accountability, but held off this cycle due to school-side turnover.

The Health Director reported that the Finance Committee and Finance Manager did not recommend pursuing an override vote for an additional $60,000 for the Counseling Center. Instead, the board voted unanimously to allocate the remaining $45,000 in ARPA funds to the Marblehead Counseling Center. A contract meeting the town’s requirements will be drafted. The board also noted that opioid settlement funds may be available for education programming. Board members expressed intent to revisit the annual allocation to the Counseling Center on a year-by-year basis given ongoing mental health needs.

The board received a task force update noting that two members stepped down, including a psychiatrist whose family obligations made attendance difficult. Dr. Mark Lavonne was introduced as new co-chair, bringing experience leading mental health organizations.

The task force is evaluating a proposed community needs assessment through UMass Boston Health Sciences, guided by SAMHSA’s Whole Person Wellness Model, at an estimated cost of $35,000. Members expressed caution, emphasizing the need to understand what interventions neighboring communities applied after completing similar assessments before committing funds. The next full task force meeting is scheduled for January 8th.

Parker Elmore of Odyssey Advisors presented Marblehead’s GASB 75 OPEB actuarial report. Key figures:

Key drivers discussed:

• 21 retirees over age 65 remain on active health plans rather than Medicare supplement plans, creating an implicit cost differential estimated at roughly $20,000 per person annually. This added approximately $8 million to the liability.
• The discount rate increase from 4.09% to 5.20% reduced the liability by approximately $28 million (assumption-driven, not cash).
• Updated healthcare cost inflation assumptions reduced the liability by approximately $18 million.
• Updated retirement, termination, and mortality assumptions aligned to PERAC standards partially offset those reductions.

Options discussed:

• The town could adopt a policy requiring retirees over 65 to enroll in Medicare, purchasing Part A credits (~$650/month average) for those who lack them. Estimated savings: roughly $22,000/year per person in healthcare costs versus ~$8,000–$9,000/year to purchase Medicare credits.
• A question to GIC has been submitted to determine whether moving retirees to Medicare supplement plans would result in reduced active-plan premiums under the GIC structure.
• Elmore noted that increasing the OPEB trust from ~$6.3M to approximately $12 million (roughly twice annual benefit payments) would allow use of the long-term rate of return (~6.3%), potentially knocking another ~$20 million off the liability.
• A formal board commitment to redirect pension savings to OPEB after pension funding is complete (estimated 10–15 years out) could allow a higher discount rate today without binding future boards.

Elmore emphasized that in present-value terms, the liability is near its peak and is not expected to grow materially as a percentage of the town budget over a 40-year horizon. Annual pay-as-you-go costs are projected to rise from approximately $6 million to roughly $7.5 million over 40 years in nominal dollars.

The board voted to amend the year-end transfers previously approved at the June 14, 2023 meeting. The change replaces a transfer from energy reserves (line item 01-225-122) with a transfer to health insurance (line item 01-221-139-517-6) in the amount of $90,259, as recommended by the Finance Committee. No change was made to the total dollar amount.

The board approved a $25,000 contract with Risk Strategies, a private insurance brokerage and risk management advisor, to assist in reviewing the town’s health insurance plans. Key drivers include an expiring employee group contract and a December 1, 2023 deadline to notify the GIC of the town’s intent to remain or depart.

The scope includes:

• Soliciting bids from all major insurance carriers (Blue Cross Blue Shield, Harvard, Tufts, Health New England, Aetna, Cigna, Maya, GIC, and others)
• Evaluating plan designs, pricing, administration, and funding arrangements including self-insurance and stop-loss options
• Analyzing plans for active employees and retirees
• Working in conjunction with the Public Employees Committee, which includes union and retiree representatives

The $25,000 fee is eligible for a Community Compact Grant (up to $25,000 for best practices), which could make the contract cost-neutral to the town. The work was noted as exempt from procurement bidding; the town administrator indicated the firm was selected as the least expensive qualified option among those evaluated.

Health Director Petty reported that, following a prior presentation by Tobacco Control officer Joyce Redford, he has referred to Town Counsel a request to incorporate kratom and delta-8 products into local tobacco control regulations. The goal is to allow the health department to conduct inspections and issue fines. Town Counsel is also drafting the updated regulations; a timeline was not given due to Town Counsel’s workload around spring town meeting activities.

Keyser noted that the town’s GIC health insurance appropriation is approximately $15M and that he expects rate increases in the range of 7–9%, though the GIC has not yet released official numbers. The Personal Employee Committee (Section 19) contract governing health plan negotiations expires at the end of the next fiscal year, making an HR professional a critical resource for those negotiations.

Representatives of the Marblehead Counseling Center at 28 Washington Street (the Hobbs Building) appeared before the Board of Health to discuss proposed uses of ARPA funds. The Board of Health had been allocated $200,000 by the Select Board, with approximately $145,000 identified as the Counseling Center’s request and the remainder under discussion for the Mental Health Task Force.

Three proposed funding categories:

Waitlist and capacity: The center currently has a waitlist of approximately 200 people; roughly 70–80% are Marblehead residents. Of those under age 20, essentially all are Marblehead residents. The center has been working to reduce the list by hiring additional clinicians.

Building context: The town owns the Hobbs Building; the Counseling Center is a tenant paying minimal rent. An approximately $80,000 renovation was completed prior to COVID, funded largely from the center’s endowment. Rear balconies and footings were identified as in poor condition.

Operating finances: Operating expenses are growing at roughly double the rate of revenue growth. Revenue sources include insurance reimbursements (MassHealth noted as among the higher-reimbursing payers), a Friends fundraising campaign, and the town’s annual appropriation of $60,000. Board members discussed potentially restoring additional funding to that annual line.

Opioid settlement: The director noted the town received an opioid settlement totaling approximately $101,923 to be paid over five years, with a working group (police chief, fire chief, town administrator, and board of health director) developing a spending plan.

Next steps: The board asked the Mental Health Task Force (meeting November 28) and the Counseling Center to each develop specific budget proposals so the full $200,000 allocation can be finalized at the December 12 meeting.

The board voted to approve year-end transfers totaling approximately $260,095 under MGL Ch. 44 Sec. 33B. Individual line items included:

All transfers except the highway item came from a surplus in the health insurance appropriation. The motion was approved unanimously.