Should active employees’ ideal health insurance be sacrificed to fund that of retirees, or vice versa? Or customer services reduced to pay for both?
The Wadesboro town council met March 22 to discuss making tough choices.
Town manager Alex Sewell prepared several proposals for the council to consider, but none of the council members found any of the options, some of which include high deductibles or HRA funding lower than comparable to current coverage, palatable.
Sewell said the cost of insurance has risen so steeply that the town can only continue to provide coverage comparable to what it offers now either for its active or its retired employees, and that it may be forced to reduce one. To buy the insurance the council wants for both groups would cost $117,000 the town doesn’t have in its budget.
The council could reduce town services — taking the limb truck off the road at least part of the time, downsizing the police force and/or reducing or removing other services — but that would only create deficits in other areas. It could also raise taxes, or drop the priorities it created at the town retreat, including purchasing its new limb truck.
While the town does have some savings — about $1 million in the fund balance — Sewell cautioned against using it to pay for annual expenses such as insurance, especially as insurance costs are predicted to continue to climb and the town is projected to add to its number of retirees in the next few years. He also noted that most of those possible solutions would only be a Band-aid on this year’s problem and would not help cover the costs in future years.
Using the council’s fund balance for ongoing costs such as insurance would be similar to a resident paying utility bills from a savings account without having a steady income stream to counter the expense.
“What makes me nervous is to use fund balance to fund these recurring costs,” Sewell said. “This isn’t an easy call at all.”
Each of the council members said maintaining optimal coverage with low deductibles for both active employees and the town’s retirees is important to them, both to take care of past, current and future employees and to attract potential applicants to seek work with the town.
“I don’t want to see them say, ‘Do I take this pill this day, and this pill this day?’” councilman Fred Davis said, adding both active and retired employees need to have not only doctors’ appointments and hospital visits, but medication needs covered for each day.
The council decided against going with the state heath insurance plan, but didn’t commit to a particular plan during the meeting. The issue was tabled until its next regular meeting at 5 p.m. April 3.
Sewell said with insurance costs predicted to keep rising so steeply, the council can’t make a perfect move.
“This issue isn’t going away, no matter what’s decided today,” he said.
Councilman John Ballard agreed.
“There’s no silk purse here,” he said. “We only have sow’s ears.”
Reach reporter Imari Scarbrough at 704-994-5471 and follow her on Twitter @ImariScarbrough.