‘There are no good solutions’: Franklin County towns grapple with health insurance increases

When voting on their fiscal year 2026 budgets at Annual Town Meetings earlier this year, municipal officials across Franklin County noted that one of the biggest drivers of budget increases was health insurance costs.

Then, just after budgets were approved and the new fiscal year began, they learned their insurance rates would increase again by an additional 20%, sending towns back to the drawing board to figure out how to make up the difference. Some communities are leaning toward taxation, others are looking to pull from free cash reserves and others still are wondering whether switching insurance would be the best option.

On July 30, members of the Hampshire County Group Insurance Trust voted to increase members’ rates, effective Oct. 1, after being informed that the trust was at risk of going bankrupt due to increased pharmaceutical and medical claims and the growing popularity of weight-loss drugs. Trust Executive Director Joseph Shea told members that the trust’s reserves have dropped from $20 million in January 2024 to less than $5 million, and given the trust paid out $8.5 million in medical claims in May and then $2.9 million in pharmaceutical claims in July alone, action needed to be taken for it to be able to pay expenses and rebuild reserves.

“It ate up so much of the little bit of reserve we had, so we needed to do a mid-year increase,” said Paula Harrison, Colrain’s treasurer and a member of the trust’s executive committee. “Millions of dollars went away very, very quickly.”

“If we did not vote in favor of the 20% increase, [the trust] would be bankrupt by September,” Buckland Town Administrator Pam Guyette said. “All but one vote was in favor of accepting the 20% and I think that was done because we need to make sure that all our employees continue to have health insurance.”

Towns wrestle with insurance costs

In Montague, when Town Meeting members approved the budget for FY26, the health insurance line item was increased by $243,000 compared to fiscal year 2025, amounting to $2.23 million for employee insurance and benefits.

Now, the town is looking at another $318,000 increase, Town Administrator Walter Ramsey said during an Aug. 6 Finance Committee meeting.

Ramsey said the vote was “a tough pill to swallow” for Montague. While this increase impacts Town Hall staff, workers at the Turners Falls Municipal Airport and the Montague Clean Water Facility also get their insurance through the trust, and are expecting a $4,000 and $37,000 increase, respectively.

Ramsey said he and Town Accountant Angelica Desroches discussed the estimated $318,000 impact and said the plan is to cover the increases through the general fund out of taxation, and not out of free cash, given the year-over-year increases that the town has the levy capacity to manage. Additionally, the town expects to maintain the same level of insurance coverage for its employees, unless the decision is made to switch providers.

“If there’s any consolation, we’re not doing this on our own. There is power in numbers.”

Montague Town Administrator Walter Ramsey

Buckland voters approved their FY26 budget just $5,000 under the Proposition 2½ levy limit, with a $312,106 line item for town employees’ insurance and retirement benefits. With the 20% rate increase, the town will now need to come up with an additional $40,000.

Selectboard members said to cover that increase, the town could potentially tap into its free cash once that is certified by the state, and in the meantime, pay out of the existing budget. Guyette said the state Department of Revenue has not yet certified the town’s free cash amount for FY26, but the amount will be determined soon.

According to the Data Analytics and Resources Bureau, Buckland had $325,299 in free cash for FY25, which was certified on Oct. 23 of last year.

“That will determine whether or not we’re going to have to set a Special Town Meeting,” Buckland Selectboard Chair Clint Phillips said. “If we’re gonna make that payment through free cash, we don’t have to have a Special Town Meeting to appropriate those funds. … We could pull out the last few months [of the budget] to be able to supplement the first few months and then backfill it with free cash.”

Similarly to Buckland, Whately Town Administrator Peter Kane said his town expects to cover the majority of its $111,000 increase using free cash. The request will appear on Whately’s fall Special Town Meeting warrant.

Shutesbury has tentatively scheduled a Special Town Meeting for Sept. 23 to address an additional $123,800 that is owed to the trust. In the coming weeks, town officials will be discussing whether they should pay for the insurance by increasing the total town budget, transferring money out of the reserve fund or dipping into the Other Post-Employment Benefits Account.

A change in insurance?

In the face of this latest increase, some towns are considering switching their insurance.

“This group seems to be run by a group of clowns if it’s going up 20%,” Rowe Finance Committee Chair Dan Pallotta said. “The easiest solution is to change the insurance.”

The town of Rowe covers 80% of its employees’ health insurance, and for FY26, the town had budgeted $800,000. During a joint meeting of the Finance Committee and Selectboard, Town Administrator Brooke Shulda said she and the town’s treasurer would need to spend more time looking at the numbers and how the town could potentially pay for the additional 20%, while the boards consider the long-term impacts of health insurance costs.

“We made the decision, we want to make the benefits high because we want to have an incentive to working here,” Rowe Selectboard member Bill Baker said of covering 80% of Rowe employees’ health insurance. “And that’s fine, and I think it’s good to evaluate where we’re at right now and see where we want to go.”

However, Shea said during the July 30 meeting that the Hampshire County Group Insurance Trust’s premiums are lower than that of the competition, like the Group Insurance Commission and the Massachusetts Interlocal Insurance Association.

“There are no good solutions,” said Colrain Town Administrator Diana Parsons. “The best thing to do right now is to maintain the sustainability of the trust.”

Harrison, of Colrain, said the 20% increase would require the town to pay an additional $28,757. However, in anticipation of hiring new staff this year and potentially needing more expensive family plans than the current staff have, the town had upped its budget. For FY26, the town had increased its insurance line item by 22% to $209,858.

Harrison said the extra nearly $40,000 the town has budgeted for health insurance could be used to cover the additional $28,757, and the town is “in a good place.” Parsons said she would still like to set a tentative Town Meeting for Nov. 4 to appropriate free cash and take care of any other town business.

School districts also facing rate hikes

School districts that are part of the trust are also impacted by these increases, whether they are members individually or covered through their municipality’s plans.

At the Pioneer Valley Regional School District, Superintendent Patricia Kinsella explained the health insurance increase that took effect for the July 1 start of the new fiscal year was $425,000. Come Oct. 1, Pioneer is looking at another $325,000 increase, representing a total FY26 increase of $750,000. By comparison, the FY25 increase was only $200,000.

Kinsella said despite the skyrocketing figures, the district is not seeking higher assessments from its member towns. Rather, Pioneer is looking at the “entire universe” of options for cost-cutting measures and revenue increases, while ensuring that the student experience isn’t negatively impacted.

“This is an all-hands-on-deck situation,” Kinsella said.

Frontier Regional School District Superintendent Darius Modestow said the middle and high schools are expecting a $300,000 increase to their health insurance fees, with an early idea being to pull from the excess and deficiency account. However, the Frontier School Committee will make the final decision.

Modestow said that ultimately, the concern is the impact on towns a year out, when decisions are more finalized regarding which of the trust’s 73 members — made up of cities and towns, water and fire districts, regional schools and other government entities across Franklin and Hampshire counties — decide to stay and which opt to find another provider.

“I think the trust could continue to move forward, but the concern is, what does the next year look like?” he said.

Around the region, questions remain as other trust members are still attempting to determine how they will cover their share of the increases.

“It’s a severe problem,” said Deerfield Selectboard member Tim Hilchey, “and it’s only going to get worse.”

Aalianna Marietta contributed reporting.