This week, I covered a story in Bazetta Township, Ohio, where the Township Trustees agreed to a 9.2 percent increase in their health insurance plans for their employees – and counted it a win.
“We’ll take the 9.2 rate increase gladly,” said Trustee Chairman Michael Hovis. “One insurance company wouldn’t even quote us.”
Hovis told me the township had been expecting an 11 or 12 percent increase.
“If we can get under 10 percent, that’s a home run for us,” he said.
Let that sink in. Anything under a 10 percent increase is a win. The taxpayers have to pay more to keep their local government operating. The people clearing roads, maintaining parks and operating city business offices just got a pay cut, as medical costs have a way of showing up as bigger paycheck deductions.
Overall, the township is going to have to pay $33,000 more this year – $364,000 – for the same benefits they had last year.
The quotes received:
- Current provider: $397,600, a 9.2 percent increase;
- Regional Insurer A: $481,500, a 32.3 percent increase;
- Regional Insurer B: $481,300, a 32.2 percent increase; and
- National Insurer, $696,000, a 75.1 percent increase.
Let’s put that 9.2 percent in context.
Inflation in the U.S. has cooled to roughly 3 to 4 percent over the past year. Wages, depending on the sector, are growing somewhere in that same range. There’s volatility right now in energy and fuel prices, with attached increases at the grocery store for many goods. Most households are adjusting to smaller, steadier increases after the spikes of the past few years.
This is just a quick snapshot of how costs for local government are going up across this region of Ohio. Across the county, local governments are dealing with the same issues. Revenues are relatively flat, but costs are not. Health insurance, equipment, materials, and contracted services are all rising faster than the income streams that fund them.
We are already seeing the effects.
In one Trumbull County community of roughly 10,000 residents, officials have paused the annual road paving program. Not because the need disappeared, but because the money did. The cost of maintaining core services is crowding out everything else. School districts across the area are looking at cutting services, like busing and afterschool programs, or teachers.
That is how a 9 percent insurance increase shows up in real life, and where communication matters for organizations facing difficult situations. No one in Bazetta made a bad decision. They reviewed the bids, avoided far worse outcomes, and kept the increase as low as the market allowed.
Here’s where good communication comes in. At the township meeting, trustees talked about how they asked for multiple quotes and relied on a long standing relationship with an agent to negotiate the best possible rate. They were careful to point out that no cutbacks were being considered, especially for employees.
For taxpayers, that’s the key point. They want to know if taxes will increase, if services will decrease and if there was any way to avoid the cost hike. A 9 percent increase can be the right decision. But if it is not explained clearly, it will not feel like one.
Rust Belt Writers 