With an increase in claims and rising drug costs, the Hampshire County Group Insurance Trust may need to increase rates for members anywhere from 10% to 20%.
The trust provides health insurance for 34 towns, schools, water districts and fire districts across Franklin County, in addition to dozens of other towns throughout western Massachusetts. Officials in these communities are left scratching their heads trying to figure out how to pay for insurance cost increases that could range from $35,000 to more than $100,000.
“We had a rate increase of 18% going into fiscal year 2026, and what they’re telling us is we’re looking at another increase for Oct. 1 of an additional 20%,” Bernardston Treasurer Susan Bobe told the town’s Selectboard on Wednesday. “What precipitated the need for this is prescription drug costs, specifically the GLP-1 drugs, have been out-of-this-world expensive for the insurance companies.”
Bobe informed the Selectboard that the trust has a reserve fund of approximately $4.6 million and claims exceeding $9 million. To rebuild its reserves and cover expenses, the trust plans to increase the rates it charges its members, but has yet to determine by exactly how much.
According to the trust’s Insurance Advisory Committee meeting agenda for May 28, it has lost $14 million since January 2024.
“The trust has been paying over $1 million in drug costs alone and it’s drained their rather healthy reserves,” Bobe said. “The situation now is rather dire.”
Bobe said members of the trust voted to no longer cover GLP-1 drugs, except for patients with diabetes.
“It is still costing HCGIT a much higher cost then they ever anticipated. In addition to that, the claims for this year are much higher than many previous years they were using as a reference for their budget,” Buckland Treasurer Cara Leach told the Buckland Selectboard on Tuesday. “So the overall picture of the financial stability of the HCGIT is struggling.”
Leach said the Hampshire County Group Insurance Trust informed her that health insurance costs would need to increase by at least 10% for the trust to break even, but to leave wiggle room for any further unexpected costs, rates would likely need to be increased more.
“The increases that began this fiscal year were dramatic. It took some financial creativity, but we were able to make it work,” said Patricia Kinsella, superintendent of the Pioneer Valley Regional School District. “But this mid-year increase was unanticipated. The HCGIT has not had a mid-year increase since the early 2000s. … It is hard to fathom how 69 towns, school districts and municipal entities will absorb a hit of this magnitude.”
Kinsella said the school district saw a 20% increase in its insurance rates and has been given an estimate of needing to pay an additional 20%. A total increase of 40% in a single fiscal year will be difficult to manage, and Kinsella is worried about what future years will bring and if health insurance costs will continue to rise.
“We do have some reserve funds,” Kinsella said. “But we had already made plans for those reserves and this will throw a wrench in our long-term plans.”
“All these town budgets are set, so I don’t know how they think we’re gonna come up with another 20% midway through our fiscal year,” Buckland Selectboard Chair Clint Phillips said. “We’ve got a small town and it’s a large number. For some towns, you’re talking hundreds of thousands of dollars.”
Finance Committee members and treasurers in Buckland and Bernardston told their Selectboards that, as the budgets have already been approved by Town Meeting voters, any health insurance increases will likely require a Special Town Meeting be scheduled to allocate additional funding.
Bernardston Finance Committee Chair Jane Dutcher said that if rate increases remain on the lower side, the town may be able to cover the difference by transferring cash from its reserve funds, but this approach will leave the town with little extra in the event of any other emergencies or unplanned expenses.
“We’ll have to tighten everybody’s belt so we don’t go over budget. Not by one penny,” Dutcher said.
Kinsella added that representatives from the various towns and member organizations have formed an ad-hoc group to brainstorm ways to address the dramatically increasing health care costs.
“We will figure this out, but it will take a team effort,” Kinsella said.
The trust plans to meet again with town treasurers and administrators this week to further discuss potential rate increases.
