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A local group, the Marblehead Liberty Foundation, says Marblehead has kept an unusually generous health insurance premium split in place even as town officials warn that rising insurance costs are a major driver of the fiscal 2027 budget crisis.
The dispute matters because health insurance is one of the town’s largest expenses and because the foundation argues Marblehead has not reduced a cost that can be revisited in bargaining. Town officials, however, say state law does not allow the town to change that split on its own.
Health insurance: the cost that ate the budget
Town spending on health insurance, FY2002–FY2027 (budgeted)
FY2027 is the budgeted amount based on adopted GIC rates ($15,814,317). FY25 actual: $12.3M. Sources: FinCom budget presentations, GIC rate announcements and Marblehead Independent reporting.
In an April 13 press release, the Marblehead Liberty Foundation said Marblehead pays 83% of the premium cost for many employee health plans and employees pay the remaining 17% of those same premiums. The group argued that Marblehead’s employer share is unusually high compared with surrounding communities and with private-sector employers in Massachusetts.
The foundation said private-sector employers in Massachusetts typically pay 74% to 78% of employee premiums, with workers paying 26% to 28% of those same premiums. It also said Swampscott pays 73% of premium costs and employees there pay 27% of those premiums. The source packet did not provide the premium-dollar base behind those outside comparisons, so those percentages cannot be translated here into specific dollar amounts.
The foundation also argued that town leaders have repeatedly described health insurance as a main driver of the budget strain while not lowering the town’s contribution when agreements came up for renewal. It said reducing the town’s share from 83% of premiums on the affected plans to 75% of those same premiums would save $1.1 million.
How the dispute works
That claim goes to the center of the dispute over whether Marblehead can actually make that change.
In an April 14 email, finance director Aleesha Benjamin said Marblehead joined the state Group Insurance Commission under Massachusetts General Laws Chapter 32B, Section 19. Under that structure, Benjamin said, the town must bargain over premium contribution ratios with a Public Employee Committee, or PEC, and cannot unilaterally change the split.
Benjamin said all unions and retirees negotiate collectively through the PEC rather than through separate bargaining with the town. She described the PEC as a coalition that includes one representative from each collective bargaining unit plus a retiree representative. According to Benjamin, the retiree representative controls 10% of the PEC vote, while the remaining 90% is divided based on each union’s share of employees eligible for health insurance. Benjamin said the School Department holds the largest voting share because it has the largest union.
Benjamin also said the Group Insurance Commission, not the town, controls nearly all other aspects of coverage, including plan design, eligibility, benefit offerings, carrier selection and methods of payment. The PEC negotiates only the percentage of premium costs paid by the town and by subscribers, she said.
That means the foundation and the town are making different arguments. The foundation is arguing that Marblehead should press for a lower employer share in bargaining. Town officials say the town cannot impose one without PEC agreement.
The current memorandum of agreement between Marblehead and the PEC supports the town’s description of that structure. The agreement runs from July 1, 2024, through June 30, 2026. Benjamin said PEC agreements must last at least two years and that if no new agreement is reached by June 30, 2026, the current terms automatically roll over.
What the agreement says
The agreement also shows that the often-cited 83% town share does not apply to all plans.
For health maintenance organization, preferred provider organization and point-of-service plans, the town pays 83% of each premium and subscribers pay 17% of each premium. For indemnity plans, the town pays 65% of each premium and subscribers pay 35% of each premium. For Medicare supplement plans, the town pays 75% of each premium and subscribers or retirees pay 25% of each premium. The source packet did not provide plan-by-plan premium bases for those categories, so those policy percentages cannot be translated into dollar amounts.
Benjamin said Marblehead has had the 83%-17% split on those health maintenance organization, preferred provider organization and point-of-service plans since at least 2012. She also said Medicare plans are already at a 75%-25% split and the highest-cost active plan is already at a 65%-35% split.
Benjamin said lowering the town’s 83% share to 75% on the affected plans would save about $1.2 million. That differs from the foundation’s $1.1 million estimate, and the source packet does not explain the difference.
One criticism raised around the negotiations is that members of the town’s administrative team also receive municipal health insurance, meaning they are negotiating over a benefit structure that affects them as employees as well as the budget. But the source packet does not establish that this creates a legal conflict or that administrators can decide the issue on their own. Benjamin said any change still requires PEC agreement.
Why it matters now
The fiscal context helps explain why the issue has become more urgent.
Town budget materials say Marblehead spent $12.3 million on health insurance in fiscal 2025, including $9,944,018 for active employees and $2,378,190 for retirees. For fiscal 2026, the town budgeted $13.6 million for health insurance. Those same materials say that $13.6 million is about 14.1% of the roughly $97 million operating budget, meaning about 14 cents of every operating-budget dollar is budgeted for health insurance.
Town materials also project a 15% increase in health insurance costs for fiscal 2027. Applied to the $13.6 million fiscal 2026 budget base, that would equal about $2 million in additional cost. The same materials say Marblehead’s annual Proposition 2 1/2 levy growth is about $2.2 million. Put another way, the projected insurance increase alone would consume nearly all of that yearly new tax capacity.
Town officials have cited that pressure alongside other rising costs in the fiscal 2027 discussion, including trash and pension obligations. But the foundation argues the premium split is different because, unlike the underlying insurance rates set by the Group Insurance Commission, the employer-employee contribution ratio is a negotiated policy term.
So the dispute is not whether health insurance costs are rising. The source materials show they are. The dispute is whether town leaders have done enough, within the bargaining structure required by state law, to reduce Marblehead’s share of those costs before the current agreement expires June 30.
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