Soaring healthcare costs detailed

The City of Boston's healthcare costs have nearly doubled in six years and now require the property tax bills of five families to pay the premium of one city employee's family healthcare plan, according to a report by the Boston Municipal Research Bureau.

In order to bring the costs under control, the city must take difficult actions, including shifting some of its healthcare policies and joining the state's healthcare plan, according to the report.

"This is the biggest issue facing cities and towns today," said Samuel R. Tyler , president of the Boston Municipal Research Bureau, which is releasing the report today . "It's affecting services, some of which are quality-of-life issues that has an effect on people and businesses choosing to stay in Boston."

The 20-page report, "Soaring Health Insurance Costs Threaten Boston's Competitive Edge," says that the increase in healthcare costs are absorbing a larger share of property taxes, forcing the city to divert resources that could be used to hire more teachers, firefighters, and police officers.

Boston's health insurance spending, estimated at $235 million this year, has increased by 92 percent since fiscal year 2001. During that time, the school budget increased 16 percent; police increased 18 percent; and fire increased 32 percent.

This year's $25 million increase exceeded the increase in state aid and absorbed half of the city's total budget increase.

It is now the city's fifth largest spending item, behind the school, police, fire, and public works departments. There are 28,600 subscribers to the city's healthcare services, about 45 percent of which are retirees.

The report's key recommendation is that the city make an effort to join the state's insurance system.

The move would require legislative approval, but would bring greater purchasing power and would help stem the city's rising costs that come through collective bargaining.

Under the state plan, items such as employee copayments and share of premiums are not part of collective bargaining, but are determined by an 11-member Group Insurance Commission.

There is currently draft legislation that would allow Boston and other municipalities to join the state's system, but it is likely to meet resistance from the unions. The report said that if Boston were part of the state system, it would have had $6 million more this year, enough to hire 85 police officers or 92 teachers.

Lisa Signori , the city's chief financial officer, said the city has tried several ways to cut health costs in recent years, but little has worked, in large part because every change has to be approved at a union bargaining table. Being part of the state program would help reduce costs, she said.

Some of the other recommendations in the report include:

Requiring retirees to enroll in Medicare when they turn 65, which would save the city money by shifting costs to the federal government. There are currently about 1,700 Medicare-eligible employees who are not enrolled in the federal program.

Establishing a reserve account to help pay for the increased costs that are expected in the coming years.

Expanding its administration program to have more control over healthcare decisions and avoid hiring as many outside contractors and consultants.

Matt Viser can be reached at maviser@globe.com.