Health care costs: Defining the challenge and finding solutions

From the Beacon, September 2025

In some ways, I cannot believe that in 2025 I’m writing about the pressures that health care costs are putting on already-strained municipal budgets. I say this from the perspective of someone who lived and worked through municipal health insurance reform well over a decade ago. This reform was a hard-fought victory for the MMA and its members, and it allowed many of you to do great work in reducing the cost burden that health insurance had been putting on your annual operating budget.

Fast forward 13 years, and we find that, once again, most public and private sector employers are facing unsustainable year-over-year increases in the cost of providing health insurance to employees. These increases would be unsustainable in any economic environment, but they have been particularly hard to manage in a time of broad inflationary pressures and the general fiscal uncertainty driven by the retreat of the federal government from state and local funding. Stemming from this, the question I often hear from city and town officials is: “What is causing this spike in costs, and what can we do about it?”

Candidly, the first part of the question is easier to answer than the second. In terms of the cause, there are three main drivers:
• More people are accessing care, and more usage of the health care system means more expenses.
• The cost of providing care is rapidly increasing. You may hear this described as “unit cost,” but basically, this is a way of saying that doctors and hospitals are increasing the rates they charge for providing health care.
• The costs of prescription drugs continue to rise, with particular growth in the usage of the class of weight loss drugs known as GLP-1’s.

These three drivers together explain the often double-digit rate increases that many of you have experienced over the past year.

The “what can we do about it?” part of the question is much harder to answer. One thing is clear, there is no silver bullet to solving the problem, but that doesn’t mean that there are no tools that can be used to address the challenges.

Sarah Iselin, the CEO of Blue Cross Blue Shield of Massachusetts (MIIA’s partner in providing municipal health insurance), laid out a roadmap for potential action in a piece published in Commonwealth Beacon last month. Her suggestions are a more-than-solid start to the conversation. As you’ll see, the majority of her recommendations directly address the cost drivers outlined above.

In the coming months, the MMA and MIIA will be engaging in dialogue with industry partners as well as state decision makers about the need for action and the possible solutions to be considered.

We also want to engage with you. To that end, we’re holding a Health Care Costs Forum on Sept. 30 in Wrentham, where we’ll bring together health care and insurance experts for a deeper dive on the issues facing cities and towns as they work to manage the cost of providing employee health insurance.

We’ll keep you up to date on our work on these issues as it advances, and we encourage you to reach out to us to share your challenges and ideas for solutions.