1. Section 18 Election 2006 Wellesley Town Meeting

2. Growth in Group Insurance $- $2 $4 $6 $8 $10 $12 199019911992199319941995199619971998199920002001200220032004200520062007 Group Insurance Budget ($ Millions) Total Group Insurance Budget 0% 100% 200% 300% 400% 500% 600% Group Insurance Budget Growth (%) % Growth - Group Insurance Budget

3. Year-Over-Year % Growth Group Health Insurance

4. Growth in Health Insurance as % of Prop 2 ½ Revenue Increase

5. Chapter 32B Basic program of health insurance (1965) Optional provisions adopted –Indemnity Plans –HMO Plans –Retiree Coverage Collective Bargaining Issues

6. Wellesley vs. Peer Communities Town Cost ACTIVE PLANSMEDICARE PLANS HMOsIndemnity Wellesley80%50% Brookline75% 75%* Lexington84%80% 80%** Needham71%50% Wayland70%50% Weston80-90%50%70-77% * Pays 50% of Part B premium ** No subsidy for Part B premium

7. Coverage Eligibility Active Employee: Any non ‑ seasonal employee who regularly works 20 or more hours/week Retiree: Any employee with 10 years of full-time equivalent service

8. Employees/Retirees Receiving Health Benefits – 1/1/06

9. What Have We Done? West Suburban Health Group Wellness Initiatives $600,000 OPEB Appropriation Healthcare Working Group

10. Section 18 Election Vote by Town Meeting Medicare eligible retirees required to enroll in Medicare Supplement Plans Plans must be of “comparable actuarial value”

11. Medicare Insurance Part A:Coverage of hospitalization & hospice care Part B:Coverage of physician services and outpatient care Supplement Fills in gaps in coverage gaps & provides Plans:prescription drugs

12. Cost Shifting Federal Government Medicare Insurance Part A:Coverage of hospitalization & hospice care

13. Cost Shifting Individual Plan Total CostTownRetiree Before: Harvard Pilgrim HMO $5,016$4,128$ 888 After: Medicare & Medex $5,298$2,649 Difference $ 282$1,479$1,761 After: Medicare & First Seniority $3,066$1,533 Difference $1,950$2,595$ 645 Black = Benefit Red = Cost

14. Cost Shifting Both Spouses over 65 TotalTownRetiree Before: Harvard Pilgrim HMO $13,056$10,353$2,703 After: Medicare & Medex $10,596$5,298 Difference $ 2,460$5,055$2,595 After: Medicare & First Seniority $ 6,132$3,066 Difference $ 6,924$7,287$ 363 Black = Benefit Red = Cost

15. Selectmen Vote If Town Meeting accepts Section 18, the Board of Selectmen directs the staff in its implementation of Section 18 to grandfather those retirees who are age 65 on or before July 1, 2006 and who have retired. March 21, 2006

16. Retirees Affected by Election

17. Retirees/Employees Affected by Election

18. Benefits to Town Immediate Impact/OPEB Liability: $8M↓ Future Savings –Retirees under age 65 –Active Employees –Active Plan Premium Savings Trend in WSHG and neighboring towns

19. Section 18 Adoption WSHG Towns AdoptedAt 2006 Town MeetingNot Adopted/ Not on 2006 Warrant AshlandX DedhamX DoverX HollistonX NatickX NeedhamX SherbornX ShrewsburyX WalpoleX WaylandX WellesleyX WestwoodX WrenthamX

20. Other Towns AdoptedNot Adopted BelmontX ConcordX LexingtonX MiltonX NewtonX SudburyX WestonX WinchesterX

21. Future Options Legislative changes Wellness initiatives Contract negotiations OPEB funding Enrollment growth control Board education on costs of hiring practices

22. Good News! People are living longer than ever! Bad news – we don’t get to choose which people.

23. OPEB Funding Program without Section 18 election 56M 101M

24. OPEB Funding Program with Section 18 election 101M 56M 93M

25. National Healthcare Expenditures as % of GDP $ Billons Healthcare as % of GDP