Affordable health care remains at the forefront of our national discourse, serving as a daunting challenge for employers who want to provide employees with cost-effective options that don’t reduce the care aspect. Employers with 100 employees can expect to pay anywhere from $1 million to $1.5 million for health insurance — a figure that can vary based on location. Factor in the cost of qualified family members and the figure can rise anywhere from $25,000-$60,000. Like all employers, cities are faced with that fine line. Kirkland, Wash., embraced the challenge, ultimately navigating its way to a solution that has saved hundreds of thousands of dollars against projected cost trends.
“In 2013, the city manager asked me to figure out how to bend the cost of care trend, which was rising with our existing plan, without diminishing care for our employees,” Jim Lopez, Kirkland assistant city manager, said, noting he was given the resources to do the change. “We did not cut the budget as we wanted to keep investing in our employees.”
As part of this effort, Lopez grabbed Keith Robertson of Alliant Employee Benefits to hash out potential options for the city. While also talking with other experts in the field, Lopez said, “We researched ideas in place around the country to find what was working while piecing together our plan.”
To flatten the cost of care trend, most city employees were given the option to move to a hybrid high-deductible plan with an individual HRA-VEBA program, which receives yearly employer contributions for each worker. This is all built around the cornerstone of the new plan: an independently operated nearby clinic.
“There is no cost at the clinic for employees and qualified family members,” Robertson said. “No money exchanges hands there.”
For diabetics, asthmatics and those who have other chronic diseases, having this type of access is life changing. The clinic also offers a free health coach who works with employees and family members to empower them to make changes in their lives by setting goals concerning issues such as stress, diet, relationships and job satisfaction.
“The clinic only dispenses generic medicine, though if they are not happy with the result, then they will be given a script for a prescription,” Robertson said, noting this ensures clinicians are not being influenced by pharmaceutical companies to prescribe certain prescriptions.
“RX costs have gone down 3 percent,” Robertson said. “Since 2014, the total RX has gone down whereas other municipalities that have done nothing have experienced increases between 44 to 77 percent. People are spending less on their medications with the clinic.”
In addition to prescribing generic medication, patients are asked to bring all their current medications with them. This allows redundancies and contradictions to be eliminated.
For the city, Lopez noted, “Utilization went up as the (cost) trend went down.” He added, “When we moved to the less expensive high-deductible plan, we invested the cost savings into the HRA-VEBA.”
Employees receive up to $600 for a wellness incentive through participating in annual checkups and free health risk assessments. This creates a positive loop that saves money. By going to the clinic, employees and their families stay healthier, with health concerns being addressed before they develop into something more serious.
One aspect of the health care plan, according to Lopez is “getting people to become more like consumers.” By giving employees the tools, including access to a health concierge, to navigate health care and remove some of the opaqueness that mires the health care industry, employees can better choose options that work for them while also positioning themselves well for retirement, with Lopez stating, “With the HRA-VEBA contributions, they aren’t coming from a position of scarcity.”
Since the new plan went in place, it has been a largely positive experience.
“We’ve never done an overall survey,” Lopez said of employees’ reactions to the new health plan. “With the clinic, the quality of care rating has come back very high. For many it’s very convenient, and for some, it has been life changing.”
Since the plan is still new, Kirkland has a health council that meets periodically to iron out any issues while also going over feedback on the clinic and plan in general. “There have been several system improvements, though not many have been needed lately,” Lopez said. “We’ve had some issues. At the beginning, there was more demand for the clinic than there was time available. Back in 2015 we worked that out.”
Related to this challenge was clinic crunch, which saw procrastinators waiting until the last minute to go to the clinic to receive their $600 wellness incentive. To address this, Lopez said, “We started a No Frantic November campaign.” Employees are also encouraged to satisfy the wellness incentive on their birthdays.
For municipalities looking to shake up their own health care, Lopez suggested, “I would say you can’t communicate enough about what you are trying to achieve. Communicate early and communicate often — really model the projected impact of your ideas. Communicate why you are proposing change and what you hope to accomplish so (employees) become invested in the new model.”
By showcasing proposed plan models, cities are providing their employees with transparency and helping them see what the impact to them will be on a personal level. Scenarios from the old plan to the new plan are also beneficial to give employees a full picture and reduce fears that often accompany any change.
“Leadership has to be invested (in the change),” Lopez said, adding that, in Kirkland, both the city manager and city council deserve so much credit, as they fully invested in the new plan and gave plenty of time for its development.
Because of this support and the time spent adequately researching potential solutions, Lopez commented, “We’re optimistic that our emphasis on proactive primary care will produce positive health outcomes for years to come.”