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How One City Showed that Improving Health Benefits Can Cut Health Costs

Over a period of six months in 2015, the city of Kirkland, WA completely revamped its health benefits for city employees, drove up engagement with the program to 70%, and cut hundreds of dollars in city costs per employee per month.

“We were what you would characterize as a Cadillac tax plan,” Kirkland human resources director Jim Lopez told local NBC affiliate K5.

To replace that costly approach to health care, the city launched a “Healthy Kirkland Initiative” wherein the city:

  • Moved employees to a high deductible plan;
  • Started a health savings program for employees to which it contributes;
  • Opened a primary care clinic (Vera Whole Health) that is free to employees and their families.

The clinic is key to the program. Regular doctor visits cost patients nothing. They encourage longer visits, and “we can give out free medicine to the patients without any charge to them up front,” says Dr. Karl Weyrauch, who leads the facility. Some irregular visits may have a price, but employees can use the health savings plan, and they may be able to qualify for rebates.

In some ways, the program merges aspects of wellness programs with health care coverage, in the way it emphasizes preventive care and adds incentives for employees to engage with the program.

“What we have in the rest of American health care is sick care. In Vera, we have a focus on keeping people healthy,” Dr. Weyrauch told K5.

The program has left the city’s budget in healthier shape, too. The city has indicated that its cost per employee per month is $211.45 less than the previous year—including all the costs to implement the program. People are happier with the program too: patient satisfaction rose by over 11% in the first six months.

There are also indications that the program helps control costs for members with chronic conditions. For example, Forbes reports that “Seattle Children’s diabetics treated at Vera cost $920 less per member per year versus past years. 47.5% of those Vera-engaged diabetics were at high risk.”

Ultimately, Kirkland shows how creative thinking and outside-the-box solutions can go a long way toward solving major problems. Even with health care uncertainty at the national organization, solutions can still be found on the local level.

 

Need more information about health care reform? CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with all forms of HR benefits and compliance. To learn more about our integrated HR outsourcing solution, contact us today.

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