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Federal Way tries to curb costs of employee health coverage
The city has hired a consulting firm to explore ways to save money on employee health care coverage.
Health care costs have skyrocketed in recent years. City management wishes to curb expenses by identifying a rational, thoughtful and effective approach to health care coverage, city spokesman Chris Carrel said. Consulting firm R.L. Evans was hired for $3,000 to explore how other agencies control expenses in this arena.
“Health care costs are one of the big strains on city budgets,” Carrel said.
In March, R.L. Evans will present cost-decreasing methods that are used by other agencies. An internal task force will then weigh the recommendations and choose one that could work in Federal Way.
There is no timeline for how long it will take before the chosen method is fully implemented, Carrel said.
“It’s a dynamic process that depends on what’s presented in March,” he said. “This is an effort to get the best of the best being tried right now.”
Federal Way offers medical, dental and vision coverage for all its employees. The sooner a solution can be found, the more the city will save. Nine percent of the city's personnel costs and 5 percent of its operating budget are spent on employees' medical coverage, Carrel said. In 2009, Federal Way spent $2.97 million on these costs, he said. For the same amount of coverage, the city paid $1.9 million in 2005, he said.
Health care expenses are expected to continue rising, both in Federal Way and nationwide. Federal Way's costs could reach $4.5 million a year by 2015 if something is not done soon, Carrel said.
King County may be one agency Federal Way can learn from. In 2006, the county launched its Healthy Incentives program, which gives employees incentives for practicing a healthy lifestyle. Employees' out of pocket expenses are tied to their participation in wellness activities, said Brooke Bascom, King County director of communications and outreach for employee health and well-being. Health insurance is more affordable to employees who take a wellness assessment and participate in an action plan.
"That's all to get people eating better and moving more and thinking about the stress in their life so their health will improve," Bascom said.
Employees are offered perks to help them stick to a healthier lifestyle. These include on-site Weight Watchers programs and membership discounts at more than 150 gyms, Bascom said. A group of employees, in their off-time, have even transformed an empty county-owned lot into a vegetable garden.
The county, more recently, has pushed generic-brand prescriptions and has increased the cost of choosing brand-name drugs, Bascom said. This alone has saved $1.5 million in the past year, she said.
The county's efforts have paid off. Ninety percent of employees partake in the wellness program, Bascom said. In 12 of the 14 measured areas of employees' health, there have been increases. For example, the county has seen a reduction in smoking among its staff members. This has led to fewer cases of respiratory infections, bronchitis and pneumonia, she said.
Had health care costs continued to grow at the rate projected in 2005, and had King County not implemented its approach to health care, the county estimates it would have spent an additional $26 million, from 2006 to present, on employee health care coverage, Bascom said. Instead, the work force is getting older and healthier, she said.
"We've won some national awards and have people who call us from all over the country asking about our program," she said.
Among City of Federal Way employees, 237 staff members carry medical coverage through Regence FirstHealth. The co-pay is $10. Nineteen city employees have medical coverage through Group Health. Their co-pay is also $10. Another 28 staff members pay a $5 co-pay for Group Health coverage, according to information provided by Carrel. Seven employees carry medical insurance through a Regence high deductible plan.
Vision coverage is extended through the Association of Washington Cities (AWC) and VSP. Benefits include a fully-paid yearly eye exam. Employees may also get a pair of prescription glasses, both lenses and frames, or contact lens care, once every 12 months. They pay a $25 co-pay on glasses and no co-pay for contacts.
Dental insurance is offered through AWC and Delta Dental: Washington Dental Service. Insurance covers diagnostic and preventative care, such as X-rays; restorative, oral surgery, periodontics and endodontics care, such as crowns, teeth removal and root canals; and prosthodontics care, such as dentures and implants.
The coverage is subject to an incentive program. Employees get a minimum of 70 percent coverage — up to $1,500 — of diagnostic, preventative, restorative, oral surgery, periodontics and endodontics care. Each year an employee regularly visits the dentist, the coverage increases by 10 percent. Each year an employee avoids regular visits, the coverage decreases by 10 percent, Carrel said. Employees may work their way up to full coverage. In theory, employees who regularly see the dentist have less catastrophic, and thereby less expensive, dental issues to be covered, Carrell said.
Prosthodontics care is covered at 50 percent. Incentives do not apply to this type of care.