City Saving on Health Plan

With the average health care cost increasing by over 10 to 12% each year, this local Kansas government is showing how an out-of-the box health care plan can buck a trend. Since implementing a new health insurance system in 2007, the City of Olathe, has experienced an overall drop of 20% in employee healthcare costs. The decrease is even more impressive when considering the 5 to 6% inflationary cost increases in healthcare. In fact, prior to the new plan, City healthcare costs had averaged 12% increases in each of the previous two years.

The new plan focuses on wellness, personal responsibility and savings. Rather than blanket insurance, Olathe's plan places tax free money that would otherwise have gone to insurance premiums into participating employees' health savings accounts. The plan includes a high deductable, but medical expenses can be reimbursed from money in employees health saving accounts. However, preventative care (check-ups, mammograms, etc.) is paid 100%.

Money not used accrues in the account and can only be used for medical related costs. The savings stay with employees and can be used as a buffer to pay for insurance between retirement and Medicare eligibility. Using this incentive, the program returns the responsibility to employees to stay well and shop for the best prices from doctors and pharmacies.

The overall 20% healthcare cost decline can be traced directly to changes in behavior and the creation of healthier lifestyles brought about by the new insurance option.

In addition, the City is working with employees to undergo optional health risk assessments to identify, address and prevent health risks. Once an assessment is complete, employees have the opportunity to participate in an individually tailored wellness program as well as the City's overall wellness program. That includes having access to a part-time clinic operated inside the City's Fire Administration building. The City has contracted with a private company, WINS to administer the program and operate the clinic, staffed by a nurse practitioner.

The program is good for the employee's health, but also the City's economic health. The City anticipates an average claim cost reduction of $650 each year for participating employees.

"We have been consistently looking for savings, and one key opportunity is having a healthier workforce," said City Manager Michael Wilkes. He said, "Not only do we avoid significant medical costs for insurance, but the costs of missed time and loss of productivity adds-up rapidly."

With the dramatic savings already being seen, the City hopes that trend continues. Wilkes said, "It makes sense. We can continue providing excellent customer service more efficiently."