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The Alliance for Innovation, a national organization focusing on innovative government practices and programs, is featuring the City of Olathe’s healthcare and wellness program at its 2010 Transforming Local Government Conference in Nevada in June. The conference is attended by local government officials from across the country.
The City’s program was selected based its innovative approach and the significant cost savings it has produced. Since it was implemented, the City has experienced an overall 20% cost decline in healthcare. With average health care costs increasing nearly 12% each year nationally, the Olathe health and wellness program has shown how an innovative approach can not only stop the increases but deliver cost savings.
The City’s 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.”