City and county deal with rising health-care costs

By Cherry Sokoloski
North Forty News

These days, griping about the cost of health care is about as common as complaining about the weather.

Local governments are also interested in the topic, since they can develop chronic financial ailments because of escalating health care costs.

Fort Collins and Larimer County - both of whom are self-insured - face rising costs as they continue to offer health insurance benefits to their employees. The employees, in turn, while benefiting from relatively generous health insurance plans, see these benefits eroding every year as the city and county try to keep costs under control.

Both the city and county have initiated wellness programs in an effort to curb costs and create a healthier workforce. Officials are talking about other innovations, too--such as a joint city/county clinic for employees.

This year, Fort Collins budgeted a 9.4 percent increase in health insurance costs--significantly less than the industry-wide average of 12 percent, according to Mayor Doug Hutchinson.

On the county side, this year's budget includes a 30 percent increase for employees' health insurance. The county began its self-insurance program two years ago, and because of high claims for catastrophic illnesses, it had to dip into its insurance reserves last year. Now, according to Larimer County Commissioner Kathay Rennels, the county has to build up the reserves again.

Commissioner Randy Eubanks noted that costs from the sheriff's department alone have been rising by about 8 percent annually, due mostly to health-care costs. On the other side of the ledger, county revenues have been relatively flat.

"I see the health care issue as a major driver of county decision-making now and in the future," he said.

Both the city and county have had to scale back their benefit packages in the face of rising costs. The city's prior package, said Hutchinson, "was by any standard over-generous and unsustainable."

New city policy brings Fort Collins in line with the market, he said. "We need to be fair to the employee, and we need to be fair to the taxpayer," he noted. Nonetheless, he acknowledges that the leaner package of benefits has been "very difficult for employees."

Hefty costs cited

The following are health insurance costs now borne by Fort Collins and Larimer County--and, as a result, local taxpayers.

Even with recent cutbacks, Hutchinson said health-care costs are a "major investment" for the city. For 2008, Fort Collins has budgeted $9,240 per eligible employee for the city's portion of health-care insurance, according to human resources director Janet Miller.

The city currently has 1,153 employees eligible for benefits, plus some retirees. This year's budget includes about $12 million for medical health insurance. With a city budget of $569.6 million, health insurance costs make up 2.5 percent.

City employees pay a portion of their insurance costs; their share depends on the plan they choose. For the "core" plan, which is the less expensive of two options but has more out-of-pocket expenses, an individual pays $890 per year for his or her share. For a family core plan, the employee pays $2,216 per year.

This year, Larimer County has budgeted almost $15 million for the county's portion of health-care insurance. There are 1,547 employees eligible for benefits, according to human resources director Wynette Reed, so the program costs $9,696 per eligible employee.

The county's 2008 budget is $289.5 million, so health insurance costs make up 5.2 percent of the budget.

County employees also pay part of their health insurance premiums. A single individual pays $504 per year for the least expensive plan. A family plan, however, costs $4,534 per year for the least expensive option.

Not all city and county employees opt to participate in the health insurance programs, since some are covered by spouses' plans.

Wellness plans in place

Both the city and county are aggressively pursuing wellness programs in an effort to keep employees healthier - and reduce health-care costs.

Larimer County hired a wellness coordinator, Elizabeth DeJongh, in January. DeJongh, who has a master's degree in health, exercise science and nutrition, enrolled more than 200 employees in the National President's Challenge last month. The challenge is an eight-week program focused on regular physical exercise, and those who stay with the regimen will be entered into a drawing for cash prizes.

DeJongh has plans for year-round programs in health education and disease management. She will also organize quarterly health campaigns like the President's Challenge, as well as challenges within departments.

County employees are actually paying for the wellness coordinator themselves, through a $2 per month deduction from wages.

Larimer County also has a smoking cessation program that offers free nicotine patches, free counseling and prescription drugs to help people quit the habit.

Fort Collins uses paid time off as the "carrot" in its wellness program, which has been operating for three years. The program includes smoking cessation and weight management, as well as health maintenance, risk reduction and disease management. Those who meet their goals can earn up to three days off each year.

This year, the city is partnering with Mayo Clinic to identify health risks for employees and to provide behavior modification training where needed.

"We can see some significant savings in health-care costs, plus greater productivity and satisfaction" because of the wellness program, Miller said.

Joint clinic possible

Commissioner Rennels noted that the county is looking at other cost-saving ideas, too. One possibility is a joint city/county clinic that would take care of employees' minor health issues. Other areas have created such clinics with good results, Rennels said.

Rennels is also pursuing a plan that could benefit all county residents. It's a discount card issued through the National Association of Counties, available to anyone in the county, that will provide a discount on all prescription drugs.

When it comes to health-care reforms at the state or national level, two elected officials weighed in with their opinions. Mayor Hutchinson said the city's program, with its wellness component, can be run more efficiently than a large-scale government program. He said he has concerns about overhead in a government-run program, because it would "remove incentives for efficiencies."

Commissioner Eubanks said he supports a system that would relieve the county and businesses of the burden of paying for health insurance, and he personally supports a single-payer system as the most efficient option. "Incentives for healthy lifestyles should also be part of the discussion," he said.

Eubanks said he has tried to start a county dialogue about health-care reform. "Whether you are a health savings account or single-payer advocate, it is important to talk about the issue," he said. "If it is important to you, make it a priority at the ballot box when choosing your elected representatives."