Sept. 20, 2011
King County Executive announces dramatic health care savings through reforms
Health care costs come in $23 million below budget for 2011 and $38 million below projections in 2012, enabling Executive to preserve services to the public
As governments and businesses everywhere see their cost of providing health care rising, King County Executive Dow Constantine today said the County has dramatically lowered its projected cost of providing health care for employees - a significant efficiency that will enable the Executive to preserve services to the public in his 2012 budget proposal, which will be released on September 26.
"At a time when the cost of health care everywhere is spiraling up, our employees are managing their own health and bending the trend toward affordability," said Executive Constantine. "Thanks to our employees and their labor representatives partnering with us to save money, we can preserve services that would otherwise have to be cut."
As a self-insurer, King County pays the actual cost of health care services used by its roughly 13,000 employees. New figures show the County has succeeded in bringing down the rate of growth in health care costs to six percent a year, down from 10 percent a year in 2006 when the County's nationally-recognized Healthy IncentivesSM benefit plan was first created. By providing a financial incentive for healthy behavior, the plan saved $26 million versus projected health care costs in the period from 2005 through 2009.
In the past year, however, the growth in health care costs dipped so sharply that the Executive will propose to reduce health care budgets by $23 million in 2011 and $38 million in 2012, and to redirect the savings to preserve services that would otherwise have been cut.
"Our Healthy Incentives plan is succeeding, containing costs better than we could have hoped," said Executive Constantine. "It's a partnership that shows how our County employees' health and the County's fiscal health go hand in hand."
The savings are being captured across all funds and all branches of government, meaning that across the board the Executive Proposed Budget can preserve services and help meet the County's critical duties of public safety and public health. The savings in the Sheriff's office this year enabled the Executive and Sheriff to restore the storefront deputy in Skyway; for the permitting department they allowed for restoration of customer service aides. Because the savings reduce the need for cuts in 2012, the benefits to the public can only be described in terms of positions that do not need to be cut. For example,
- The savings will avoid the need to cut the equivalent of 12 Sheriff's deputies.
- For the Prosecuting Attorney the savings will avoid the need to cut the equivalent of 7 deputies.
- For Public Health, the savings will avoid the need to cut the equivalent of about 20 nurses.
Under King County's nationally-recognized Healthy IncentivesSM program, employees take a written wellness assessment and complete an individual action plan in order to qualify for the best levels of health care cost-sharing.
Under the current employee agreement for Healthy IncentivesSM which began in 2010 and runs through the end of 2012, employees are reducing costs to the public in four ways: lower use of health care services; an increase in the amount they share of their health care costs; greater use of less-expensive generic drugs; and increased enrollment in the more cost-effective Group Health plan rather than the County's preferred provider plan, known as KingCareSM. As a result:
- Employees saved the County $3 million since the start of the new plan by choosing generic prescriptions over more expensive name-brand drugs, with the use of generics rising from 71 percent to 76.5 percent. These savings are expected to grow in the future.
- Enrollment increased by more than one-third in the more cost-effective Group Health Cooperative plan since January, 2010, from 18 percent of all employees to 26 percent. Due in part to its emphasis on preventive care and evidence-based medicine, the Group Health plan costs the County on average $4,300 a year less per employee than the County's preferred-provider KingCareSM plan.
- The portion of health care costs shared by employees increased, including a tripling of deductibles in the preferred provider plan, and a doubling of co-pays for brand-name drugs.
In addition, employees improved their health in 12 out of 14 areas since the inception of Healthy IncentivesSM, with a corresponding decrease in their use of health care services. Most notably,
- The smoking rate among employees decreased by 40 percent, from 10 percent to 6 percent, leading to fewer medical claims for pneumonia, bronchitis and other respiratory illnesses associated with smoking.
- More than 2,000 people classified as overweight or obese when the program began lost at least 5 percent of their weight - the point at which doctors say people begin to see health benefits - for a combined total of more than 24 tons.
"King County is exemplary in its comprehensive approach to managing the quality and the cost of healthcare - encouraging healthy behaviors, providing incentives for higher values services, and working systemically with other employer and labor groups and the healthcare system to transform it," said Mary McWilliams, Executive Director of the Puget Sound Health Alliance, a nonprofit initiated in 2005 by former County Executive Ron Sims to improve quality and lower costs for health care in the five-county region.
Employees like Mary Rabourn in the Local Hazardous Waste Management Program say they see a link between Healthy Incentives and their service to the public. "My job is all about customer service. My customers aren't just ratepayers or residents. Many are my friends - and they pay the fees and taxes that keep me working. I answer to them when I am using public dollars. It might sound corny, but I think about my health and how I use health care because it's part of using public dollars and practicing an ethic of service and accountability."
Another $6 million will be saved in the Executive's 2012 budget proposal thanks to a new contract the County negotiated for administration of its preferred-provider KingCareSM plan. The five-year contract with Regence BlueShield, a nonprofit health care company, creates lower fees for services as a result of the company's large presence in the market and ability to negotiate rates that are significantly better than those currently paid by the County. The new contract starts January 1, 2012.
At a news conference today the Executive introduced nine Health Heroes, King County employees who have made significant health gains under the Healthy IncentivesSM program.
The Executive will deliver his 2012 Proposed Budget in an address to the Metropolitan King County Council next Monday, Sept. 26, at 11:00 am.