Health Insurance and a Healthy Bottom Line

Just like your household or business, health insurance is a significant expense for Westmoreland County government. As we work through options for employee healthcare coverage for 2013, I thought it important to share with you what we’ve done and perhaps where we’re headed.

Healthcare coverage is not only expensive, it is complicated. There are a number of variables in plan design – self-insured vs. fully insured, picking providers, setting deductibles, co-pays and employee contributions, and more. In Westmoreland County, these factors are further complicated by the fact that we have 11 different collective bargaining units whose contracts we have to honor when making these decisions. And healthcare coverage is also a definite negotiating point when working out these labor contracts.

In Westmoreland County government we spend almost $20 million a year to provide coverage for 1,830 employees and 2,300 spouses and children. So all told, we cover more than 4,100 people. This is a responsibility I take very seriously, as health insurance is so vital to our employees and their families. But I also have an obligation to look out for the taxpayers who are footing the bill. Like so many decisions I make, it’s about finding the proper balance. The county must also keep pace with trends in other plans, in both the public and private sector.

For years Westmoreland County has been a self-insured entity, meaning that we pay our providers a small administrative fee, but pay the claims directly. Most large employers follow this model. I thought it important to review how we’ve been doing business, so I have been busy studying data and trends. My findings have been encouraging on many levels, but I wanted to focus here strictly on the bottom line.

After reviewing the actual budget numbers from the past few years the results have been positive. The following is the amount of money the county has spent on healthcare and the percentage increase from the prior year, using 2009 as the base year…

2009             $16,624,523
2010              $17,598,942 +5.86 %
2011               $17,630,232 +0.18 %
2012 (est.)    $18,100,958 +2.67 %

So over the past three years the average increase in our healthcare budget has been just about 2.9 percent. While no one wants to see costs go up, the reality is that they almost always do. It’s about managing, and minimizing, those increases.

So we know by those numbers that the multiple carrier, self-insured model has been working. But we cannot rest on our success. We need to continually work to keep those costs in check. I expect that two initiatives we are examining now will help meet that goal and also solidify the county’s relationship with one of our largest and most important employers, Excela Health, with its major facilities in Greensburg, Mount Pleasant and Latrobe and its various other satellite locations.

The first initiative is designing what’s referred to as a “home-host” network. What it essentially does is give our employees and their family members a financial incentive to use a local Excela physician or facility by waiving the co-pay or deductible for that visit or procedure. We know that many medical procedures that are currently being done in out-of-county facilities can be done right here in the county at a lower cost. So, given that we are paying the bills in their entirety because we are self-insured the actual cost of a particular service is extremely important.

In no way will this concept punish those who need to, or want to, use another facility. Those folks will simply follow the usual plan and pay design. But if developed properly the home-host concept will be a win for our employees and families and a win for the thousands of county residents employed by Excela.

We are also examining the possibility of developing an in-house clinic within the Courthouse to help employees better manage any chronic condition, like diabetes, arthritis or hypertension. Keeping people healthy is the best way to keep medical costs low. This clinic would be the perfect example of workplace wellness. This idea requires a lot more study for sure, but my initial reviews are positive. This is exactly the type of cutting edge concept that we need to embrace to keep our healthcare cost trends low.

After spending a lot of time recently analyzing the county’s healthcare needs and outcomes, I am encouraged by the work we have done and excited about the potential ahead.