What Happened?
The city of Boston recently reached an agreement with the Public Employees Committee that would help contain the healthcare costs attributed to existing and retired public employees. The new policy is predicted to generate $45 million in healthcare savings over the next five years.
Goal
Boston officials signed an agreement with the Public Employee Committee that builds off a previous union agreement to better control rising healthcare costs of public employees. The new agreement aims to:
- Change copayments and premium splits
- Consolidate and modify existing non-Medicare and Medicare plan options
- Avoid potential costs associated with the Affordable Care Act Excise Tax
Boston will issue an RFP to streamline the Medicare and non-Medicare plans offered to public employees. All workers and non-Medicare retirees will gain access to three non-Medicare plans rather than six, while Medicare retirees can choose from three Medicare Supplement plans.
In addition, new plans will introduce an out-of-pocket maximum in compliance with the Affordable Care Act’s requirements. The changes are designed to encourage health insurance vendors to offer more competitive pricing without sacrificing essential coverage to Boston public workers.
Furthermore, Boston is offering a Value HMO plan with a limited network, deeper provider discounts and an alternative payment structure to further drive savings. Overall, Boston officials estimate the changes and competitive pricing will lead to $45 million in savings within five years.
NYC Care Management
Also seeking a drastic cut in employee healthcare costs, New York City agreed to restructure a care management program that better addresses the most costly, and potentially avoidable, healthcare expenses.
City officials reassessed hospital readmission rates and repeat visits of city employees that drive up costs to determine how to encourage more preventative care and reduce unnecessary services. The city audited its contract with a specialty drugs provider to identify areas for savings, as well as ensuring all dependents receiving healthcare benefits are entitled to do so, Capital New York reported.
These initiatives, among several other changes, are projected to save New York City $400 million in municipal healthcare costs this fiscal year, and up to $3.4 billion over the next four years, Capital New York reported.
Duluth Modernization
Duluth, Minnesota, recently changed its retiree healthcare plan for city employees that was first established in the 1980s. If the plan had been left alone, the city would be paying up to $20 million annually by the current fiscal year, and potentially $30 million by 2030. After negotiations with labor unions, the city was able to freeze its annual municipal retiree healthcare costs at $9 million, Northlands News Center reported.
Under the new agreement, the city created a retiree trust fund to help contain retiree healthcare costs to $9 million annually. The fund currently houses $42 million. The city expects the $9 million annual cost to decrease as current retirees travel through the system. This will free up capital for other projects in the community, Northlands News Center reported.
New Plans
Gov1 has reported on a growing number of pension reforms and healthcare strategies to keep city costs low without sacrificing employee benefits.