A consultant says the Urban County Government can save $33 million on its health insurance costs over the next five years by implementing a range of reforms aimed at improving workers' health.
The centerpiece of the proposal is an on-site wellness center for city employees with a staff of full-time physicians and nurses. Employees, retirees and dependents covered by the city's health insurance plan could use the wellness center without making any co-pays.
A separate, full-service pharmacy would be available with reduced co-pays.
Use of the wellness center would be voluntary, said Briggs Cochran, president of Benefit Insurance Marketing, a Lexington firm hired to analyze the city's current health plan.
The city now spends $30 million a year on health insurance for employees. Without changes, those costs are expected to increase 8 percent annually to $47.6 million by 2016. With the proposed changes, Cochran projects that costs would increase 2 percent annually to $35.7 million by 2016.
Urban County Council members were briefed by Cochran and Benji Marrs, senior vice president of Benefit Insurance Marketing, at their meeting on Thursday. By mid-September, the consultants plan to return to the council with all their recommendations for a more frugal health insurance plan that would take effect Jan. 1.
Council already has budgeted $3.5 million in health insurance savings between Jan. 1 and June 30. A selection committee, made up of council members and city employees, is now considering bids from health care providers to operate the proposed wellness center and pharmacy.
"The mayor thinks a wellness center is an important piece of our health insurance reform, not only to save the city money, but to give our employees options for the highest quality care," said Jamie Emmons, chief of staff for Mayor Jim Gray, on Friday.
The city's health plan has had a $33 million shortfall over the past three years.
The number of employees covered by the plan fell from 3,538 in 2009 to 3,064 in 2011; still, the plan cost $10 million to $13 million more than was budgeted each of those three years.
Some 89 percent of the city's employees are in the Platinum plan, which charges no deductible. In cities of a similar size, the average employee pays a $500 deductible. The average state worker pays a $1,000 deductible, according to an analysis done by Benefit Insurance Marketing.
Much of a wellness center's focus would be preventive care — annual physicals, prostate exams for men and gynecological exams for women.
"The whole idea is, it would catch something — like high blood pressure that might be lurking — before it becomes really, really serious," said councilwoman Peggy Henson, who is on the health benefits selection committee. "Or instead of going to the emergency room, you could go to the wellness center."
The wellness center also would offer occupational health services, such as annual physicals to police and fire employees.
"Right now, the city has to pay to have those done," she said. "That would be a big savings right there."
Concentrating on improving the clinical health of city employees and retirees can dramatically reduce growth in the city's health insurance costs, Cochran said.
"Forward-thinking companies focused on improving employee health at work are experiencing increases of 1 or 2 percent, even flatlining the increases," Cochran told the council on Thursday. "I could fill the room with employers who are making these kinds of savings."
In Chattanooga, the city opened a wellness center and pharmacy for its employees and had health care savings of $3.5 million in 2010 alone, Cochran said. Together with a variety of other health-improvement initiatives, the city has "flatlined its health care costs," he said.
Chattanooga Mayor Ron Littlefield, an enthusiastic wellness center proponent, has offered to come to Lexington to talk about his city's savings, Gray said.
A location for a wellness center in a city-owned building has not been identified, but a team is working on finding a site.
"It wouldn't be where employees are coming and going, but a more confidential setting, a place that feels more like a doctor's office," Cochran said.