Health Care Strategy for 2018
Challenges with the city’s health care plan
Medical costs of city employees, retirees and dependents exceeded budget by $16 million in FY2016 and are projected to do so by $10 million in the current fiscal year.
The city’s health care plan is a shared expense by the city and the plan members, so it is important for all of us to keep it affordable. Putting more money into the plan will not have any effect on the long-term trend, so city management is looking at other alternatives.
What is driving the cost increase?
DFW is an expensive health care market, with some providers charging substantially more than other parts of the country. We also continue to see excessive use of emergency rooms.
Additionally, the City of Fort Worth has a growing population of pre-65 retirees who are not paying into the fund, but who are supported by premiums from the city that has grown from an annual cost of $3.8 million in 1990 to $32.5 million in 2017. If the trend continues, that cost will be $64 million in 2021, as people are living longer and health care technology is providing advanced options for care.
What can we do about it?
Our first strategy is to manage costs. The city has done this in recent years by shifting retirees who are over the age of 65 to a Medicare Advantage plan, making improvements to the city’s wellness plan, implementing changes to the city’s pharmacy benefit management provider and increasing co-pays for emergency room visits, just to name a few.
However, it has not been enough. We need more results by steering members to high-quality care that is cost-effective. There are two main strategies to achieve this: high-deductible plans where employees are encouraged to make good consumer choices, or a clinic/co-pay model that manages care with a preferred network.
When will decisions be made that affect the choices of employees/retirees?
There will be premium increases to balance the impact among plan members, tax payers and plan design changes. These changes will be finalized and shared with employees in the coming weeks. Most if not all of the details should be available by September, including general locations of the health centers, to aid in the decision-making.
Fast facts about the City of Fort Worth health plan
- For the first quarter of 2017, the city’s health plan saw 3,195 plan members visit the ER at an average cost of $3,100.75 per visit – a total cost of $9,906,896.25. For 31% of these visits, an ER visit was not necessary to treat the ailment.
- North Texas is one of the most expensive health care market in the nation.
- For 2017, the City of Fort Worth Health Plan is expected to be $10 million over budget.
- Based on plan claims for the City of Fort Worth, spouses and retirees are driving the majority of the cost. The plan is appropriately priced for employees, but not spouses or retirees.
- 62 percent of the claims on the city’s health plan are from members who do not currently work for the city. These claims are from spouses, retirees and dependents.
- The average cost to the city, employees and retirees for the following services in 2017 are:
- Average ER visit: $3,100.42
- Average urgent care visit: $161.93
- Average routine office visit: $131.51
- The city’s health plan is a shared responsibility between current city employees, retirees and the City of Fort Worth. On average, the cost is split the following way:
- 77 percent city contribution/23 percent employee contribution
- 85 percent city contribution/15 percent retiree contribution
- The City of Fort Worth Pharmacy Benefit Manager (PBM) will change to OptumRX on Oct. 1, 2017.
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