Employee Healthcare Costs a Major Concern Among Local Governments

December 9, 2011 (PLANSPONSOR.com) – A survey of local governments found employee healthcare costs are a major concern. 

According to the survey, 71% of respondents listed “employee healthcare costs” as one of their top three general operating concerns, ranking below “budget” (93%), and ranking ahead of the next closest concern, “service delivery” (41%) on the list of local government priorities.

When asked what approaches the respondent was taking to reduce healthcare expenses/claim costs, the four most popular answers for actions already taken were: increase the share of total healthcare costs paid by employees (51%); audit or review eligibility or enrollment in your health plan (46%); actively manage communication to educate customers on healthcare costs and living a healthier lifestyle (43%) and significantly increase pharmacy copays, deductibles or coinsurance (42%).

Local governments also cited four primary obstacles to developing a healthy workforce, which included: lack of employee engagement (65%); lack of adequate budget to support effective health management programs (60%) and too many other demands on employees/not enough time (54%).

Several questions in the survey asked local governments directly about their plans and understanding of federal healthcare legislation passed in 2010. Specifically, most local governments need to learn more about the Patient Protection and Affordable Care Act. When asked what their level of understanding of the healthcare reform legislation is, the vast majority of respondents said they partially understand, and need to learn more (63%). Eighteen percent of respondents said they completely understand the legislation, but need to assess its impact. Twelve percent completely understand the legislation and its impact, while 7% said they have heard about it, but don’t understand the legislation or its impact on their benefits.

Most local governments plan to take a “wait and see” approach on potential changes due to the Affordable Care Act. When asked whether they plan to make any changes to employees’ healthcare benefits as a result of health reform legislation, 54% said they would wait and see how it unfolds, while 44% said no changes were currently planned. A very small percentage indicated plans to drop health coverage for any class of employee.

Among other relevant findings, overall, 99% of local government respondents offer medical insurance as part of their current employee healthcare plans, along with 92% who offer dental and 92% who offer pharmacy provisions as part of the employee plans. Additionally, population size seemed to be a factor in whether local governments have programs in place to address workforce health concerns, with larger local governments reporting the availability of these programs at a noticeably higher rate than smaller localities show.

The survey was conducted jointly by Cigna and IMCA, the International City/County Management Association, and includes responses from nearly 1,500 local governments.

To view the survey in its entirety, visit http://icma.org/en/results/surveying/survey_research/survey_results.