Government Employers Using Health Cost-Saving Strategies

October 10, 2014 ( – Similar to private sector employers, government employers are dealing with new health care reform rules and mitigating the costs of providing health care benefits to employees.

A survey from the nonprofit research firm Cobalt Community Research of 1,536 municipalities, school districts, state governments, and other public sector employers from across the United States rates their collective knowledge of the Patient Protection and Affordable Care Act (ACA) at 4.5 out of 10. However, employers offering coverage to active employees have frequently responded to the ACA with compliance reviews to see how the ACA applies to their plans (64%); by testing plans to see if they meet minimum value and affordability standards (66%); and by calculating ACA costs (54%). Nearly half are developing new strategies for part-time and seasonal employees because of the 30-hour per week requirement.

Increasing the share of employees’ costs for health care benefits is a common strategy for government employers, similar to private sector employers. Thirty-eight percent have either increased deductibles or plan to in the next two years, 32% have either increased copays or plan to, and 32% have increased employees’ share of premium costs.

Government employers are also adding wellness initiatives, using health savings accounts (HSAs) and educating employees and retirees to improve their purchasing decisions.

Twenty-one percent of the government employers surveyed indicated they provide health coverage for early (pre-Medicare eligible) retirees only, and 30% provide health coverage for both early and Medicare-eligible retirees. Employers’ top strategies for mitigating health benefit costs for retirees are the same as those used for active employees: increased deductibles (30%), increased copays (27%) and increased retiree share of premiums (25%).

Respondents rate their efforts to control health benefit costs at 5.1 out of 10.

Very few employers are eliminating coverage or moving toward an exchange, according to the research, and fewer than 10% are considering an exchange in the next two years.

The full survey report and other information may be downloaded from here.