Magazine article Government Finance Review

Wellness Programs - Are They Worth It?

Magazine article Government Finance Review

Wellness Programs - Are They Worth It?

Article excerpt

The City of Garland, Texas, netted almost $400 savings per participant from its pilot wellness initiative program.

Editor's note: The GFOAs Web site includes an OPEB Toolkit including case studies like this one, as well as methodologies and other resources for governments. It can be accessed at www.gfoa. org/opebtoolkit/.

Of all the fiscal pressures on local government, arguably the most significant and one of the least controllable is health care. Costs have risen inexorably, often in double-digit percentages per year - rates that far exceed the abilities of municipalities to raise revenues. Additionally, people are living longer, but not necessarily healthier, lives; and chronic health problems are widespread even among those who have not yet retired.

Furthermore, efforts by health-care providers and insurers to contain costs have often failed. In the late 1980s and throughout the '90s,"managed care" was perceived as a panacea. But while the costs of programs such as HMOs, PPO networks, case management, and care coordination have gone up more slowly than those of traditional fee-for-service plans, increasing prices associated with almost all types of health care, specialty drugs, and longer lifespans continue to drive inflation. Many employers are forced to ask how much longer they will be able to afford health insurance for their employees. "Consumerism" or the assumption that patients will make more efficient decisions on health care if they have a greater financial stake in the process -hasn't fared much better. In practice, most people trust their doctors' recommendations and do not go beyond that to find out about therapeutic alternatives; furthermore, there is simply not enough information available to let people know which doctors, hospitals, and drugs have the best outcomes, statistically.

Wellness programs have emerged as a promising new solution for reducing health-care expenses. They are based on prevention, a concept that often isn't covered in traditional or managed-care health plans, and provide information, screening, and proactive solutions for better health. The concept is that a healthy and happy workforce will be more productive, miss work less often, and generally spend less of their employer's and their own money on medical attention.


A successful program in Garland, Texas, shows what can be done. The scheme, which started out as a pilot but is now open to all city employees, has resulted in significant savings for the city's self-insured health program. In the 20-week pilot alone, the city saved an average of more than $300 per employee, while participants-selected randomly, rather than based on any health concerns - lost an average of 25 pounds each.

The program began in 2004 with a task force, initiated by the Garland Chamber of Commerce, that brought together representatives from public- and private-sector interests. The Garland Chamber had noticed a growing trend in attracting new businesses to the city Potential new corporate citizens voiced concerns over the increasing cost of health care and workers' compensation claims. To address these issues, the Chamber established a task force with representatives from many of the city's largest private and public employers (including the school district, the hospital district, and the City of Garland) to look at ways of reducing costs through wellness campaigns.

The task force met for several hours once a month and brought in experts from the medical and benefits fields to discuss ways of attacking the problem. After participating in these sessions for about a year, City of Garland officials decided to act on what they had learned in the sessions, rather than waiting for someone else to develop an answer.

For years, vendors had been calling on the City of Garland to "help the city save money" through their version of wellness programs. The city had shied away from these programs for a number of reasons, but primarily because of the following concerns:

* Many vendors wanted to charge a per employee per month fee based on the entire employee population. …

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