Strategy to Finance Health Care Costs

City employee working out in fitness center

By Susan Robertson

Health care and health-care financing are key issues for cities and counties, as with all employers, in Tennessee. In an effort to answer the increasing number of calls for assistance, the UT Institute for Public Service (IPS) is helping local governments address rising health care costs.

In collaboration with the Center for State and Local Government Excellence, IPS developed a summary of strategies based on a nationwide study. The research was initially presented to a group of local government officials in February and is now being presented to local government associations and groups across the state.

“Local government programs that contain costs and improve employee health are among the most important strategies,” says Elizabeth Kellar, president and CEO of the Center for State and Local Government Excellence. “Wellness and disease management programs are offered by a majority of local governments and are valued by employees.”

The study found that most local governments have seen their health care costs for employees and retirees increase between 6 percent and 15 percent over the past five years. The key reasons cited for these increases were higher claim and drug costs, an aging workforce and insurance cost increases. The research also found that, to control costs, local governments have increased cost sharing of employee premiums, instituted wellness programs or increased deductibles paid by employees.

Research for the study was conducted throughout 2014. The summary report, “Local Government Strategies to Address Rising Health Care Costs,” was distributed to members of the Tennessee General Assembly and nationally through the Center for State and Local Government Excellence in January. In February, the study was presented to local government officials in Tennessee in a half-day seminar.

More than 60 local government officials from across the state participated in the seminar to discuss the major drivers in health-care costs for cities and counties. Participants also discussed the six case studies that were featured in the published strategies and how those can be applied in Tennessee. The case studies highlighted ideas, adopted by local governments across the county, to control costs.

“The study helped me realize how far-reaching health care is. It made me stop to think about it because I don’t always see it that way,” says Belva Hale, director of administration for the city of Bristol. Hale also served as a panelist at the seminar, discussing her city’s two-tier employee wellness plan, which was developed in an effort to keep health-care costs low.

“My role in the presentation was to discuss our employee wellness plan and open up a dialogue on what others are doing,” she says. “The biggest key is (for cities and counties) to look at what their current resources are. For example, we have a certified personal trainer on staff, and we found an online program that is relatively inexpensive. I hope I emphasized to participants that they should look at the resources they have now to help them implement a program.”

Featured image (top): The city of Franklin, Tennessee, started an employee wellness program to reduce health-care costs. The UT Institute for Public Service is working with government officials across Tennessee to address this issue.