King County Washington's Healthy Incentives Program takes a creative approach to a significant problem faced by jurisdictions across the country – resulting in tremendous savings to municipal budgets and taxpayers.
In 2004, increasing healthcare costs were threatening to double the cost of the self-insured county medical plan of King County, WA, in under seven years. In this environment, employers began shifting more healthcare costs to the employees.
In order to stop its healthcare costs from increasing at unsustainable rates, King County utilized industry research and problem analysis to formulate two healthcare cost reduction programs in 2005. These included the employee wellness program, Healthy IncentivesSM, and a cross-system quality assurance initiative, the Puget Sound Health Alliance.
The county offered lower out-of-pocket expenses for employees participating in wellness activities; the higher the level of participation, the lower the member’s out-of-pocket expenses. Participants get a substantial reduction in out-of-pocket expenses for taking a health risk assessment and even lower for participating in an action plan targeting behavior-related health risks.
The Pudget Sound Health Alliance is composed of providers, health plans, employers, hospitals, patients and others, and currently represents more than two million covered lives. The Alliance promotes coordination of care across providers, and encourages the use of evidence-based treatment guidelines by publicly reporting the percent of time they are followed. Public reporting leverages market forces to drive compliance with evidence-based guidelines, improved outcomes and more efficient use of resources. King County is using these reports to design benefits programs that favor providers and health plans that have higher quality and more efficient use of resources.
King County’s approach stands out because instead of just shifting who pays the bill, it targets the root of the healthcare cost crisis: unhealthy lifestyles and poor quality healthcare. After the program initiated, the county began converting its physical and cultural environment to support health. Wellness programs like Weight Watchers at Work® were brought onsite, healthy food options were put in vending machines, and ongoing education on nutrition and exercise were launched through a newsletter and website.
From 2009 to 2012, wellness action plans were enhanced to address a wider range of health risks, and include additions such as onsite disease management workshops, activities in county parks, and Weight Watchers® community meetings. Employee engagement has been at or above 90 percent since the program began.
Through improved health of employees and use of higher quality healthcare, the county has reduced its healthcare cost expenditures from 11 percent to 6.2 percent, saving $46 million. Of these savings, the County attributed $14.6 million of health improvements within the covered population from quitting smoking (800 people) and over 2000 people have lost 5 percent of their body weight. Participants have lost 19 tons more weight than a national comparison group and the smoking rate has dropped below the national average from 11.3 percent to 6.2 percent.
The $46 million in avoided costs are directly associated with health improvements, use of higher value healthcare and strategic benefit plan design. The county’s research shows that the program lowers the county’s cost by $4,216 per employee each year. These savings have had direct impact on public service as layoffs have been avoided and capital project funding has been preserved.