Local Government: The Vehicle for Systemic Change In Healthcare
I recently published a poll on LinkedIn, asking people from around the country to take a moment, discover what their City is spending on healthcare and employee benefits, calculate a 20% reduction, and then answer the poll question, which asked how much savings it would be in dollars. The results were amazing.
Colleagues, friends, and even strangers participated in the poll. In all, about 60 cities were represented, and the estimated accumulative savings?
$767,500,000
Take a moment…..
Let that figure settle in. Imagine the opportunity we have as a country, if every City in America would embrace strategies that would reduce their healthcare/benefits costs by just 20%. The question becomes, how difficult is it to find 20% savings in current healthcare spending. NOT HARD!
According to analysis published recently by JAMA, waste in our healthcare systems amounts to $760 Billion to $935 Billion annually. That is more than 25% of the total healthcare spend in America. The Institute of Medicine projects that upwards of 30% of all healthcare expenditures in America are wasteful. That means that at the local level, right now, anywhere from 20% to 40% of what local governments are spending on healthcare is wasteful, inappropriate, or fraudulent. So, just by addressing waste in the system, it is not difficult to reduce costs by 20%.
Cost/Risk Mitigation Strategies Further Reduce Costs
Beyond waste, local governments should embrace innovative cost containment strategies, including directly contracting with healthcare providers instead of relying on large health insurance companies to negotiate on their behalf. It has become a very common occurrence to discover CASH PRICES that are lower than negotiated reimbursements between insurers and care providers. That begs the question, “Why do I even have insurance?” We understand that frustration.
More and more public employers are using their political position in the community, as well as their size and stature, to negotiate far better deals on healthcare than traditional health insurance companies. Expect to see more of that in the future.
Just recently I helped a mid-size County Government here in Texas reduce their healthcare/benefits costs by 40%, which amounted to over $500,000 in savings for the County and its employees. This enabled the County to balance their budget, and give employees raises. The silver lining was that benefits were actually IMPROVED, so if you’re thinking, “Ya, they saved a bunch of money by gutting benefits”, you’d be dead wrong. You can read more about what we accomplished for that County here.
Two years ago we assisted a small City Government reduce their healthcare costs by almost half, and after the open-enrollment period, the City Manager told me that they had not paid premiums that low in over ten years! They dialed the clock back a decade just by embracing more innovative solutions.
Why do I believe local government is the key to systemic change in healthcare? Because every City in America has a local governing body that provides their employees with benefits and access to our healthcare system. Local leadership can more easily pave the way to solutions than most private employers. Local governments are influential, and if they set the standard for solving healthcare’s greatest challenges, it has the potential to catalyze a nation-wide movement to adoption.
Let’s Get Moving!
Reach out to your City officials. Encourage them to get engaged in this effort. There is no greater opportunity for economic stimulus than addressing and solving these healthcare issues. And employees will appreciate the hell out of it too!
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