The biggest perk of state employment has always been having great benefits; many a professional has opted for a government job not for stellar pay, but for excellent health insurance and the promise of a government pension.

But that's coming to a halt as states tighten benefit options through high deductibles, greater cost sharing, and health savings accounts. They're also turning to wellness programs and aggressive disease management initiatives to lower healthcare costs.

The government in Nevada (ground zero for the recession) has instituted drastic benefit design changes in recent years because of increases in medical costs and the state's budget problems. Nevada's state employee health plan phased out its traditional PPO and switched to a high-deductible PPO ($3,800 for families). Massachusetts gave its state workers a major nudge toward cheaper, narrow-network plans by offering them a three-month premium holiday if they picked one of six limited network plans; 31 percent took the state up on that cheaper option. Connecticut also used the carrot-and-stick approach to get its state workers into a wellness program. Those who did not enroll in the Health Enhancement Program must pay an additional $100 per month in premiums and annual in-network medical deductible of up to $1,400 per family, while those who chose to participate have no deductible and pay lower costs for drugs. Almost all chose the latter.

California, North Carolina, and Georgia are among the states pushing wellness and disease management through various initiatives. California's California Public Employees' Retirement System (CalPERS) launched an accountable care organization pilot in 2010, partnering with Blue Shield of California, Catholic Healthcare West and Hill Physicians Medical Group to better coordinate care for 41,0000 members in three counties. According to CalPERS, in just 10 months the pilot helped reduce the number of patients hospitalized for 20 days or more by 50 percent, and helped cut hospital readmissions by 17 percent, saving the state $15.5 million in healthcare costs. Another CalPERS vendor, Kaiser Foundation Health Plan, launched a wellness pilot program in 2010 for select state workers after determining that 74 percent of its CalPERS members were overweight, compared to the national average of 68 percent.

North Carolina, which has run a successful medical home program for its Medicaid population, is now offering that program to state employees in certain counties, with plans to have it statewide within a couple of years. Georgia is offering its state employees a significantly lower premium increase if they participate in a wellness program that requires them to answer monthly surveys about their activities, and get annual screenings for body mass, blood pressure, glucose and cholesterol. It doesn't stop there: the next year, employees must show better results on the screenings or be taking steps to improve their health in order to qualify for the wellness discount.

The recession has not been kind to state government; as businesses bite the dust, so do the state taxes those businesses pay. Like other large employers, state governments are desperate to lower healthcare costs. That opens up the door for health plans and pharma to partner with cash-strapped states as they work with employees to whittle down their waist lines and manage their meds.


DRG becomes Clarivate

View Now