The City of Puyallup might open a health and wellness clinic for city employees and their dependents in an attempt to rein in costs under federal health-care reform.
The proposal was presented and discussed at a Puyallup City Council study session Tuesday night.
City officials stressed that employees would not be forced to drop their current medical providers and use the clinic. They also said there are no plans to change what City Manager Kevin Yamamoto called the “very high quality health insurance benefit here in the city of Puyallup.”
However, success under the new model is based on the assumption that many employees would use the clinic and that their health would improve as a result.
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The city currently insures about 830 employees and dependents. About half of those would need to use the clinic for the proposal to save the city money, officials said.
The plan for a city-contracted health clinic was developed in anticipation of high claims costs and the Affordable Care Act’s so-called “Cadillac tax.” The excise tax, meant to encourage employers to offer cost-effective plans to workers, is set to kick in by 2018.
Debi Christensen, Puyallup’s human resources director, said a new rate structure for health-insurance premiums will keep Puyallup from facing the new tax when it first goes into effect. However, she said, employee premiums have increased 5 percent annually, and the city will eventually pass the Cadillac tax threshold if no changes are made.
In a single year, Puyallup spends about $5 million for employee medical, dental and vision coverage. Christensen said the proposed clinic is projected to save almost $900,000 over a three-year period.
Under a proposed pricing model, the city would pay a monthly fee of $99 per adult and $59 per child. Employees and their dependents could then use the clinic free of charge in lieu of visiting their primary care physicians or urgent care facilities.
“The idea is people will stay healthier, and that will reduce the overall claims costs,” Yamamoto said.
That could mean lower premiums and, therefore, no tax penalty imposed on the city, he said.
“(The clinic) is a much more creative and less direct way to avoid the Cadillac tax without reducing coverage,” he said.
There are many questions that still need to be answered, he said, noting that he plans to take a closer look at the proposal along with a city health committee.
Puyallup’s insurance policy is self-funded. The city maintains a health insurance fund as part of the annual budget.
Christensen said the new proposal would reduce costs as long as enough patients go to the clinic for basic care, thus reducing expensive visits to emergency rooms and urgent care facilities. Encouraging preventive care services could also help reduce employee sick days, she said.
The health committee, based on previous health coverage data, determined that many city employees would likely use a city clinic, Christensen said. She noted that data has shown many employees do not regularly go to a primary care doctor.
Christensen said Yakima is the only city in Washington that has successfully implemented a similar program. But she said it appears to be catching on in the private sector, and cities in Oregon and Montana are having success with it.
If the proposal moves forward as discussed Tuesday, the vendor Paladina Health – a subsidiary of DaVita – would lease space at or near Puyallup City Hall and operate traditional Monday-Friday, 8 a.m.-5 p.m. hours, starting this summer. Those hours could change as need arises.
Paladina was selected from six potential vendors and three semi-finalists who sought to do business with the city.
Some council members expressed concern that they weren’t able to compare several different vendors. Christensen said staff plans to compile a comparison chart.
Overall, the council seemed cautiously optimistic.
“It’s a new model of delivering medicine,” said Councilman Tom Swanson. “This is about solving problems before they emerge.”
Councilwomen Julie Door and Heather Shadko said she they’re not convinced employees would choose to visit the new clinic over current health care providers whom they already trust.
Mayor John Knutsen stressed that he would only support a proposal that is affordable and welcomed by employees.
“Those two elements have to be met,” he said, adding that if they’re achieved, “I don’t know why there would be any objection.”