L.A. Controller Calls for Consolidation to Curb City Healthcare Costs

Posted on August 16, 2017 at 5

Galperin says taking workers’ comp care, group healthcare out of their silos would yield major savings

Read the full report here.

Los Angeles – City Controller Ron Galperin called for the City to explore consolidating workers’ compensation health insurance with employee group health insurance in order to curb City employee healthcare costs, which have outpaced overall City expenditures over the last decade.

“This common-sense reform would help the City get a handle on healthcare costs while giving injured employees quicker access to care. Consolidation is a win-win solution for everyone,” said Controller Galperin. “At a time when quality healthcare can’t be taken for granted, innovative reforms like this will allow us to continue caring for employees while saving money.”

L.A. would be the first major city to integrate workers’ compensation healthcare and group health insurance. Cities currently place employee healthcare and workers’ compensation healthcare in bureaucratic silos. Bringing those silos together would yield savings and other benefits.

In fiscal year 2016-17, the City budgeted $716.1 million for employee benefits (health, dental, optical, disability, and life insurance) for more than 47,000 workers. Separately, the City budgeted $159 million for workers’ compensation not including the Department of Water and Power, of which nearly $100 million went toward healthcare for injured workers. Integration would reduce L.A.’s overhead costs for workers’ compensation healthcare, help injured employees return to work sooner, minimize disputes, lower medical costs, and provide better data.

Controller Galperin also recommended exploring consolidation of some of the City’s 19 employee health benefit plans, expanding wellness programs, and appointing a Chief Medical Officer to oversee all City health programs, and more.

The Controller issued his recommendations in a report that found that the City of Los Angeles spent an average of $13,077 a year per employee on healthcare in 2014-15, with 77 percent of employees having paid no out-of-pocket premium costs.

The report studied the health benefits offered to City employees under agreements with bargaining units representing general City employees, police, firefighters and Department of Water and Power employees.