Seeking to drive down the health care costs for city employees who have more medical problems than average Americans, Mayor Rahm Emanuel’s administration will issue a formal request for proposals Wednesday from private companies interested in operating a new wellness program.
“The selection of the vendor is absolutely crucial,” Deputy Mayor Mark Angelson told the Chicago News Cooperative on Tuesday. “We hope to save some lives. We will save some lives.”
Emanuel also hopes to save tens of millions of taxpayer dollars for the cash-strapped city. Angelson and experts in the field said City Hall’s wellness initiative could represent the largest such government effort.
By offering frequent screenings and helping manage chronic health issues, Emanuel administration officials hope to drive down the costs of medical claims, which are split between employees and the city.
City budget documents reflect the magnitude of the problem and the potential for cost cutting.
“The city of Chicago’s employees are sicker than the national average,” according to documents prepared by city officials. Participants in the city’s health benefits program are more likely than average to have what were defined as “significant chronic diseases” or critical conditions.
“There was a high percentage of ‘significant chronic’ compared to the benchmark, and the percent catastrophic was nearly double the benchmark,” the documents showed.
City employees are battling the three costliest chronic conditions – diabetes, hypertension and asthma – much more frequently than the norm. Ten chronic maladies account for almost half of the claims payments made by the city.
That means city health care costs are growing between 10 and 12 percent a year, officials say, from about $8,500 per employee in 2005 to almost $13,000 this year.
“The trend needs to go down,” Angelson said. “We have very high hopes for this program.”
City budget analysts expect to spend more than $365 million for employee health costs in 2012. But if city workers were no more prone to illness than the average American, that figure would drop to about $320 million, city records show.
Add in health care for retirees, and total city spending for medical benefits topped $500 million in 2011. Largely through the wellness program, the city hopes to cut that figure by about 3.5 percent, to $485 million, in the next year.
And Angelson said Tuesday that he was in discussions with labor officials to expand the wellness effort to the city’s sister agencies, including the public school system, the public housing authority and the Chicago Transit Authority.
“We are hopeful that we will get substantially expanded participation soon,” he said.
In September, Emanuel and employee labor union leaders announced an agreement clearing the way for the City Hall wellness program. Only one major employee union, the Fraternal Order of Police, has not agreed to support the program. The FOP represents more than 10,000 of the city’s roughly 35,000 workers.
Nobody will be required to participate, although opting out would tack on $50 to every monthly premium payment. The larger premium payments from non-participants are expected to fund the administration of the program.
Bids to run the city’s initiative must include a cost-benefit analysis and will be due by Dec. 16. The Emanuel administration hopes to award the deal by early next year. The contract will be for at least three years, with the city having the option to extend it for another three years under the same terms.
Angelson said the inspiration for the effort, which Emanuel touted in his mayoral campaign, came from his experience as chief executive of R.R. Donnelley. He said previously rising employee health care costs at the Chicago-based printing giant declined after it instituted a wellness program.
Another former top executive at R.R. Donnelley, Ted Theophilos, now runs a Lombard-based company that operates wellness programs. Theophilos helped Angelson convince union leaders of the merits of the new city initiative.
But Angleson said Tuesday that Theophilos would not personally benefit from the City Hall wellness deal.
“Ted Theophilos is the only person associated with the city of Chicago who is getting paid less for helping than I am,” said Angelson, who draws a salary of $1 a year as Emanuel’s point man on budget issues.
The city program will offer free annual health risk assessments, counseling from health advisors and weekly programs focused on managing specific conditions, including diabetes and high blood pressure.
A recent study in the Dallas area found that some wellness programs also offer discounts for all or part of the cost of fitness center memberships. While that concept is not specifically part of the city’s request for proposals, bidders in Chicago are encouraged to suggest other program options.
Government has lagged behind the private sector in starting wellness programs, said the author of the Dallas study, Abraham David Benavides.
“In a couple of years, the city of Chicago will be in better shape financially because they are doing this,” said Benavides, associate professor of public administration at the University of North Texas. “Paying employees is the biggest expense of government, and it makes no sense to pay them for taking sick days and not doing any work.”