Specialty Health Care Services in Municipal Government
| Date | 01 April 1996 |
| Published date | 01 April 1996 |
| Author | Gregory Streib |
| DOI | 10.1177/0734371X9601600205 |
| Subject Matter | Articles |
57
Findings
from
a
National
Survey
Specialty
Health
Care
Services
in
Municipal
Government
GREGORY
STREIB
This
article
examines
the
use
of
specialty
health
care
services
in
municipal
governments.
Findings
are
provided
by
a
comprehensive
national
survey.
The focus
is
on
describing
the
use
of specialty
services
and
exploring
their
impact
upon
satisfaction
and
the
overall
cost
of coverage.
The
data
show
some
interesting
variations
in
the
use
of
these
services.
They
also
suggest
some
important
relationships
with
satisfaction
and
cost.
For
example,
the
overall
cost
of indemnity
programs
appears
closely
linked
to
the
number
of specialty
services.
Also,
individual
services
such
as
dental
care
and
eye
care
were
associated
with
more
expensive
indemnity
programs.
predominant
theme
in
the
health
benefits
literature
is
the
A
alarming
increase
in
health
care
costs
and
the
need
for
cost
control.
Health
care
is
nearly
a
trillion
dollar
in-
dustry
that
has
been
consuming
nearly
a
quarter
of
normal
yearly
increases
in
the
GDP
(Faltermayer,
1992).
These
cost
increases
have
had
a
devastating
impact
upon
the
nation’s
employers
(Luthans
and
Davis,
1990).
Their
burden
may
be
getting
lighter,
due
to
greater
employee
cost
sharing
(Business
and
Health,
1994)
and
smaller
cost
increases
(Employee
Benefit
Plan
Review,
1995a),
but
it
would
be
a
mistake
to
conclude
that
health
care
costs
have
been
tamed.
Employers
must
remain
vigilant
if
they
hope
to
keep
health
care
costs
under
control.
In
their
efforts
to
control
costs,
em-
ployers
must
also
give
a
great
deal
of
thought
to
the
welfare
of
their
employ-
ees.
They
are
going
to
need
to
come
up
with
creative
approaches
to
cutting
ex-
penses
while
still
meeting
employee
needs.
Specialty
services
are
one
ap-
proach
to
meeting
these
two
goals.
Em-
ployers
can use
these
services
to
better
&dquo;customize&dquo;
their
health
care
plans.
This
article
will
explore
this
issue
through
the
analysis
of
data
from
a
national
survey.
A
quick
look
at
recent
developments
in
health
care
offerings,
cost-control
efforts,
and
purchasing
strategies
will
provide
im-
portant
background
information
for
the
discussion
of
specialty
services.
HEALTH
CARE
PLANS
ARE
CHANGING
One
of
the
toughest
health
care
decisions
facing
employers
concerns
the choice
of
a
health
care
plan.
Unless
funds
are
un-
limited,
this
decision
will
force
them
to
strike
a
delicate
balance
between
cost
and
employee
choice.
Invariably,
the
less
ex-
pensive
plans
place
some
limits
on
the
choice
of
health
care
providers.
The
evi-
dence
strongly
suggests
that
employers
of
all
types
are
retreating
quickly
from
the
high
cost
and
high
choice
indemnity
plans
58
that
once
dominated
the
health
care
in-
dustry
(Miller,
1993).
Health
maintenance
organizations
(HMOs)
and
preferred
provider
organi-
zations
(PPOs)
are
now
very
popular
choices.
Both
of
these
approaches
limit
access
to
physicians
in
exchange
for
lower
costs
(Kalman,
1992).
HMOs
emphasize
preventive
care.
Patients
pay
a
flat
fee,
regardless
of
the
treatment
they
receive,
so
there
is
a
real
incentive
to
prevent
those
illnesses
that
require
expensive
or
pro-
longed
treatment.
PPOs
offer
traditional
medicine,
but
at
a
kind
of
group
rate
(Tartaglione,
1992).
Most
research
con-
firms
that
HMOs
and
PPOs
have
been
saving
private
employers
some
money
(Leonard,
1994),
though
this
view
is
hardly
unanimous
(Hofmann,
1993;
Mandelker,
1993).
COST
SHARING
IS
GAINING
IMPORTANCE
Given
the
rapid
rise
in
health
care
costs,
many
employers
can
no
longer
afford
to
shoulder
the
entire
cost
of
their
benefits.
In
fact,
an
increasing
number
of
employ-
ers
are
choosing
not
to
offer
health
care
benefits
(Fisher,
1994).
Such
employers
are
rare
in
the
public
sector,
but
even
many
local
governments
deny
coverage
to
their
part-time
employees
(Streib,
1995).
Also,
employers
of
all
types
deny
coverage
to
retirees
(National
Underwnter,
1994).
Another
way
employers
are
cutting
back
is
by
requiring
employees
to
contrib-
ute
to
the
cost
of
their
benefits
through
premium
sharing
and
co-payments.
Pre-
mium
sharing
requires
employees
to
pay
a
portion
of
their
health
care
premiums,
and
co-payments
are
fees
that
often
ac-
company
specific
medical
services,
such
as
doctor
visits,
lab
work,
x-rays,
and
other
procedures.
These
types
of
require-
ments
are
rapidly
becoming
standard
practice
in
the
private
sector
(Sheeline,
1991;
Leonard,
1994).
A
1980
survey
of
&dquo;Fortune
500&dquo;
companies
disclosed
that
53
percent
of
these
firms
paid
100
percent
of
the
premium
for
their
employees’
health
insurance.
By
1984,
only
38
per-
cent
of
the
firms
paid
the
entire
bill
(Zumwalt, 1987).
Change
has
been
slower
in
the
public
sector,
but
many
local
gov-
ernments
do
require
some
form
of
pre-
mium
sharing
and
co-payments
are
fairly
common
(Streib,
1995).
BENEFITS
ARE
BEING
PURCHASED
IN
NEW
WAYS
The
pursuit
of
cost
savings
has
also
had
an
impact
upon
the
ways
in
which
health
care
benefits
are
purchased.
Two
new
approaches
that
have
received
wide-
spread
attention
are
self-insurance
and
purchase
through
a
consortium.
In
the
case
of
self
insurance,
a
municipal
gov-
ernment
starts
making
payments
into
a
special
fund
rather
than
to
an
insurance
company.
This
fund,
along
with
any
in-
vestment
returns,
belongs
to
the
em-
ployer.
In
return, the
municipality
as-
sumes
responsibility
for
the
payment
of
employee
health
insurance
claims.
Self
insurance
leaves
municipalities
respon-
sible
for
managing
a
certain
amount
of
risk,
but
it
may
produce
investment
in-
come,
reduce
administrative
costs,
and
generate
some
tax
savings
(Stuart,
1992;
Tinsley,
Walsh,
and
Greenberg-Cormier,
1993).
Health
care
consortia
seek
to
reduce
the
cost
of
coverage
by
increasing
the
size
of
the
insurance
pool.
Consortia
are
es-
pecially
important
to
small
municipalities
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