UnitedHealthcare / Optum
In 2016, stronger city and county revenues built the capacity of cities to deliver critical services and improve quality of life. This trajectory of growth, however, is threatened by a number of persistent concerns, one of which requires thoughtful implementation of pension reforms and the leveraging of fiscal planning tools. As local municipalities move to shore up healthcare and pension liabilities, the additional expenditures required in their General Funds will compete for scarce resources with other government services, confronting local leaders with difficult choices among employee and retiree benefits, city service levels, and raising new revenues (1).
The data clearly reflects how difficult times have been the past few years. And unfortunately, it also predicts uncertain times ahead with revenue shortfalls and strained budgets expected in the near future. Here are the facts (2):
- During the recession, spending on employee wages – both wage levels and total municipal employment – declined sharply. Local job losses were felt most heavily in public safety, public works, public health, social services and parks and recreation. (3)
- As noted by finance officers, cities are increasing expenditures on employee wages and salary, most notably in the area of public safety. Cities have led public sector job recovery – but, despite gains, municipal employment remains more than 88,500 jobs below its post-recession peak (December 2008) of 6.5 million jobs, according to the Bureau of Labor Statistics.
- Retiree health benefits and pensions rank among top budgetary stressors. Interestingly, health benefits and other post-employment benefits (OPEBs) only comprise about 1.5 percent of operating revenues for many local governments. (4)
- The rising costs of claims and prescription drugs combined with an aging workforce are adding budgetary pressures. (5)
- For pensions, the portion of combined state and local government spending dedicated to retirement system contributions is only about 4%. (6) The funding levels and the extent of pension challenges, however, varies considerably based on the locality’s underlying economy, tax capacity, state fiscal health, and availability of policy choices.
The solution? Let's start by working together, UnitedHealthcare, Optum and your county, to reverse these daunting indicators. Together we can find innovative, data-driven solutions that will help to control government spending while keeping your employees healthy.
About UnitedHealth Group
UnitedHealth Group has two distinct business platforms: Optum and UnitedHealthcare. This cohesive partnership offers an array of health services and health benefits.
UnitedHealthcare is dedicated to simplifying the health care experience, meeting consumer health and wellness needs, and sustaining trusted relationships with care providers. The company offers the full spectrum of health benefit programs for individuals, employers, military service members, retirees and their families, and Medicare and Medicaid beneficiaries.
Optum is a leading information and technology-enabled health services business dedicated to modernizing the system and improving the health of people and communities. Optum builds innovative partnerships, provides technology and tools that enable unprecedented collaboration and efficiency and taps into valuable health care data to uncover insights that lead to better care at lower cost.
UnitedHealthcare is dedicated to helping people nationwide live healthier lives by simplifying the health care experience, meeting consumer health and wellness needs, and sustaining trusted relationships with care providers. The company offers the full spectrum of health benefit programs for individuals, employers, military service members, retirees and their families, and Medicare and Medicaid beneficiaries, and contracts directly with more than 1 million physicians and care professionals, and 6,000 hospitals and other care facilities nationwide. Globally, UnitedHealthcare is one of the businesses of UnitedHealth Group (NYSE: UNH), a diversified Fortune 50 health and well-being company. For more information, visit UnitedHealthcare at uhc.com or follow @myUHC on Twitter.
Optum is a leading health services and innovation company dedicated to helping make the health system work better for everyone. With more than 133,000 people worldwide, Optum combines technology, data and expertise to improve the delivery, quality and efficiency of health care. Optum uniquely collaborates with all participants in health care, connecting them with a shared focus on creating a healthier world. Hospitals, doctors, pharmacies, employers, health plans, government agencies and life sciences companies rely on Optum services and solutions to solve their most complex challenges and meet the growing needs of the people and communities they serve.
*Insurance coverage provided by or through UnitedHealthcare Insurance Company or its affiliates. Administrative services provided by United HealthCare Services, Inc. or their affiliates. Health Plan coverage provided by or through a UnitedHealthcare company. © 2017 United HealthCare Services, Inc.
1. 2016 Report on City Fiscal Conditions by the National League of Cities (NLC) Center for City Solutions and Applied Research.
2. 2016 Report on City Fiscal Conditions by the National League of Cities (NLC) Center for City Solutions and Applied Research.
3. National League of Cities, National Association of Counties and U.S. Conference of Mayors, July 2010. Local Governments Cutting Jobs and Services.
4. Moody’s Investor Services, March 2015. Moody’s: Most large local governments have low retiree healthcare outlays, although outliers are present.
5. Center for State and Local Excellence and University of Tennessee, Institute for Public Service, December 2014. Local Government Strategies to Address Rising Healthcare Costs.
6. National Association of State Retirement Agencies, February 2015. State and Local Government Spending on Public Employee Retirement Systems.