When the city switched to a self-insured plan three years ago, costs went way up.
That's because the new plan focused on wellness screenings and hundreds of employees were diagnosed with serious illnesses like diabetes and various cancers.
The City raised insurance premiums in the spring by 14.9 percent, but Houston Mayor Annise Parker says she's bringing that down to 8.7 percent because costs for the self-insured plan are back down.
"We are amending the cost to our employees, rolling back the cost to our employees for their health benefits to an increase the year over year of 8.7 percent instead of the 14.9 percent. Every employee will be taking more money home in their paycheck."
The city spends nearly $300 million a year on healthcare.
Employees are responsible for 25 percent of their total premiums.
Parker says she's also lowering copay costs for visits to specialists and for prescription drugs.
"I don't want to do anything that might cause someone not to take their medication, because that would impact the trends we're seeing of a healthier workforce. And I don't want to do anything that would inhibit someone from seeking out specialist care if they need it."
Parker had originally offered only the lower copays, but agreed to lower premiums after pushback from HOPE, the city's municipal employees union.
The announcement about lower healthcare costs coincides with Parker's campaign for re-election against former city attorney Ben Hall.