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2013 Study Results: Iowa Employers Report 9% Increase in Health Premiums

David P. Lind BenchmarkToday, we issued our Press Release on the results from our 15th annual Iowa Employer Benefits Study©. As you might imagine, there is a wealth of data coming from this year’s survey, but as always, one of the most newsworthy finding is the headline number – 9 percent.

 

Average Health Insurance Rate Increases in Iowa 

It is important to distinguish how this increase is determined each year. The 9 percent increase is an average that factors in employers receiving no rate change, an increase or decrease in their premiums. This number represents the average increase in premiums employers received PRIOR to making design changes to their medical insurance plans – such as increasing cost-sharing arrangements with employees. After altering the plan design, the net increase over the past year was a modest three percent for single premiums and under five percent for family premiums.

How does this net increase compare to the national average? According to the 2013 Employer Health Benefits Survey conducted through the Kaiser Family Foundation/Health Research & Educational Trust (HRET), this average is quite similar to the five percent increase on single coverage and four percent on family coverage.

We have been surveying employers since 1999 (2001 was the first year we began asking questions on premium adjustments). With this relatively “tame” increase (compared to prior double-digit increases between 2001 and 2010), Iowa employers reported making the following changes during the past 12 months:

  • Passed some or all of the increased costs to the employees (57 percent)
  • Absorbed the entire cost increase (33 percent)
  • Increased deductibles (20 percent)
  • Raised out-of-pocket maximums (10 percent)
  • Increased office visit co-payments (8 percent)
  • Increased prescription drug co-payments (7 percent)
  • Changed insurance companies (8 percent)
  • Reduced pay raises or bonuses (6 percent)
  • Offered Consumer-Driven Health Plans (5 percent)
  • Began wellness program initiatives (4 percent)

Since 1999, the annual Iowa single premium has increased by 171 percent, while the family premium increased by 158 percent. By comparison nationally, over that same time period, Kaiser reported increases of 168% and 182%, respectively.

Over the course of 15 years, employee contributions have increased by 117 percent for single coverage and 121 percent for family coverage. These numbers are more staggering when compared to the average weekly wage (for all industries), which increased by only 37.5 percent between 2001 and 2012 (Source: Iowa Workforce Development).

The overall percentage of Iowa employers offering health coverage dropped to 77 percent from 81 percent in the 2012 study. This four percent drop is considered statistically meaningful. A greater percentage of smaller employers with fewer than 20 employees reported not offering health coverage in the 2013 survey. This number will require additional scrutiny in future studies.

Iowa Employers Offering Health Insurance

Employer Attitudes on Health Reform
A number of questions relating to the Affordable Care Act (ACA) were directed to employers during this year’s survey. One key finding is that less than two percent of Iowa employers with over 50 employees indicated they would discontinue offering health coverage and, instead, incur the $2,000 penalty per employee. It must be noted that employers responded to these questions PRIOR to learning the employer mandate was delayed until 2015. This response from employers, however, does provide a glimpse into 2015 when the mandate takes hold.

When asked about the likelihood of discontinuing health coverage in the next three years due to health reform requirements, only 2.6 percent indicated they would not offer coverage (all coming from smaller employers). No employer with at least 250 employees reported they would drop coverage.

Plan Design Attitudes
Iowa employers were also asked a series of questions about reducing health care costs now and during the next five years. Over 42 percent of employers currently encourage the use of high-quality hospitals and physicians. This is accomplished either through their health insurance providers or by lowering employee cost-sharing to provide incentives to use designated health providers. Another 11 percent plan to include this approach within the next five years.

Over 11 percent of employers currently reward employees with reduced premiums or lower cost-sharing for achieving certain health outcomes, such as improved Body Mass Index (BMI) or lower cholesterol, while 19 percent plan to encourage this approach during the next five years.

The complete 2013 Iowa Employer Benefits Study© will be available for purchase and download in the near future.

The above information is just a small fraction of our survey results. To learn more, we invite you to subscribe to our blog.

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