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Three Key Health Plan Comparisons Between Iowa and U.S.

Three important health plan components that are first and foremost on the minds of employers when assessing their annual plan offerings, include: health premiums, employee health coverage contribution and deductibles employees are required to pay. It is natural, therefore, to compare Iowa averages to national norms, thanks largely to the Kaiser Family Foundation’s Employer Health Benefits Survey, which was just released on September 25. Kaiser Family Foundation (KFF) is a nonprofit organization based in San Francisco, CA.

Brief Survey Background

Since the year 1999, the KFF has been performing their national survey of employer health plans, the same year that we began our Iowa Employer Benefits Study©. For the record, there was no particular reason that 1999 was the base year used by KFF and our organization, but speaking for myself, I’m happy that we can use the annual KFF study as a measuring stick to our statewide annual results.

Before I share the graphic comparisons, I must comment that surveys can vary from one another using slightly different methodologies, and there is no exception with the two studies being compared in this blog. The largest difference is that KFF is a national survey, which in 2019, randomly-selected 2,012 non-federal public and private organizations with three or more employees. Additionally, KFF asked another 2,383 organizations a single question about offering health coverage.

The Iowa Employer Benefits Study© is a statewide-only survey. Each year, we seek to have at least 1,000 organizations participate.  These organizations are randomly-selected to ensure that results will reflect the overall population of organizations within Iowa. Although we survey employers with at least two employees, we do not actively randomly-select organizations with 2 to 10 employees. During the survey process, however, if respondents fall into this size category due to downsizing, we will include their data within our report.

It is important to note that Iowa organizations can also be surveyed by KFF, but the number is considerably fewer than our goal of 1,000 organizations. In 2019, for example, KFF surveyed 612 organizations in 12 midwestern states, including Iowa, which averages out to 51 organizations for each state. This Midwest average is consistent with prior KFF surveys.

Health Plan Premiums

Since we released our study in early August, we learned that Iowa employer-sponsored health premiums increased by 7.1 percent during the past year, which is slightly higher than the KFF national average increase of 3.4 percent for single and 5 percent for family coverages. One explanation for this variance between surveys can be that KFF may have compared the actual premium change from 2018 to 2019 – AFTER plan design changes were made. Our survey, however, asked Iowa employers to share their rate adjustments (e.g. increase, decrease, no change) during the past year BEFORE plan design changes were made – subtle difference, but important.

The annual KFF single premium in 2019 is $7,188, which is merely $171 higher than the average Iowa single premium of $7,017. Statistically speaking, the single premiums are in a dead heat with each other. As for family premiums, the KFF premium is now at $20,576, which is $1,241 higher (or 6.4 percent) than Iowa’s $19,335. We often hear that Iowa’s medical costs are lower than the national averages, which is a true statement. However, it does appear with the latest data available, Iowa is inching closer to the national premium averages.

Since 1999, health premiums from both studies show very similar results when it comes to growth. Below is a graphic that superimposes the KFF premiums to the annual Iowa history of single and family premiums. The premium increases are staggering for both, but equally horrific is that the Iowa premiums (both single and family) have increased slightly higher compared to the national norms (denoted in green font).Employee Contribution as a Percentage of Premium

As the health premiums change each year, usually through increases, employers are forced to make decisions on how much to shift this increased cost to employees, most often through health plan design changes and having the employee assume more of the premium burden. One way to measure just how much the employer wishes the employee to assume is illustrated in the graphic below.

From this graphic, Iowa organizations and their national counterparts are nearly identical as to the percentage of the total premium that is assumed by employees for both single and family coverages. For single coverage, Iowa employees pay 19 percent of the total single premium, while employees elsewhere contribute 18 percent of the single cost. As for family coverage, employees in both Iowa and national organizations identically pay 30 percent of the total family cost.Single Health Deductibles

KFF’s report shows that, on a national basis, the average single deductible is $1,655, which is $537 lower than the Iowa average of $2,192. Part of this difference may be explained in the composition of small employers participating in each survey. As we know from previous results, smaller employers are less likely to control their health costs when compared to larger, more sophisticated employers – employers that have more tools at their disposal to keep their rates down (e.g. administration costs, self-insuring, etc).

Perhaps a larger mix of smaller employers in the Iowa study could very well influence the overall deductible averages being higher – however, this is pure speculation. NOTE: Family deductibles were excluded in this comparison due to insufficient historical data from KFF.

The following graphic displays how Iowa single deductibles compare to national norms.Conclusion

In past years, the KFF results most always demonstrated higher national health premiums compared to Iowa. However, despite higher premiums, employees in the U.S. paid, on average, a similar percentage for their health premiums than Iowans, except for family coverage, where they paid a lower percentage compared to Iowans. In 2019, however, Iowans have ‘regressed to the mean’ and now appear to be paying a similar percentage of the premium for both single and family coverages.

Despite having lower premiums, Iowa workers are asked to pay higher deductibles compared to their national counterparts, which makes paying for medical services a bit more challenging each year. Tracking these key components are vital to learning how Iowans fare with the rest of the country, and it appears that Iowa is becoming ‘more the norm’ in some of these components.

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Rural Iowa Workers Outpace Urban Workers – But Not Favorably

I’m a sucker for playing with data, especially when it covers a relatively sizeable period of time. Over time, data usually tells a ‘story’ especially when drilling deeper. With the results of the latest 2019 Iowa Employer Benefits Study© now available, I tracked a few key cost comparisons as they relate to employees with single health coverage versus those with family coverage. More specifically, I found that Iowa workers employed by rural employers are paying higher healthcare costs – both in premiums and deductibles – compared to their urban counterparts.

Before concentrating on rural and urban data, I would like to share a few graphics comparing overall Iowa data from 2005 through 2019. This first graphic provides a comparison of how employee-only premiums have increased over 14 years of our study. Of note, this study was not performed in 2017.

Total Annual Spending – by Employee-Only Coverage

In 2005, the total annual premium for employee-only coverage was $3,708, of which the Iowa employer contributed $3,000 (or 81 percent of the total), and the employee pitched in $708 (19 percent of the total). In 2019, 15 years later, the total annual premium jumped by 89 percent to $7,020. The employer is now contributing $5,712 annually (up 90 percent), while the employee is chipping in $1,308 (up 174 percent).

Akin to the Ginsu knives commercial, there’s more. The deductibles purchased by Iowa employers increased from $750 in 2005 to $2,192 in 2019 – up 192 percent during that period. What is not covered on this graphic (please accept my apologies, Iowa-specific information is difficult to obtain) is the actual out-of-pocket money spent by Iowa employees for medical care each year.

Total Annual Spending – by Employee-Only Coverage

Total Annual Spending – by Family Coverage

Similar to the previous graphic on employee-only coverage, the family graphic that follows illustrates the continued ‘leakage’ from employee paychecks in the form of higher employee contributions and deductibles they are required to pay for covered services. However, in this graphic, I have included another layer of cost, thanks largely to Kaiser Family Foundation, that shows the national family out-of-pocket spending (based on employers with 1,000+ employees). Again, it would be very helpful to have Iowa-specific claims data, but I am forced to use national data as a replacement.

In 2005, the total annual premium for family coverage was $9,768, of which Iowa employers contributed $6,396 and the employee relinquished $3,372 through payroll deductions. In 2019, the total annual premium increased by almost $9,600 to $19,332 – an amount that would buy a 2019 Volkswagen Beetle. Additionally, family deductibles increased by 157 percent during that period, growing from $1,547 to $3,975.

Total Annual Spending – by Family Coverage

Employee-Only Coverage (Urban vs. Rural)

The next two graphics compare urban with rural employees, both employee-only and family coverages. Because studies from 2005 – 2011 did not breakout urban and rural data, the following graphics spans seven years (2012 – 2019).

In 2012, the total annual urban employee-only premium was $5,206, while the rural premium was $430 higher ($5,636). In 2019, the urban premium jumped by 29 percent to $6,723, while the rural premium increased by 32 percent to $7,413 – which is 10.3 percent higher than the average urban premium. Despite having a higher premium, the rural employee with single coverage has a higher deductible ($2,536) when compared to the average urban deductible ($1,888). Additionally, in 2019, the rural employee contributes $284 more annually for health coverage compared to urban employees.

Employee-Only Coverage (Urban vs. Rural)

Family Coverage (Urban vs. Rural)

Finally, the family premium for urban family employees jumped 60 percent from $11,980 in 2012 to $19,152 in 2019.  The rural family premium increased by 73 percent during this same period, and is now $402 higher than the average urban family premium. On average, rural employees contribute $812 more annually for health coverage compared to urban employees. As with employee-only deductibles, the average family deductible for rural employees ($4,370) is higher than the average urban deductible ($3,647).

Family Coverage (Urban vs. Rural)

In the final analysis, urban employees are more likely to pay less for their health coverage premiums, and when they seek medical care, will typically pay less out-of-pocket due to having lower deductibles and out-of-pocket maximums (not shown). This difference is also spelled out quite clearly when comparing the 2019 Lindex® scores between both groups – the urban employers scored a 78, while the rural employers scored four points less (74).

The Take-A-Way?

Without dispute, the cost of health insurance crowds out workers’ wages. The continuation of cost-shifting in healthcare deflates purchasing opportunities that workers and their families make elsewhere. On the surface, overall data found above can show trends happening for a particular population (see graphics one and two), yet when drilling down deeper with this same data, we find that other important – and disturbing –  issues are occurring (e.g. rural outcomes vs. urban outcomes).

Imagine what this data would show between selected industries, such as manufacturing vs. retail, or for-profit vs. non-profit. We did for 17 different Iowa sectors – it’s called the Lindex!

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Presidential Candidates: Take the Pledge to Serve ‘We the People’

This Op-Ed was published by the Des Moines Register on August 21.

I write this not as a Republican, nor as a Democrat – I’m politically agnostic. When it comes to addressing healthcare, a critical election issue, Iowa voters have the first crack at drilling down and asking presidential candidates for details on how costs will be meaningfully lowered, who will be covered, what will be covered, how it will be paid, and how higher-quality care will be delivered consistently to all populations.

The candidates we eventually elect must thoroughly analyze the details of their plans, including the possibility of unintended consequences that will invariably result. Acknowledging the pros and cons of the plan they support is both honest and crucial.

For presidential candidates to successfully make it out of Iowa and live to compete in future primaries and caucuses, Iowans must require each to articulate the specifics of their plan. Generic responses of supporting “Medicare for All” or “Single-Payer” does little to inform voters, other than allow candidates to merely checkoff one of many issues they support. In healthcare, the devil is definitely in the details.

During the Democratic debates this summer, many candidates singled out insurance and pharmaceutical companies as being responsible for the cost predicament we have across the nation. In fact, Sen. Bernie Sanders, (I-Vt), pledged to reject any donations over $200 from political action committees, lobbyists and executives of insurance and drug companies. Sen. Sanders called on other Democratic candidates to do the same.

Per Sanders’ pledge, “Candidates who are not willing to take that pledge should explain to the American people why those corporate interests and their donations are a good investment for the healthcare industry.”

This pledge, although well-intentioned, does not go far enough. The narrative that insurance companies and pharmaceutical manufacturers are the lone villains is grossly naïve because it excludes other major contributors to the cost problem – hospitals and physicians.

Healthcare prices in the U.S. are considerably higher when compared to other industrialized countries, and a large part of this comes from those providing this care. In fact, providers do not want their negotiated fees with private payers to be transparent, largely under the guise that once prices are publicly known, costs would go even higher because lower-paid providers may want better deals through higher prices. This is merely a convenient approach to keep prices opaque and largely unknown. This status quo only benefits the intended stakeholders, not most Americans.

According to MapLight, a nonpartisan research organization, the American Medical Association and the American Hospital Association are the fifth and sixth largest lobbying spenders over the past decade. In the first half of 2019, the AMA has spent $11.5 million on lobbying while the AHA has spent $10.2 million. The AHA amount is equal to the combined lobbying contributions of three large insurance organizations: America’s Health Insurance Plans, Blue Cross and Blue Shield Association and UnitedHealth Group. Since 2008, the AMA has spent almost $228 million in lobbying, while the AHA spent over $205 million.

Sen. Sanders and all candidates (congressional included) should pledge to avoid donations and other influential contributions from all key healthcare stakeholders, including the AMA and AHA. Candidates must distance themselves from external influences that undermine a system that needs to be designed for the people, not by special interests.

These three foundational healthcare cornerstones – cost, coverage and quality – are the overriding factors that should determine whether our reformed healthcare system is run solely by the government, as some “Medicare for All” proposals tout, or through public-private reforms that improve or replace the existing Affordable Care Act (ACA).

Candidates of all parties – do the right thing – rid yourselves of conflicts of interest and represent all Iowans and Americans.

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