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2019 Iowa Employer Benefits Study©
Employers Report 7.1% Increase in Health Premiums

Today, we issued our 20th Iowa Employer Benefits Study© results. As with past studies, the wealth of data is immense. This year’s study found that Iowa employer health insurance premiums increased an average of 7.1 percent from 2018 to 2019.

The 7.1 percent increase is an average that factors in employers receiving no rate change, an increase or decrease in their health premiums. This number represents the average increase in premiums employers received PRIOR to making design changes to their medical plans – such as increasing cost-sharing arrangements with employees.

The 2019 Iowa Employer Benefits Study© found that average annual premiums for employer and employee contributions (combined) were $7,017 for single coverage and $19,335 for family coverage. Since 1999, the year this study began, the single premium has increased by 240 percent while the family premium has jumped by 251 percent. (NOTE: In a number of slides below, the year 2017 was excluded because no survey was performed.)

During the post-ACA period (2011-2019), total family premiums increased by 45.4 percent, while employees with family coverage experienced a 30.5 percent increase to their payroll-deducted premiums. Employers continue to make sizeable contributions to keep the employee cost ‘manageable.’ This information is depicted in the following graph.

How did Iowa employers respond? They continue to ratchet up employee cost-sharing arrangements by increasing employee premium contributions and plan-sharing responsibilities, which results in higher deductibles and out-of-pocket maximums.

For the first time in this study’s history, employers were asked to gauge their ‘cost-shifting fatigue.’ On a 10-point scale, where 1 means the employer has a minimum cost-shifting fatigue and 10 means the employer has reached its limit of shifting costs to employees and is now considering to no longer offer health coverage, Iowa organizations reported their fatigue level was 3.5 out of 10. Despite experiencing rate hikes for years, Iowa employers are not yet likely to discontinue offering health coverage. Below is a slide that depicts employer responses by employee-size categories.

Iowa employees were asked to contribute an annual average of $1,313 for employee-only coverage, while employees with family members were asked to pay $5,794 annually. Over the course of 20 years (1999-2019), employee contributions have increased by 196 percent for single coverage and 173 percent for family coverage.

The overall 2019 statewide weighted-average deductible for single coverage is now $2,192, while the family weighted-average is $3,975. Since 2004, deductibles for both single and family have risen by 288 percent and 235 percent, respectively.

The post-Affordable Care Act (ACA) period (2011-2019) reveals the deductibles continue to climb for both single and family coverages, approximately 46 percent and 25 percent respectively.

In addition to revealing updated results for dental coverage, group life insurance, short and long-term disability coverages, the 2019 Study also reveals whether Iowa organizations offer a large number of work-life and convenience benefits in their workplace setting. The top five benefits offered by Iowa employers include:  Jury Duty Leave (89.2 percent), Bereavement/Funeral Leave (87.5 percent), Unpaid Leave (83.7 percent), Maternity Leave (72.6 percent), and Personal Days (63.6 percent).

The above information is just a small fraction of our survey results. The complete 2019 Iowa Employer Benefits Study© is available for purchase and download on this site.

To learn more, we invite you to subscribe to this blog.

 

‘Medicare For All’ Can Be a Common Enemy to Unite ‘Foes’

It is both comical and infuriating to watch how key healthcare stakeholders react to two different, but highly inter-related subjects: 1) Medicare For All, and 2) Who is at fault for outrageous medical prices. Stakeholders in healthcare include hospital systems, provider groups, health insurance companies and pharmaceutical and device manufacturers. Employers are another major stakeholder, but much too often, they are largely excluded when it comes to contractual relationships between many of the aforementioned players.

When many of these stakeholders are asked who is at fault for charging high prices for medical services, each will conveniently step into a circle and point fingers at one another, as if they are participating in a circular firing squad. It seems that someone else is always at fault, but never the accused.

However, when asked about the growing ‘Medicare For All‘ proposals, commonly believed to eliminate private insurance and ‘socialize medicine,’ many of these same stakeholders will quickly hold hands in support of something centrally sacred to their collective well-being, as if they are military comrades in the HBO mini-series, “Band of Brothers.” These stakeholders’ words and actions are quite transparent about protecting their own self-seeking interests.

Below are just a few examples of this love-hate relationship between various healthcare stakeholders.

Medicare For All

Former Secretary of State, Condoleezza Rice, was quoted as saying, “We need a common enemy to unite us.”  For stakeholders who are frequently at odds with each other, such as medical providers are with insurance companies when it comes to contractual reimbursement arrangements, the relationships can be confrontational, if not outright brutal. However, for various reasons, both typically view Medicare For All as a major threat to their profitable well-being, if not survival. Given what is at stake with a ‘Single-Payer’ system that presumably would be controlled by federal bureaucrats, providers and insurers have found this ‘common enemy’ to mask their mutual differences with each other.

On April 16, UnitedHealth Group CEO David Wichmann warned Democrats that Medicare For All would destabilize the nation’s healthcare system. As mentioned in The Hill, Medicare For All would be a “wholesale disruption of American healthcare [that] would surely jeopardize the relationship people have with their doctors, destabilize the nation’s health system, and limit the ability of clinicians to practice medicine at their best.”

Insurance companies are greatly threatened by the many proposals initiated by progressive Democrats to expand Medicare to the entire U.S. population, most likely greatly reducing the role of private insurers. It must be noted, however, even with any given Medicare For All program implemented, private insurers would most likely be chosen as subcontractors to administer the program, but the profit motive would be greatly reduced from today’s standards.

Not to be outdone, a major counterpart to private insurers, the American Hospital Association (AHA), have similar views to Wichmann’s. AHA President Rick Pollack wrote in February that Medicare For All proposals “could do more harm than good to patient care.” Additionally, this one-size-fits-all approach could disrupt coverage of 180 million Americans who are currently covered by employer plans, and that physicians and other providers “may limit the number of Medicare or Medicaid patients they see because of chronic government underpayment.”

When lobbyists from both stakeholders were recently on stage together in Nashville addressing the Medicare For All topic, such as Matt Eyles (CEO of America’s Health Insurance Plans (AHIP)) and Chip Kahn (CEO of the Federation for American Hospitals), one could almost detect John Lennon’s epic song, “Give Peace A Chance” in the background. Kahn discussed a new organization that he formed, Partnership for America’s Health Care Future, and its purpose of ‘counter-messaging’ against the Medicare For All movement. Eyles acknowledged that AHIP was one of the first groups to become part of this new organization.

Healthcare Prices – Who is at Fault?

The camaraderie found in Medicare For All quickly vanishes when stakeholders are simply asked why healthcare prices are so high. This healthcare ‘hot potato’ can quickly determine just how deep-seated relationships are (or not) between major industry players. The April 15 cover of Modern Healthcare appropriately illustrates fingers pointing at each other, deflecting the price question and placing the blame elsewhere. Additionally, when leaders from Pharmacy Benefit Managers and the Pharmaceutical Research and Manufacturers of America (PhRMA) have appeared in front of the Senate Finance Committee during the past few months to justify their pricing methods, both pointed fingers at one another (insurers also), making sure that their respective organizations and industry were not to blame.

Deflecting responsibility and other self-preservation behaviors will only add to the desire to seek alternative solutions that can reform a grossly underperforming and bloated healthcare system. Stakeholder organizations and industries must decide whether they want to be part of the solution – or, at their own peril – continue to pursue their ‘business-as-usual’ behavior that benefits no one – but themselves.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.

Wellness Programs – New Study Confirms Cautioned Approach

During the past seven years, I have written a fair number of posts regarding wellness programs offered by employers. The core message of all blogs suggests that employers must have realistic expectations about what wellness initiatives will or will not do within the workplace.

A recent randomized clinical study published in JAMA is yet another reminder for employers to have tepid expectations when trying to keep their employees happy, healthy and less likely to incur more health costs. The study found that workplace wellness programs do not cut healthcare costs for employers, reduce absenteeism or improve the health of employees.

From the University of Chicago and Harvard, researchers used a large-scale approach that was peer-reviewed and included a more sophisticated design when analyzing BJ’s Wholesale Clubs. BJ’s has about 33,000 employees across 160 clubs. This analysis compared 20 randomly-assigned clubs that offered wellness programs with 140 BJ’s clubs that did not.

After 18 months of timeline analysis, this study revealed that wellness programs did not result in health measure differences, such as: improved blood sugar or glucose levels, reduced healthcare costs or absenteeism, or impacted job performance in a positive manner. In other words, employees with a wellness program did not experience reduced healthcare costs and other desired affects. I suppose one could argue that a year and one half was not enough comparison time to develop these conclusions.

One of the authors of this study, Katherine Baicker, dean of the Harris School of Public Policy at the University of Chicago, put it quite succinctly in a Kaiser Health News article: “[But] if employers are offering these programs in hopes that health spending and absenteeism will go down, this study should give them pause.”

What are your expectations about workplace wellness? Do you believe such programs, when appropriately and thoughtfully implemented, will greatly mitigate your healthcare costs, improve workforce productivity and reduce absenteeism? Maybe you feel these programs are a waste. From our 2012 Iowa Employer Benefits Study, employers shared their perceived ‘return on investment’ on the programs they currently had in place.

According to a 2013 “Workplace Wellness Programs Study” by researchers at the RAND Corporation, these programs only have a modest effect. This runs contrary to claims made by wellness firms that sell workplace wellness programs to employers. The report found that people who participate in wellness initiatives lose an average of only one pound a year for three years. Another finding is that employee participation in such plans “was not associated with significant reductions in total cholesterol level.” Smoking-cessation programs show some potential, but only “in the short term.”

Most likely, both skeptics and supporters of wellness initiatives will find ammunition to support their cause. Workplace wellness programs have grown to an $8 billion industry in the U.S., primarily as a direct result of rising employer health insurance costs.

This latest report may help stabilize any pre-conceived lofty expectations each of us may have about the benefits of workplace wellness programs. However, it must be noted that some employers have found value in these programs.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.