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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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Lindex® Score Remains Unchanged in 2019

Four color-coded quartiles represent the strength of benefits offered.

We’ve just released the new Lindex®scores based on our 2019 Iowa Employer Benefits Study©. Introduced in 2012, the Lindex is an innovative tool that allows Iowa employers to distill voluminous and complicated benefits data into one relevant number.

An organization’s Lindex score may help Iowa employers to:

  • Determine the competitiveness of their benefits package.
  • Attract and retain a high-quality workforce.
  • Decide whether benefit changes are required to keep your employee benefits competitive.

The Lindex is a composite score used as a reference when determining the quality of benefits offered by Iowa organizations. This index is the result of a sophisticated calculation based on the benefits data submitted by 999 Iowa organizations from the latest 2019 Iowa Employer Benefits Study©.

Calculated once a year, the Lindex ranges from 0 to 100, with low scores reflecting fewer benefits offered at a higher cost to employees, while higher scores indicate more benefits being offered at a competitive cost.

In 2019, the overall Lindex score for Iowa employers (regardless of employer size and industry) is 76 – which is unchanged from 2018.

The Lindex score will vary based on the employer size and industry, which are two determining factors that affect employee benefits. For example, employers with fewer than 10 employees have a Lindex score of 64, while employers with 1,000+ employees averaged 89.  Below is a summary graphic of the Lindex scores based on organization size:Employers in the construction industry averaged 64, while colleges and universities averaged a score of 92. Below is a summary graphic of the Lindex scores based on industry:The Lindex calculation began during the 2012 survey year. As depicted in the graphic below, between 2012 and 2015, the Lindex was calculated using five employer size categories: 2-9, 10-19, 20-49, 50-249, 250-999 and 1,000+. The top of the graphic provides the Lindex score based on size categories (by year), while directly below this is a color-coded chart showing the Lindex scores based on quartiles for each year. For example, the scores of the smallest organization-size category (2-9) is depicted in red, meaning this size typically scores in the lowest-scoring quartile. The scores of the next two size categories, 10-19 and 20-49, fell in the second quartile (orange). Without fail, the next size category of 50-249 scored in the third quartile (yellow), while organizations with over 250 employees were offering the most comprehensive benefits – noted in green, the fourth quartile.Beginning in 2016, the organization-size categories were altered somewhat, primarily to shadow many provisions found in the Affordable Care Act (ACA). The graphic below depicts the average Lindex scores by organization size and the quartiles that each size category are found. The quartile results are similar to the results found in the previous graphic.Finally, with any selected industry, it is interesting to compare the Lindex scores by size categories.  As an example, the following graphic compares ‘for-profit’ organizations with ‘non-profit’ organizations. With the exception of organizations that have 1,000+ employees (both scored equally at 89), all ‘for-profit’ size categories scored less-favorably when compared to scores of ‘non-profit’ organizations (see graphic below).  Non-profit organizations clearly offer more comprehensive benefits than their for-profit counterparts.Should you wish to learn more about the Lindex, and how your organization can obtain your own Lindex calculation, please visit the Frequently Asked Questions (FAQ) section of our website.

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