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Fast Food – Our Habit of Convenience

Habits we acquire happen over a period of time. They typically begin with a cue and a perceived positive reinforcement of a reward.

Maybe we bypass going to the fitness center or take a bike ride because it is more pleasant to sit on the couch and watch Netflix. It’s just too convenient to press the TV remote (cue) and then become engrossed in countless shows that are entertaining, educational – or both (reward). Doing this too often may develop into a new habit that could detract from a previous habit (e.g. gym or bike). We exchange one habit (exercising) for another, less-healthy habit (TV binge-watching).

According to a recent Centers for Disease Control and Prevention report, 36.6 percent of Americans eat some kind of fast food* each day, with men being a bit less discerning about what they eat (37.9 percent) than women (35.4 percent). When you think about it, fast food is always accessible throughout the day, making it just too convenient for many of us to pass up.

On a typical day, almost 23 percent of Americans will eat breakfast from a fast-food outlet, while about 44 percent of us will pick up a ‘quick’ meal during lunch. Not to be left out, fast-food dinners draw another 42 percent of Americans.

Ethnic group and age also provide differences when it comes to the daily consumption of fast food.

Ethnic Groups:

  • Black Americans – 42.4 percent
  • Whites – 37.8 percent
  • Latinos – 36.5 percent
  • Asian-Americans – 30.6 percent

Age Categories:

  • 20–39 years-old – 45 percent
  • 40-59 years-old – 38 percent
  • 60+ – 24 percent

Take-A-Way from This Report?

The conventional wisdom about fast food is that people eat it when they can’t afford something better (and healthier). However, this report suggests this wisdom is not necessarily true. For example:

  • Higher income equates to more fast food: The more money we have or make, the more likely we are to eat fast food on any given day. For example, about 32 percent of people who earn less than 130 percent of the federal poverty level eat fast food daily. However, over 36 percent of middle-income families (earn between 130 – 350 percent) purchase fast food daily, while 42 percent of people with incomes above 350 percent consume fast food daily.

This finding is interesting because healthier food can cost a bit more than fast food, and yet, regardless of having the ability to pay for more expensive, healthier food, we often elect the more convenient food that is available at our finger tips (often using the drive through). Additionally, with our younger population consuming more fast food compared to older generations, younger families (and their children) will be more likely to establish unhealthy eating habits – creating health issues later in life (obesity, heart disease, dementia, etc.). The intake of calories, fat, and sodium eventually adversely affects our health in many different ways.

Iowa Youth Obesity Rate is High

Another report recently released by The National Survey of Children’s Health compares the obesity rates of children (ages 10 to 17) for all 50 states. Almost 18 percent of our youth in Iowa are obese, ranking our state as the 10th highest state for youth obesity. Iowa’s white (non-Hispanic) youth are significantly higher than the national rate.

The implications of having overweight and/or obese youth present future challenges to our state. For one, employers desire to have healthy and productive employees in their workplaces, and having unhealthy employees will continue to leverage up their health insurance costs due to higher healthcare usage. No one wants a poor quality of life, but often this is a result of the choices and habits that have been established much earlier in our lives.

Per a recent Harvard T.H. Chan School of Public Health report, we are still trying to come to terms with the dietary fat we consume – fat that is good and fat that is bad.

This much we know. Establishing a habit based on mere convenience may not be the smart choice we should make for ourselves, individually – or as a society.

Now, where did I put my channel changer…

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*NOTE: For this survey, fast food was broadly defined as any item obtained from a “fast food/pizza” establishment. It is possible that some people may interpret fast food differently from one another – e.g. takeout sushi, etc.

By 2028, Iowa Employer Health Insurance Family Premiums Could Be…

As we enter the holiday season, I’m somewhat hesitant to share something that could spoil the holiday spirit – our projected health insurance premium 10 years from now. But to put a positive spin on this, especially as we prepare for Thanksgiving day, it is safe to assume the health insurance premiums that we are currently paying will be a ‘bargain’ compared to what we may be paying in 2028.

From our latest 2018 Iowa Employer Benefits Study©, we learned the average annual Iowa family health insurance premium is $17,448. Yes, this is a very inflated amount, especially when we compare it to 10 years earlier in 2008 ($11,520). Yet, this Iowa average is actually a bargain compared to the 2018 Kaiser Family Foundation national average of $19,616! Another positive spin for you!

The five-year average (2014 – 2018) increase for Iowa employer health insurance premiums is 7.7 percent. This figure represents all survey respondents, regardless of employee size and industry. It is important to acknowledge that this number represents the average increase BEFORE employers made adjustments to their health plans to keep the rate increase more manageable. Such adjustments typically include increasing deductibles, copayments and other plan features that require employees (and their dependents) to assume more of the medical costs when seeking healthcare through providers. Either way, the rate increases adversely affect employees’ the take-home pay.

The graph below calculates the average Iowa family premium rate trending forward for the next 10 years (compounded annually at 7.7%) and showing the annual employer and employee contributions (based on the Iowa employer contributing 68 percent of the total cost – another five-year average). One squeamish by-product of inflated health rates not shown on this graph are the plan design alterations that will surely be made by employers to shift costs to employees in order to keep the rates ‘manageable.’ One primary example of this cost-shifting is the family deductible, which was $1,963 in 2008 and is now at $3,900 in 2018 (99 percent increase over 10 years).

The family premium in 2028 could become $36,636! This amount is 110 percent more than today’s average family premium in Iowa.

Also worth noting, the trend line above the premium represents the estimated annual household income (HHI) in Iowa, compounded annually by 1.5% to 2028. The bubble above the $57,947 HHI for 2018 represents the percentage of family premium to HHI. This percentage is projected to almost double by 2028 if we cannot control healthcare costs. In short, over half of our household income (54 percent) could evaporate due to healthcare costs.

As we cast 10 years into the future, it is safe to give ‘thanks’ for what we are paying today in health insurance premiums. This is my best attempt to find some good in something that clearly is not.

Sorry to share this information.  Now, it’s time for the other turkey…

Have a wonderful Thanksgiving!

*DISCLAIMER:
I am NOT predicting that family premiums in Iowa will be $36k by 2028. Rather, based on past behaviors, employers will continue to find ways to alter their plan designs to keep their premiums lower than the initial increases they experience. Because of this, health plans will look considerably different in 10 years than they do today.

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After 15 Years, Not Much Has Really Changed (Except My Age)

I recently was cleaning out some very old files and came across a document that I wrote 15 years ago. Before tossing it, I decided to read it just one last time.

In 2003, I authored a ‘Commentary’ for the ‘Iowa Commerce’ magazine, an Iowa Association of Business and Industry publication that is no longer in existence. The article was simply titled, “Rising Health Insurance Rates in Iowa.” Little did I know that this title would continue to reflect on the state of our healthcare 15 years later.

In fact, the circumstances then should seem rather archaic compared to today’s challenges, right? See what you think:

Health insurance rates have been increasing dramatically for the last several years in this country. More specifically, employers in Iowa are experiencing higher increases in health insurance costs than employers have been receiving nationwide. With such increases, what are the economic tradeoffs confronting Iowa employers each year?

Our firm, David P. Lind & Associates (DPL&A), recently completed the fifth “Iowa Employer Benefits Study©.” For the last three years, we have noticed a disturbing trend that is plaguing businesses in Iowa – health insurance rates are increasing faster in Iowa than in the rest of the country. For example, our 2001 study showed that health costs increased 17.4 percent in Iowa compared to the Kaiser Foundation Study, which showed an average increase nationally of 11 percent. In 2002, the DPL&A study found that health insurance rates increased by 18.7 percent in Iowa versus 12.7 percent nationally (Kaiser). Finally, in 2003, health insurance rates in Iowa increased by another 18.2 percent. The Kaiser study for 2003 has not been released as of this writing, but other national studies are again proving that Iowa is experiencing higher than average rate increases for health insurance. In fact, over the last five years, our study shows an average increase in health insurance rates of 55 percent in Iowa! Such staggering increases have a profound economic effect on Iowa employers and their ability to make capital improvements.

There are a few key reasons why health insurance rates increase faster in Iowa than nationally. According to Iowa Cares About Medicare, an advocacy group, the state of Iowa has the largest percentage of its population over the age of 85 in this country. In addition, Iowa currently has the fifth highest percentage of people over age 65. People over the age of 65 are eligible for Medicare, the federal health insurance program for the elderly. A report from the Center for Studying Health System Change finds that per person spending on health care increases an average of $40 a year for each year a person ages from 18 to 50. At age 50, spending begins to accelerate rapidly, rising an average of $152 a year for each additional year in age between 50 and 64.

Also, Iowa ranks among the highest states nationally in the percentage of individuals who are overweight, according to a study funded by the U.S. Centers for Disease Control and Prevention. That same study found that people who weigh too much are at an increased risk of heart disease, diabetes, most types of cancer, and other illnesses. It also showed that an obese Medicare recipient costs $1,486 more annually than a Medicare patient at a healthy weight. Unfortunately, Iowa ranks 50th in the country for the rate of Medicare reimbursement that Iowa providers receive when giving care to the elderly. Consequently, Iowa medical providers (hospitals and physicians) must shift costs to the private-payer side to make up for the shortfalls received from the Medicare program.

According to the Iowa Insurance Division, Iowa employers with fully-insured medical plans (self-insured employers excluded), have paid approximately $2.46 billion for medical insurance in the year 2002. With rate increases averaging over 18 percent during the past two years, Iowa employers could possibly pay $2.9 billion in medical insurance premiums for 2003, approximately $443 million more than paid in 2002. Again, this does not include self-insured employers (State of Iowa and many large employers) and self-employed individuals who have private health insurance. In our 2003 study, Iowa employers were asked the hypothetical question: “If your medical insurance premiums remain stable (do not increase) over the next 12 months, how might your organization apply these ‘savings’ elsewhere with the organization?”

Overall, 10.4 percent of employers responded that they would make capital improvements and/or equipment purchases. Smaller employers (less than 250 employees) were more likely than larger employers to make this “investment.” Confronted by this huge economic trade-off of lost capital, it becomes more difficult for employers (both nationally and in Iowa) to reinvest this money to grow their business.

Clearly this trend must abate. We should not spend our time blaming various industries or organizations for this problem, but rather, offer constructive solutions that address healthcare affordability without sacrificing quality of care. A meaningful and ongoing dialogue must develop between all the major “players” within the delivery (and payment) of our healthcare system that would create a new vision and leadership agenda for the future. Why not begin this dialogue in Iowa?

Again, this was written in 2003. Thankfully, the average annual rate increase reported this year by Iowa employers (8.4 percent) is less than half of what was reported 15 years ago (18.2 percent). However, the discussion of affordability continues to plague us today. Since I wrote this piece, the combined rate increase reported by Iowa employers (2004 – 2018) exceeds 140 percent – with no real end in sight.

Except for my age, not much has really changed regarding the escalation of healthcare costs.

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