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Listen With Your Eyes
Small Employers Beware!

Listen to your EyesPercentages can matter. But when depicted in bar graphs, they seem to matter more – or at least become more digestible to understand.

Do smaller employers receive larger premium increases to their health plans when compared to their larger counterparts? The short answer to this question is ‘yes.’ Being community-rated with other like-size employers certainly has a great impact, as does paying state-required premium tax for being fully-insured. Small employers have fewer options to alter their benefit plans and lack critical scale to explore various funding arrangements that are available only to larger employers.

Using results from our last six Iowa Employer Benefits Studies© (2010 – 2015), we found the three smallest employer size categories (2-to-9 employees, 10-to-19 employees and 20-to-49 employees) were more likely to receive annual double-digit increases from their insurance vendors when compared to the other three-size categories (see below).

Average Increases 2010-2015 Iowa Employer Benefits Study

From 2010 – 2015, the average annual increase for each size category demonstrates the divide between the largest and smaller employers. Employers with fewer than 20 employees averaged premium increases each year of 11.5 percent, while employers with 250-to-999 averaged premium increases of 6.3 percent. Employers with over 1,000 employees were most ‘fortunate’ by experiencing average increases of 5.6 percent.

Average Premium Increase 2010 - 2015

Over this period – and prior to making health plan adjustments – the smallest employers received premium hikes of 69 percent. The largest of employers received a cumulative increase of 33 percent, more than half of what the small employers received.

Overall Premium Increases 2010 - 2015

The implications of rising health premiums are unsettling for all employers, but especially for the majority of employers in Iowa with 2-to-19 employees, which represent 94 percent of all Iowa organizations.

Seeing is believing, so listen with your eyes.

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