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Numbers Within A Number

2012 Iowa Employer Benefits StudyAs reported in last week’s blog and Press Release, Iowa employers reported receiving an average seven percent increase to their health insurance from 2011 to 2012. Despite this decelerating increase, smaller Iowa employers continue to receive higher increases than their larger counterparts. Without exception, this variance has occurred every year since our study began in 1999.

It is with larger increases that the smaller employer is forced to make major adjustments to their health insurance plan designs – such as migrating to larger deductibles and out-of-pocket maximums. By increasing the cost-sharing arrangement with employees, the smaller employer is able to find some relief in the premiums they pay to insurance companies. However, each subsequent year, the smaller employer receives higher increases again. This vicious cycle is difficult not only for the employer, but to their employees and family members.

Unlike the small employer, larger employers have more options available to combat escalating premium adjustments. Large employers have:

  • More leverage to negotiate with insurance vendors
  • Greater ability to self-insure their health plan (when it makes sense) by utilizing many different financial tools
  • Personnel to help implement, promote and monitor Wellness Programs
  • Access to claims data allowing the employer to analyze key medical issues inherent within the organization

Employers offer many different types of health plans. The preferred provider organization (PPO) is the most frequently offered plan for all employer size categories here in Iowa. In 2012, over 62 percent of Iowa employers offered PPO plans. Employers with PPO plans reported receiving the lowest premium increase compared with other plans offered by Iowa employers. The average increase reported by employers with PPO plans was 6.5 percent. Interestingly, employers with consumer-driven plans with health savings accounts reported receiving an average increase of 10.5 percent.

Finally, employers located in rural parts of the state have reported lower increases to their premiums (6.1 percent) when compared to their urban counterparts (7.7 percent). Part of this reason, I believe, may be due to rural employers offering PPO plans more often (63.3 percent) than do urban employers (61.8 percent). The cost of rural care can be less than in the state’s metropolitan areas.

2012 Iowa Employer Benefits Study

 

Statistics can be interesting. When digging down deeper, we learn many fascinating things not readily found at the surface.  More to come!

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