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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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Mental ‘Rubber Ball’ Continues…and a BIG ‘Thank You!’

Mental Rubber BallIt all began in 1998 – and it wasn’t my idea.

About three years after starting David P. Lind & Associates, my first and only associate at the time, Brad Johnson, walked into my office and sat down across from my desk and asked, “Do you have a few moments?” I must admit, I did not know what to expect from this unanticipated dialogue – and I was a bit nervous.

“Sure.” I said.

For the next couple of hours, we had a discussion that I will never forget. Brad had an idea, and he wanted to knock the concept around like a rubber ball in a racquetball court. In addition to the floor, it hit all four walls and the ceiling countless times and it was virtually impossible to contain its’ kinetic energy after each subsequent surface smack. The idea was growing legs quickly!

From this experience, came my first big lesson in business: Never underestimate ideas that come from your employees. In fact, ALWAYS encourage suggestions and new approaches that may seem too big at the time. After giving the idea(s) the necessary attention, time and dialogue, allow it (them) to simmer and then revisit the concept with additional levity and a fresh perspective. Then, if appropriate, ACT!

Brad’s idea was a simple one. “Why not perform an employee benefits study in Iowa to help our clients (employers) benchmark their benefit plans to other employers locally?” His suggestion was basic – yet brilliant!

Another lesson? Don’t spend a great deal of time looking at your competition. Instead, watch what people actually do, observe what they use, how they see, feel, hear, touch and interact with every aspect of a product or service. Then move on it.

In the 16 years since my game of mental ‘rubber ball’ with Brad, we have completed 16 annual employee benefits studies, and surveyed 12,460 employers. During that time (1999-2014), Data Point Research, Inc. has served as the backroom ‘engine’ for undertaking this survey process. I am grateful for the work they do and the professionalism they consistently demonstrate on behalf of my organization.

Scott Woodruff of Majestic Limousine Services

Scott Woodruff of Majestic Limousine Services

As in 2013, we offered a special incentive to employers who took part in this year’s survey. Participants were automatically entered into a random drawing for one of two iPads. This year’s winners are Amy Hanson of Prairie Lights Books (Iowa City) and Scott Woodruff from Majestic Limousine Service (West Des Moines). Both recently received their iPads and were gracious to allow me to use their names within this blog. Thank you, Amy and Scott. Again, congratulations!

And a big thanks to the other 1,000 organizations who participated in this year’s survey! If your organization was one of this year’s survey participants, an email was sent to you on September 17, 2014, with a unique link to download your FREE copy ($300 value). If you missed this email, please check your Spam or Junk email folders. Otherwise, please contact us.

For the record, kinetic energy has taken that simple rubber ball into new, unexplored surfaces outside the racquetball court. No telling where the ball will eventually go!

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What Iowa Employees Value Most – Lessons to be Learned?

Iowa Employment Values StudyAlthough it has been six years since we completed the “Iowa Employment Values Study,” the lessons learned are still important today. In fact, in some cases, we may assume the results are…timeless!

This Study was conducted in 2007 to better understand the opinions, perceptions and values of Iowa employees and how they differ from those of executives in Iowa organizations. With assistance from Data Point Research, Inc., almost 700 people were interviewed from 56 different organizations. Executives numbered 159 while 537 were employees.

The intent of the Study was to ask employees what 11 key workplace ‘values’ were most important to them – and if these values would keep them employed at their particular organization. In addition, we asked the executives within these organizations to rate how important these same values were to their employees. As you might expect, the results were both revealing and, in many cases, reassuring.

The 11 key employment workplace values are listed below in descending order of employee preference. This table clearly shows that:

  • Employees regard every value statement as more important than executives realize.
  • The order of importance of those values to employees was clearly misunderstood by Iowa executives.

NOTE: The questions were presented to respondents using Likert scales. Scored on a 1 to 100 scale, the highest number represents the most positive response.

 Values Study - Workplace Values

From the table we learn that executives understand Respect at the workplace and a sense of Achievement on the job are very important values to their employees. However, when ranked, executives mistakenly believe that Job Security, Money, Employer Leadership, Benefits and Personal Safety are all more important to their employees than the opportunity to Balance work time with family needs.

Here’s the big takeaway from the above table:

THE GREATEST ERROR OF EXECUTIVES IS UNDERESTIMATING THE IMPORTANCE OF WORK-LIFE BALANCE TO THEIR EMPLOYEES.
The importance of employees having a well-rounded lifestyle is critical to the mental well-being of employees – and Iowa employers should take note.

Some other interesting findings from this Study that may be worth noting, include:

  • By Gender: Female executives are in-tune with female employees. In contrast, male executives underestimated the importance of many values to both male and female employees. The largest disconnect being the importance of Balance and Time to their female employees.
  • By Age: Separated into categories of those younger and those older than 50 years of age, executives under 50 underestimated the importance of workplace values for their employees in all 11 categories. Employees, regardless of age, rated workplace values similarly.
  • By Generation: Generation X employees (born between 1967 – 1976) rated Money as the second least important workplace value, considerably lower than the other generations. All generations of executives significantly underestimated the importance of Balance and Time to all generations of employees.
  • By Income: Lower paid executives clearly underestimated the importance of 10 of the 11 workplace values to employees who earn less than $50,000 (79 percent of the respondents).

This survey was conducted before the full impact of the Great Recession – which began in 2007/2008. My suspicions, however, are that many employee and executive views in today’s environment may be relatively similar to those views found within this Study. Having Respect, a sense of Achievement and a work-life Balance are most assuredly timeless values…

Iowa employees value Respect, Achievement and the opportunity to Balance work time with family needs as most important, even more important than pay. In today’s globally competitive environment, Iowa employers will need to create a culture that is more responsive to these employee needs and values to attract and retain qualified employees. Being appreciated and valued on the job is the number one value to employees. When asked “What is the one main thing your organization could do better?” the answer: “Show appreciation for hard work,” was consistently heard. This is not an expensive solution, as appreciation can be effectively expressed in a non-monetary way.

Similarly, employees who are proud of their organization were significantly more positive about all aspects of their job. Employers are best served to communicate accurate details about the organization to employees and foster employee pride. Organizations may also consider flextime programs that allow for individual needs, as employees responded overwhelmingly in this Study that they value a healthy work and family balance.

I will continue to ‘dust off’ other gems found within this report, which to my knowledge, was the first study of its kind within Iowa that objectively addressed the disconnect between employer-employee opinions on employment values. Performing another Study similar to this one is definitely on my wish list for the future!

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