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2014 Study Results: Iowa Employers Report 6.8% Increase in Health Premiums

David P. Lind BenchmarkToday, we issued our Press Release on the results from our 16th annual Iowa Employer Benefits Study©. As you might imagine, there is a wealth of data coming from this year’s survey, but as always, one of the most newsworthy finding is the headline number – 6.8 percent.
Average 2014 Rate Adjustments
It is important to distinguish how this increase is determined each year. The 6.8 percent increase is an average that factors in employers receiving no rate change, an increase or decrease in their premiums. This number represents the average increase in premiums employers received PRIOR to making design changes to their medical insurance plans – such as increasing cost-sharing arrangements with employees. After altering the plan design, the net increase over the past year was 6.7 percent for single premiums and 5.3 percent for family premiums.

We have been surveying employers since 1999 (2001 was the first year we began asking questions on premium adjustments). With this relatively “tame” increase (compared to prior double-digit increases between 2001 and 2010), Iowa employers reported making the following changes during the past 12 months:

  • Passed some or all of the increased costs to employees (58 percent)
  • Absorbed the entire cost increase (26 percent)
  • Increased deductibles (19 percent)
  • Raised out-of-pocket maximums (15 percent)
  • Changed insurance companies (11 percent)
  • Increased office visit co-payments (8 percent)
  • Reduced pay raises or bonuses (7 percent)
  • Increased prescription drug co-payments (7 percent)
  • Began wellness program initiatives (6 percent)
  • Hired fewer employees (6 percent)
  • Offered Consumer-Driven Health Plans (4 percent)
  • Discontinued offering health insurance coverage (.5 percent)

Since 1999, the annual Iowa single premium has increased 189 percent, while the family premium has increased 172 percent.
Average Annual Premiums in Iowa Since 1999
Over the course of 16 years, employee contributions have increased 96 percent for single coverage and 120 percent for family coverage. These numbers are more staggering when compared to the average weekly wage (for all industries), which increased only 39.3 percent between 2001 and 2013 (Source: Iowa Workforce Development).

The overall percentage of Iowa employers offering health coverage increased to 81 percent from 77 percent in the 2013 study. This four percent increase is considered statistically meaningful. A greater percentage of smaller employers with fewer than 20 employees reported offering health coverage in the 2014 survey.

Employer Attitudes on Health Coverage
A number of questions relating to the Affordable Care Act (ACA) were directed to employers during this year’s survey. One key finding is that over 69 percent of Iowa employers feel it is ‘very important’ to offer health insurance for recruitment and retention purposes, while another 17.6 percent indicated that it was at least ‘somewhat important.’ Less than seven percent felt that offering health coverage was ‘not at all important,’ with most of these employers having fewer than 10 employees. About two percent of employers anticipate discontinuing health coverage in 2015.

Importance of Offering Health Insurance in Iowa

Grading Healthcare in Iowa
When asked to grade the overall healthcare in Iowa based on the cost-of-care that is paid by employer and employees, employers mostly graded the state with ‘Bs’ and ‘Cs.’ Only 15.4 percent of employers graded Iowa’s healthcare delivery an ‘A.’ Such grading is a reflection of how Iowa employers perceive health providers on 12 performance indicators, as documented in our white paper, ‘Voices for Value.’

The complete 2014 Iowa Employer Benefits Study© will be available for purchase and download very soon.

The above information is just a small fraction of our survey results. To learn more, we invite you to subscribe to our blog.