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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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A New Revolution Begins: ‘Voices for Value’

This is your world. Shape it or someone else will. Gary Lew

This quote is so true! If we simply sit back and complain about the status of healthcare and health insurance rates in Iowa, nothing will change. We need to reshape our healthcare world. And, to begin to shape it, we need an open and honest dialog about the conditions that currently exist, determine what is working and where improvement is needed.

To encourage this dialog, I have written a ‘Voices for Value’ white paper, based on employers’ responses to survey questions regarding their satisfaction with their regional hospitals and doctors. You may download your FREE copy of ‘Voices for Value‘ here. Since issuing our press release last week on Iowa employer perceptions of the Iowa healthcare provider community, the interest in this white paper has been overwhelming!

Iowa Association of Business and IndustryI wish to thank the Iowa Association of Business and Industry (ABI) for sponsoring ‘Voices for Value.’  After learning about this paper, ABI has been extremely supportive in promoting the contents of our survey. It is a great honor for me to have ABI involved as the sole sponsor. 

The findings from this ground-breaking survey are quite clear:  Iowa employers expect more from their healthcare providers than what they are currently receiving in most all of the survey’s 11 performance indicators.

  • Access to services
  • Concern for patient satisfaction
  • Electronic health records
  • Consistent quality of care
  • Ability to engage patients
  • Focus on wellness and health promotion
  • Efficiency
  • Coordination of care among providers
  • Transparency in medical outcomes
  • Cost transparency
  • Keeping cost reasonable

In addition to the above indicators, employers were asked to rate the extent of ‘Trust’ they have for the providers serving their workforce. Having trust in those who provide care is paramount to having a highly-functional healthcare system. I firmly believe that greater trust will result when improvements are made within each of the performance areas.

Until this survey was conducted in mid-2013, the voice of Iowa employers has been diffused, diluted and, mostly silent. For care to be appropriate, efficient and cost effective, a meaningful revolution must occur in Iowa (and elsewhere) to drive innovation with carefully-placed incentives (and disincentives) that will reward behaviors we desire – from both the care delivery and consumption sides. But it won’t be easy.

It has been said that “Revolutions never happen in comfortable shoes.” 

As found in most social change, this new revolution will be uncomfortable, but very necessary – if not critical. Healthcare providers must heed the voices that have emerged from ‘Voices for Value,’ and take action to deliver high-value care to their customers, the very people they serve within their communities. This revolution may also be uncomfortable for employers, who have historically relinquished the oversight of healthcare delivery to third parties. Now, employers must take action by providing constructive, ongoing feedback to the providers serving their communities. Somehow healthcare has lost this critical ‘voice’ to serve as a crucial guide on how care should be delivered.

The new healthcare revolution in Iowa is buoyed by ‘Voices for Value.’ However, Voices merely serves as the first step in a long journey to high-value care that we all deserve. The ‘value’ of care has been defined as health outcomes achieved per dollar spent* – and we currently spend an enormous amount of money with seemingly few controls to reduce this growing expenditure. Yet, as witnessed in our survey results, Iowa employers have spoken loud and clear that care is mediocre, at best. A revolution is necessary to reshape our healthcare world.

Based on how Iowa employers perceive the care provided within their communities, ‘Voices for Value’ establishes the basic framework of issues that require new transformations in our local healthcare system. ‘Voices for Value’ is not an exhaustive accounting of the myriad of issues inherent in healthcare, but rather, it serves as a baseline from which new initiatives can be thoughtfully developed and pursued by all interested stakeholders within Iowa to make the changes that we all desire to have.

Continue to follow our future blogs on how this revolution is gaining traction and, most importantly, how YOUR voice can be heard!

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*Michael E. Porter, Harvard Professor

Grading Iowa Hospitals and Physicians – A ‘Silent Voice’ No More

PR Report Card Visual Option (1)Today, we issued our press release on the Iowa Employer Perceptions of the Iowa Healthcare Provider Community. The results come from our 15th annual Iowa Employer Benefits Study©. This section of the study reveals compelling information that is both fascinating and relevant to Iowa employers – and to the entire state of Iowa. This type of study is a first of its kind in Iowa – perhaps in the country! 

We’ve also just released our “Voices for Value” white paper which provides a comprehensive look at Iowa employer perceptions of the Iowa healthcare marketplace. I am very proud that the Iowa Association of Business and Industry (ABI) is the sole sponsor of this paper, as they have represented the “Voice of Iowa Business Since 1903.”

For the last 30 years, I have been keenly involved with employer-sponsored health insurance in Iowa. During most of that time, I assisted employers with evaluating and obtaining health coverage on behalf of their employees. As employers know, the complexities of health insurance requires a great deal of their time and effort each year to assure the ‘appropriate’ health coverage offering to their employees. This is an often-overlooked cost that is not factored into the health premiums paid by employers. Nonetheless, it is a necessary process that requires frequent employer attention.

Year-after-year, our annual studies indicate that Iowa employers continue to receive premium increases that exceed the inflation rate. In fact, since 1999, the annual Iowa single premium increased by 171 percent while the family premium increased by 158%. Despite these meteoric increases, Iowa employers continue to pay more than their ‘fair share’ of the premium costs – about 80 percent of the total single premium and about two-thirds of the family premium.

So why ask Iowa employers to assess hospitals and physicians within their communities? It’s quite simple. Employers play an enormous and critical role in funding the private insurance system. Unfortunately, when assessing the value received from the healthcare providers, they have been a relatively silent and diluted voice on how this investment is being used.

A silent voice?  Yes, but no longer.

Iowa employers were asked on a 10-point scale, where 1 is “failing” and 10 is “excellent,” to assess 11 key performance measures. Employers reported that both hospitals and physicians within their communities are either ‘average’ or ‘below average’ on most measurements. However, two measurements that are most worrisome to employers, resulting in dismally low grades, are “Keeping Cost Reasonable” and “Cost Transparency.” Iowa employers feel that hospitals are a grade away from failing on both measurements, as they received grades of D-minus and D-plus respectively. Physicians were graded slightly better at D and C-minus, respectively. Based on the escalating premiums employers continue to pay each year, it is not surprising that employers are in a foul mood on cost issues.

 Grading Hospitals - Voices for Value

Grading Physicians - Voices for Value

Iowa Hospitals and Physicians - 'Voices for Value'

Trusting Hospitals and Physicians

One last assessment measurement is the “Level of Trust” employers have with hospitals and physicians within their communities. Specifically in healthcare, trust is perhaps the most important measurement used to gauge the effectiveness of the services provided to the population. In this measurement, hospitals received a tepid B-minus from employers, while physicians received a mid-B.

The other grades given to hospitals and physicians are considered to be underperforming, particularly relating to measurements on patient care and the perceived outcomes received from patient care. More about these grades in later blogs.

One final comment regarding how employers graded their health providers. When asked to evaluate health providers, employer assessments come from ‘perceived’ attitudes about the various measurements being asked within the survey. Clearly, we need to know a great deal more on how our healthcare providers can meet the expectations of a key healthcare payer – the employer.

This particular survey provides a solid baseline on employer perceptions. Based on these results, future healthcare provider community assessments will be required. 

I invite your comments regarding the grades employers assigned to both hospitals and physicians.

To learn more about this and other survey results, we invite you to subscribe to our blog.