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New Kaiser Survey on Employer Health Coverage Released

National Study on Employer Health CoverageNearly every September for the past two decades, I have released our survey findings from the Iowa Employer Benefits Study and, during that same month, would eagerly await the results from the annual Kaiser Family Foundation Employer Health Benefits Survey. The Kaiser findings put a complementary national perspective to our Iowa results.

Unfortunately, due to the Covid-19 pandemic, I pumped the brakes on surveying Iowa employers for this year. Kaiser, however, did pursue their national survey and it was released a little later than usual – on October 8.  The results provide an important glimpse into what is happening to employer-sponsored health insurance around the U.S.  Overall, Kaiser surveyed 1,765 non-federal public and private organizations with three or more employees, and from this number, 540 employers were located in 12 Midwestern states (an average of 45 employers per state). The Kaiser study, I must mention, does not break out the results by each state, only by region.

Key Findings by Kaiser

The Kaiser survey is very helpful because it documents national health trends for employer-sponsored plans. Some of the key findings in 2020 include the following:

  • About 56 percent of employers offer health benefits, a percentage that remains unchanged over the past five years. Similar to Iowa, the larger the employer, the more likely health benefits are offered. About half (53 percent) of U.S. organizations with fewer than 50 employees offer health coverage, and nearly all (99 percent) of the organizations surveyed by Kaiser with at least 200 employees offer health coverage.
  • The average single and family premiums increased by four percent over the past year, while worker’s wages increased by 3.4 percent and inflation increased by 2.1 percent.
  • The average annual premium for single health coverage is now $7,470, while the average family health premium is at $21,342. Over the last five years, the family premium has increased over 22 percent, and over the last 10 years, it has increased 55 percent.
  • On average, covered workers contribute 17 percent of the total single coverage premium and 27 percent of the premium for family coverage. In our 2019 Iowa study, we found that covered workers contributed 18.6 percent for single coverage while workers for family coverage contributed 30 percent of the premium.
  • The average single deductible found by Kaiser now stands at $1,644, which is remarkably similar to last year’s $1,655 average. In 2020, 83 percent of covered workers have a deductible in their plan, similar to last year.
  • Most large organizations (81 percent) offer at least one type of wellness or health promotion program. However, among those that offer the coverages, only 11 percent) view the programs as “very effective” at reducing the organization’s health care costs.
  • About 83 percent of surveyed employers who offer health benefits say they are satisfied with the overall choice of providers available through their insurance plans, however, only two-thirds (67 percent) say the same about their mental health and substance abuse networks.

The 2020 Kaiser survey was conducted from January to July, with about half of the interviews conducted before the full extent of the pandemic had been felt by surveyed employers.  Kaiser President and CEO Drew Altman acknowledged, “…our survey shows the burden of health costs on workers remain high, though not getting dramatically worse. Things may look different moving forward as employers grapple with the economic and health upheaval sparked by the pandemic.”

Because of this, next year’s survey will provide a more realistic look at how the pandemic may have impacted employer-sponsored health benefits in the U.S.

To learn more about the Kaiser study, the article was published in the peer-reviewed journal Health Affairs.

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2020 Iowa Employer Benefits Study and COVID-19

Given the local and worldwide circumstances due to the COVID-19 pandemic, we are all taking things “day-by-day” for at least the foreseeable future – both personally and professionally. The ‘predictable’ lives we had just a few short weeks ago, no longer resemble what we have today.

Because of the unprecedented uncertainty for all businesses in this ‘new’ economic climate, we have found (while pursuing the 2020 survey) the response level of Iowa employers has dropped significantly compared to last year at this time. Frankly, ALL organizations are going through massive business and personnel upheavals that will require a ‘reboot’ of their workplace practices – and for some, perhaps ensuring mere survival. In light of this, because we have an annual goal of surveying 1,000 organizations, it will be very difficult to successfully ‘invite’ Iowa employers to participate in this year’s survey. My desire is to be mindful of the key issues facing employers and to refrain from our survey activity.

Due to this development, and with regret, I must suspend this year’s survey. At some undetermined time in the future, we will pursue a revised survey using newer, perhaps more pertinent questions, to gauge the benefit practices of Iowa employers.

I look forward to that time!

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While at home the past few weeks, I read the best-selling book by Erik Larson, “The Splendid and the Vile.” This book describes the one-year period – 1940 to 1941 – when Germany was incessantly bombing Great Britain, more specifically London. Despite not having the military support of the United States at that given time, the grit and courage that British Prime Minister Winston Churchill demonstrated would fundamentally decide the fate of his country, and frankly, the entire world.

During that difficult period of austerity, Churchill’s actions and words provided the necessary inspiration for his country citizens to persevere. Two of Churchill’s inspiring quotes are most poignant for me. No matter how difficult the circumstances are for us in today’s world, we have hope to overcome these obstacles.

“Victory at all costs. Victory in spite of all terror. Victory however long and hard the road may be. For without victory there is no survival.”

“It’s not enough that we do our best: sometimes we have to do what’s required.”

It is no wonder why Churchill is considered to be one of the most influential leaders of the 20th century.

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Three Key Health Plan Comparisons Between Iowa and U.S.

Three important health plan components that are first and foremost on the minds of employers when assessing their annual plan offerings, include: health premiums, employee health coverage contribution and deductibles employees are required to pay. It is natural, therefore, to compare Iowa averages to national norms, thanks largely to the Kaiser Family Foundation’s Employer Health Benefits Survey, which was just released on September 25. Kaiser Family Foundation (KFF) is a nonprofit organization based in San Francisco, CA.

Brief Survey Background

Since the year 1999, the KFF has been performing their national survey of employer health plans, the same year that we began our Iowa Employer Benefits Study©. For the record, there was no particular reason that 1999 was the base year used by KFF and our organization, but speaking for myself, I’m happy that we can use the annual KFF study as a measuring stick to our statewide annual results.

Before I share the graphic comparisons, I must comment that surveys can vary from one another using slightly different methodologies, and there is no exception with the two studies being compared in this blog. The largest difference is that KFF is a national survey, which in 2019, randomly-selected 2,012 non-federal public and private organizations with three or more employees. Additionally, KFF asked another 2,383 organizations a single question about offering health coverage.

The Iowa Employer Benefits Study© is a statewide-only survey. Each year, we seek to have at least 1,000 organizations participate.  These organizations are randomly-selected to ensure that results will reflect the overall population of organizations within Iowa. Although we survey employers with at least two employees, we do not actively randomly-select organizations with 2 to 10 employees. During the survey process, however, if respondents fall into this size category due to downsizing, we will include their data within our report.

It is important to note that Iowa organizations can also be surveyed by KFF, but the number is considerably fewer than our goal of 1,000 organizations. In 2019, for example, KFF surveyed 612 organizations in 12 midwestern states, including Iowa, which averages out to 51 organizations for each state. This Midwest average is consistent with prior KFF surveys.

Health Plan Premiums

Since we released our study in early August, we learned that Iowa employer-sponsored health premiums increased by 7.1 percent during the past year, which is slightly higher than the KFF national average increase of 3.4 percent for single and 5 percent for family coverages. One explanation for this variance between surveys can be that KFF may have compared the actual premium change from 2018 to 2019 – AFTER plan design changes were made. Our survey, however, asked Iowa employers to share their rate adjustments (e.g. increase, decrease, no change) during the past year BEFORE plan design changes were made – subtle difference, but important.

The annual KFF single premium in 2019 is $7,188, which is merely $171 higher than the average Iowa single premium of $7,017. Statistically speaking, the single premiums are in a dead heat with each other. As for family premiums, the KFF premium is now at $20,576, which is $1,241 higher (or 6.4 percent) than Iowa’s $19,335. We often hear that Iowa’s medical costs are lower than the national averages, which is a true statement. However, it does appear with the latest data available, Iowa is inching closer to the national premium averages.

Since 1999, health premiums from both studies show very similar results when it comes to growth. Below is a graphic that superimposes the KFF premiums to the annual Iowa history of single and family premiums. The premium increases are staggering for both, but equally horrific is that the Iowa premiums (both single and family) have increased slightly higher compared to the national norms (denoted in green font).Employee Contribution as a Percentage of Premium

As the health premiums change each year, usually through increases, employers are forced to make decisions on how much to shift this increased cost to employees, most often through health plan design changes and having the employee assume more of the premium burden. One way to measure just how much the employer wishes the employee to assume is illustrated in the graphic below.

From this graphic, Iowa organizations and their national counterparts are nearly identical as to the percentage of the total premium that is assumed by employees for both single and family coverages. For single coverage, Iowa employees pay 19 percent of the total single premium, while employees elsewhere contribute 18 percent of the single cost. As for family coverage, employees in both Iowa and national organizations identically pay 30 percent of the total family cost.Single Health Deductibles

KFF’s report shows that, on a national basis, the average single deductible is $1,655, which is $537 lower than the Iowa average of $2,192. Part of this difference may be explained in the composition of small employers participating in each survey. As we know from previous results, smaller employers are less likely to control their health costs when compared to larger, more sophisticated employers – employers that have more tools at their disposal to keep their rates down (e.g. administration costs, self-insuring, etc).

Perhaps a larger mix of smaller employers in the Iowa study could very well influence the overall deductible averages being higher – however, this is pure speculation. NOTE: Family deductibles were excluded in this comparison due to insufficient historical data from KFF.

The following graphic displays how Iowa single deductibles compare to national norms.Conclusion

In past years, the KFF results most always demonstrated higher national health premiums compared to Iowa. However, despite higher premiums, employees in the U.S. paid, on average, a similar percentage for their health premiums than Iowans, except for family coverage, where they paid a lower percentage compared to Iowans. In 2019, however, Iowans have ‘regressed to the mean’ and now appear to be paying a similar percentage of the premium for both single and family coverages.

Despite having lower premiums, Iowa workers are asked to pay higher deductibles compared to their national counterparts, which makes paying for medical services a bit more challenging each year. Tracking these key components are vital to learning how Iowans fare with the rest of the country, and it appears that Iowa is becoming ‘more the norm’ in some of these components.

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