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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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Wellness Programs – New Study Confirms Cautioned Approach

During the past seven years, I have written a fair number of posts regarding wellness programs offered by employers. The core message of all blogs suggests that employers must have realistic expectations about what wellness initiatives will or will not do within the workplace.

A recent randomized clinical study published in JAMA is yet another reminder for employers to have tepid expectations when trying to keep their employees happy, healthy and less likely to incur more health costs. The study found that workplace wellness programs do not cut healthcare costs for employers, reduce absenteeism or improve the health of employees.

From the University of Chicago and Harvard, researchers used a large-scale approach that was peer-reviewed and included a more sophisticated design when analyzing BJ’s Wholesale Clubs. BJ’s has about 33,000 employees across 160 clubs. This analysis compared 20 randomly-assigned clubs that offered wellness programs with 140 BJ’s clubs that did not.

After 18 months of timeline analysis, this study revealed that wellness programs did not result in health measure differences, such as: improved blood sugar or glucose levels, reduced healthcare costs or absenteeism, or impacted job performance in a positive manner. In other words, employees with a wellness program did not experience reduced healthcare costs and other desired affects. I suppose one could argue that a year and one half was not enough comparison time to develop these conclusions.

One of the authors of this study, Katherine Baicker, dean of the Harris School of Public Policy at the University of Chicago, put it quite succinctly in a Kaiser Health News article: “[But] if employers are offering these programs in hopes that health spending and absenteeism will go down, this study should give them pause.”

What are your expectations about workplace wellness? Do you believe such programs, when appropriately and thoughtfully implemented, will greatly mitigate your healthcare costs, improve workforce productivity and reduce absenteeism? Maybe you feel these programs are a waste. From our 2012 Iowa Employer Benefits Study, employers shared their perceived ‘return on investment’ on the programs they currently had in place.

According to a 2013 “Workplace Wellness Programs Study” by researchers at the RAND Corporation, these programs only have a modest effect. This runs contrary to claims made by wellness firms that sell workplace wellness programs to employers. The report found that people who participate in wellness initiatives lose an average of only one pound a year for three years. Another finding is that employee participation in such plans “was not associated with significant reductions in total cholesterol level.” Smoking-cessation programs show some potential, but only “in the short term.”

Most likely, both skeptics and supporters of wellness initiatives will find ammunition to support their cause. Workplace wellness programs have grown to an $8 billion industry in the U.S., primarily as a direct result of rising employer health insurance costs.

This latest report may help stabilize any pre-conceived lofty expectations each of us may have about the benefits of workplace wellness programs. However, it must be noted that some employers have found value in these programs.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.

20th Iowa Employer Benefits Survey Now Underway!

At Haystack Rock in Cannon Beach, Oregon (2002).

This year marks the 20th year that we have been performing the Iowa Employer Benefits Study©. When this study began in 1999, I had two toddler daughters, one of which is now two years post-college and working in the Twin Cities, while the other is about to graduate from St. Olaf College. Between my daughters and this survey, it’s easy to measure just how fast the years have flown by!

With the 2019 survey, as in the past, we plan to randomly survey at least 1,000 Iowa employers from a variety of sizes and industries. We have found this number of respondents to be extremely beneficial when comparing various industries and size categories to one another.

However, contrary to the past, this year’s survey is being conducted three months earlier in the year, allowing the study to become available in July. By doing so, many employers will have access to these results while strategizing potential changes to their benefit plans during the fall renewal season. Because of this, we are excited about performing this survey process earlier.

If you happen to be an employer who is randomly-selected to participate in this year’s survey, we would greatly appreciate you taking the time to share your confidential data with us. By doing so, you will receive, via email, the Iowa Employer Benefits Study© report that summarizes key findings. Please know that your information will only be used on an aggregate basis and combined with data from other participating employers. Most importantly, we will protect your anonymity and the confidentiality of your responses to the fullest extent.

Twenty years is a milestone for us. As mentioned, much has changed over these two decades, but during this time, I have always been very grateful to all Iowa employers who have taken the time to share their information with us. We take our work seriously and will always value your trust in our survey.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.