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Healthcare Patients Want ‘Good Value’ for the Money

Cost +Quality = Value

…we are now entering into a new era in healthcare that appears to alter our behaviors toward the care we are receiving…

Similar to national data, Iowa spending on healthcare and insurance premiums has risen at historically lower rates in the last three years. However, according to the Kaiser Family Foundation, only three percent of Americans said health costs are “going up slower than usual,” and 52 percent said costs are “growing faster than usual.”  The other 35 percent say costs are about the same.

The amount that Iowans with employer-based health insurance pay for premiums has risen 167% in the last 14 years, while Iowa weekly wages have risen about 40%* and general inflation 43 percent. As we know, our incomes are suppressed by increasing health premiums, which certainly impact take-home pay and, ultimately, our capability of making consumption trade-offs for other priorities, such as food, shelter, education and retirement savings.

In addition to the premium cost, Americans are asked to pay increasingly more of the medical care they seek, through higher deductibles, copayments and out-of-pocket maximums. With lower-relative income, finding the financial resources to pay is problematic for many employees, causing them to put off receiving care or incur more medical debt.

In a recent Wall Street Journal article, Drew Altman, president and CEO of the Kaiser Family Foundation, wrote that Americans with health coverage care about:

  • Their premium costs, or the share of premiums they pay if they have employer coverage;
  • Their deductibles and other forms of cost-sharing, especially when deductibles have been rising steadily;
  • Their drug costs;
  • Whether they can go to the doctor or hospital they want without having to pay more;
  • The hassle and red tape in healthcare and health insurance. People care about getting information to be informed about their health and make smarter insurance and healthcare decisions;
  • Seniors care a lot about Medicare and sometimes vote on this issue.

Most people would agree to this list.

However, Mr. Altman then mentioned that “Americans don’t care as much as experts do about improving quality and eliminating unnecessary care. In general, people think that quality is good and they want more care not less.”

Perhaps this was true in the past, but we are now entering into a new era in healthcare that appears to alter our behaviors toward the care we are receiving. One prime example is a recent study that says cost is not the most important determinant of the care we seek – it is quality. From this report, when patients are provided hospital safety score grades and cost information together, they will choose safer hospitals 97 percent of the time, REGARDLESS OF COST.

Of course, this may also depend on WHO pays…the patient or a third party.

Making sure that such report cards reflect the most relevant performance measurements will be extremely important – if not critical – to the patient. Unfortunately, we don’t have this luxury at the present time. A March article on the Johns Hopkins Medicine website reports that national rating systems on the quality and safety of hospitals are too confusing because each will stress different measures from each other – sometimes providing a wide variation of grades on the same hospital (study source: Health Affairs).

In my blog last August, I wrote that the Urology Department at Cleveland Clinic received a top score by the U.S. News & World Report, yet received the lowest possible score by Healthgrades for prostatectomy outcomes. This type of reporting will only serve to confuse the general public before seeking care.

As healthcare delivery and payment initiatives continue to morph, look for quality and safety measurements to emerge with the cost component. The convergence of reliable safety and quality information with ‘real-time’ cost information can eventually catapult the healthcare industry into the 21st century.

Until then, many hurdles must be successfully cleared in order to achieve the desired value we all want.

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

*2014 data from the Iowa Workforce Development is not yet available, and therefore, excluded.

Psst…Guess Which Areas in Iowa Offer More Employee Benefits?

Knowledge Is Power“All politics is local.” Tip O’Neill, Former Congressman from Massachusetts

To rephrase this famous quote:

“All employee benefits in Iowa are local.”

Allow me to explain…

Using the Lindex Radius, a simple interactive feature within our Lindex Online® benchmarking program, I compared the prevalence of employers offering two important benefits – health and dental plans – to statewide averages in seven different Iowa metropolitan areas. The seven locations are:

  • Cedar Rapids (zip code: 52401)
  • Council Bluffs (51501)
  • Davenport (52801)
  • Des Moines (50309)
  • Dubuque (52001)
  • Mason City (50401)
  • Sioux City (51101)

The Lindex Radius allows the user to insert their desired zip code and radius (in miles) to determine the information being sought for any given location within Iowa*. For example, using a 50-mile radius (regardless of employer size and industry), the user can quickly learn the percentage of employers who offer health insurance coverage for each of the seven Iowa locations. In fact, when compared to the statewide average, the variances of offering health coverage are quite startling.

Using the statewide average as the baseline (set at zero), the graph below displays the variance in the percentage of employers offering health coverage to their employees in each location:

Health Coverage Offered by  Major Cities in Iowa

So what do these variances tell us about health coverage in Iowa?

Location can matter a great deal!

Employers within a 50-mile radius of Des Moines offer health coverage about six percent more than the statewide average, while Cedar Rapids, Mason City and Davenport-area employers fall below the statewide average by five percent. From this, we also learn that 19 percent more Des Moines-area employers offer health coverage when compared to Dubuque-area employers! The margin of error of this data does vary by zip code and desired radius.

The graph below shows the variances for each Iowa location offering dental coverage:

Dental Coverage Offered by  Major Cities in Iowalide3

When offering dental coverage to employees, Des Moines–area employers offer this benefit 19 percent more than the statewide average. With the exception of Davenport, employers in the other five cities offer less dental coverage compared to the statewide average, while Dubuque lags with this particular benefit. Other benefits found within our study, including: retirement, group life, short- and long- term disability, vision, sick leave and PTO also show a great deal of variance between Iowa locations.

It is important to note that both employer size and industry will greatly impact the averages found within each metropolitan area. Our previous studies confirm that as employers grow in size, their ability to offer more benefits will expand. Governmental (state and local) entities are more likely to offer some key benefits compared to, say, the retail industry.

Employer respondents within our surveys are randomly-selected, which makes the results highly-reflective of the overall employer population. Within any given geographical area in the state, the size and industry of employers will greatly impact the scope of benefits offered for each particular area.

Using Lindex Online and the Lindex Radius will ensure that employers remain competitive within their specific ‘turf’ of operation. As we all know, when assessing the labor pool within a given market, the attraction and retention of employees will always be an important consideration for any employer.

Knowledge of pertinent facts does indeed trump pure guesswork!

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

*The margin of error must be considered when using the Radius filter. If the radius is set at too few miles within a desired zip code, fewer survey respondents will appear, resulting in a higher margin of error calculation which will provide less data credibility to the user.

Lindex Online® – Hitting the Mark in Iowa

Lindex Online“Torture the data, and it will confess to anything.” Ronald Coase, Nobel Prize Laureate

Throwing darts at a dartboard takes great skill, especially if one is incented to consistently hit the bulls-eye. For most others, it is merely a game of chance – so what if the errant dart lands in a different zip code from the bulls-eye? The difference between those throwing the darts can boil down to one word – ‘motivation.’

Due to the sheer cost of offering benefits to employees – thanks largely to escalating health insurance premiums – employers are increasingly motivated to rely on credible, localized data to make decisions about employee benefits. According to the Bureau of Labor Statistics, the cost of employee benefits constitutes a significant percentage of total employee compensation – roughly 31 percent for private organizations and 36 percent for state and local governments!

An essential, on-going source of Iowa benefits information is summarized in our annual ‘Iowa Employer Benefits Study,’ which now enters its 17th year. This report provides overall statewide data that combines all industries based on employer-size categories, which is important for employers who wish to benchmark their plans with other similar-sized employers. This study gives employers a ‘birds-eye’ view of overall benefits offered by Iowa employers, but it does not compare employers to key industries – or by employer location.

But Lindex Online® does!

Lindex-Online---IBB-Logo-50

Lindex Online is our innovative web-based tool we designed to ‘slice-and-dice’ the myriad of data from our annual survey into meaningful benchmark information that compares key benefits offered by employers.

Lindex Radius

Lindex Radius is a benchmark filter

An online purchaser, such as an employer, broker/consultant, association or insurance carrier selects a ‘filtering’ tool that compares the client organization to six key industries – based on seven different employer-size categories. Additionally, the on-line purchaser can benchmark their benefits using the Lindex Radius, which combines only those surveyed employers who fall within a designated mile-radius of the client zip code (see Lindex Radius on right).

Key benchmarked industries include:

  1. Overall (All industries combined)
  2. Manufacturing
  3. Retail
  4. Finance, Insurance, Real Estate
  5. Other Services
  6. Government and Education
  7. Healthcare and Social Services

Depending on the number of respondents within each survey, we may consider adding a few more industries to Lindex Online in the future.

Because employee benefits data can be both voluminous and complicated for an employer, Lindex Online distills this data into one relevant number to provide clarity – known as the Lindex®.

2014 Lindex Gauge

Overall 2014 Lindex score in Iowa is 74.

The Lindex is a complex algorithm that measures the types of benefits offered, preferences employees have for each specific benefit, and employee costs associated with those benefits. Ranging from 0 to 100, with lower scores indicating fewer and more expensive benefits, and higher scores indicating more comprehensive benefits being offered at a lower cost, the Lindex allows the benchmarked employer to compare their overall benefit offering to other employers on an on-going basis.

Without great practice (and torture!), Lindex Online will guide your dart to the intended bulls-eye. To learn more about the features and cost of Lindex Online, please contact us.

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