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Shifting Health Costs to Employees – Pre vs. Post ACA

Consumer-Driven Health Care in IowaAccording to various media reports and a recent USA Today article, Americans continue to pay more of their own healthcare costs.

But there was one sentence in a December 3, 2014 Wall Street Journal article that got me thinking. The sentence reads: “The trend is being accelerated by the Affordable Care Act (ACA) because many private plans sold by the law’s health exchanges come with high-deductible health plans.”

Can this be true? If so, what is happening in Iowa with employer-sponsored health plans since the ACA was passed in 2010? From our vault of study data, I decided to perform a quick ‘audit’ of pre-and-post ACA trends in Iowa on this particular issue.

My findings appear to be a bit different than conveyed by the WSJ article – at least for our state of Iowa.

To clarify, our survey does not exclusively analyze the health plans offered within health exchanges. After all, the ‘public’ exchange has only been operating since the beginning of 2014. But rest assured, because we randomly select employers to participate in our surveys, a few employers may have purchased their group health plans through the Iowa Partnership Exchange and participated in our 2014 survey. Realistically, a scant number of these employers would have affected our overall findings.

PRE and Post ACA Deductibles
The chart below illustrates the average single health plan deductibles offered by Iowa employers during the period 2005 to 2014. All group medical plans within our data include PPOs, HMOs, Indemnity and consumer-driven health plans. Looking at the five-year period prior to 2010 (the year the ACA became law), the deductible increased from $750 in 2005 to $1,061 in 2009 – an increase of 41 percent. Yet, when we look at the five-year period that follows 2009, the deductible growth appears to be more tame – increasing only 13 percent ($1,247 in 2010 to $1,410 in 2014).

All Medical Plans DeductiblesPNG

Many key ACA provisions did not take effect until sometime after 2010, so we cannot completely comprehend how the ACA will ultimately impact employer-sponsored plans on cost-sharing arrangements and cost. When attempting to clearly understand the ACA impact, this comparison is only one of many metrics that will need to be assessed in the years to come.

PRE and Post ACA Out-of-Pocket Maximums
Similar to the above deductible chart, the chart below illustrates the average single out-of-pocket maximums (OPMs) offered by Iowa employers from 2005 to 2014. Again, the five-year period prior to the 2010 ACA implementation year shows that OPMs increased by 19 percent, compared to 13 percent since 2010.

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There are many variables to consider that are not addressed in this blog, such as average health plan designs within the public exchange versus outside the public exchange. Assuming a healthy number of employers enroll in the public exchange, it will take a few years to have a better accounting of such differences. At this point, plan design changes continue to show additional cost sharing with employees and their dependents, just not at the accelerated pace that some may think.

What will the future eventually reveal about our ever-changing health insurance world? Stay tuned…

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16 Candles

Sixteenth Iowa Employer Benefits StudyWe have just launched our annual Iowa Employer Benefits Study©. As with all previous studies, I’m looking forward to this year’s survey for the following important reasons:

• This will be the 16th Study conducted since we started this particular survey in 1999. Though I would never compare this ‘baby’ to my two beautiful daughters, it sure has evolved considerably since inception!

• Two new modules of questions will be added in this year’s survey.

1.   Affordable Care Act (ACA) – This module will address whether Iowa employers are using healthcare exchanges (marketplaces) — either public or private. If not, we’ll determine whether they plan to offer health coverage through some type of marketplace in the future. We will also find out whether employers are using a Defined Contribution approach for health coverage or offering it as part of a cafeteria plan.

Along with many other ACA-related questions, we will learn whether employers plan to:

  • Add a spousal surcharge
  • Require an employee’s spouse to get coverage through their own employer
  • Adopt a value-based insurance design for health coverage
  • Offer tiered-provider networks to promote high-value providers
  • Eliminate health coverage for all employees
  • Eliminate health coverage for part-time employees
  • Institute a wellness program
  • Add wellness rewards or penalties

2.   In our 2013 Study, we asked Iowa employers to rate hospitals and physicians on 11 performance indicators using a 10-point scale. In addition, employers were asked to rate how much they ‘trust’ hospitals and physicians. In this year’s survey, we are going one step further. We are inviting employers to rate which of the 12 performance indicators are most important to them. From this, we will prioritize which of the 12 indicators are most important from the employer perspective.

As with the past 15 Studies, we will continue to ask our core questions about the benefit components being offered by Iowa employers. New information gained from this survey will be reflected in our Lindex Online Iowa Benefits Benchmarking tool. The 2014 results should be available in late August/early September. As always, our intent is to keep our annual Study both fresh and relevant within the changing world of employee benefits.

If your organization is randomly selected to participate in this year’s Study, we highly encourage you to share in our celebration by participating in this important survey. 

I always take great delight in adding yet another candle to our cake!

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Employer Perceptions on Healthcare System – a National Perspective

National Healthcare PerceptionsDeloitte Consulting develops thoughtful studies on nationwide employer practices, specifically relating to employee benefits and healthcare issues. Their 2013 Survey of Employers study is no exception. Results from this particular study provide a great framework to the findings we will be releasing in April.

Deloitte’s topic within this report? How employers perceive the healthcare system. Their findings are both interesting and concerning for all of us. I’m not surprised, nor should you be.

The cliff notes from this survey reveal the following:

  • Employers view the healthcare system as wasteful and expensive.
  • Keys to improving the system are increased transparency around pricing of specific medical products, services and procedures. In addition, employers want “clear, accessible information about the performance of care provided by doctors.”
  • Despite almost four years into implementation, employers still do not understand the features of the Affordable Care Act (ACA).
  • Only 22 percent believe the ACA will reduce costs by 2019, and just 19 percent think the law will improve quality-of-care during that time.
  • Only 33 percent of employers grade the performance of the healthcare system as “A” or “B.”
  • 38 percent rate our healthcare system a “C,” and 29 percent rate it a “D” or “F.”

The big takeaway is that employers are frustrated over a perceived lack of ‘value’ in the price they pay for health coverage. The healthcare system is underperforming in numerous ways.

Keep this topic in mind and visit our website in April, as we will be releasing Iowa-specific information that reveals employer perceptions on 11 different performance indicators, in addition to the ‘trust’ employers have in their hospitals and physicians. I will also be releasing a white paper titled, “Voices for Value: Iowa Employer Perceptions of the Iowa Healthcare Provider Community.”

Stay tuned as this topic will only gain greater traction over the next months and years to come.

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