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Iowa Number$ – Size DOES Matter

Data from Iowa Employer Benefits StudyIt appears that employer size really DOES matter – especially for employees with family health coverage who work at the largest organizations here in Iowa. A great example can be found in the two graphs below.

In 2012, Iowa employers with fewer than 250 employees (over 99 percent of employers in Iowa fall into this category) asked their workers with single health coverage to contribute $1,108 annually for their health insurance. This amount has increased by 53 percent since 2005. Employees who are employed in organizations with 250 or more employees contributed $135 less annually for health coverage (a 48 percent increase during this same period).

 David P. Lind Benchmark

To compound matters, employees at larger organizations receive dramatically lower deductibles (and lower out-of-pocket maximums). At large firms, the average employee with single health coverage receives an average deductible of $895, versus a $1,654 single deductible at organizations smaller than 250 employees.  In addition, the out-of-pocket maximum at smaller employers is $3,320 while the large organizations average $2,439. These are BIG discrepancies!

The differential for employees with family coverage is even more pronounced. Employees in the larger organizations contribute $3,831 annually for their health coverage. Likewise, employees in smaller organizations contribute $1,318 MORE annually, or $5,149.

 David P. Lind Benchmark

As you may have guessed, employees in larger organizations have, on average, a lower family deductible than employees who work for smaller employers. The average family deductible for large employers is $1,880 while the average deductible for smaller organizations is $3,559 (a variance of $1,679!). The family out-of-pocket maximums for the larger and smaller organizations are $4,699 and $6,948, respectively.

In the late 19th Century, British Prime Minister Benjamin Disraeli said, “There are three kinds of lies:  lies, damn lies, and statistics!”

Why is there such a great variance between large and small employers? Frankly, it has more to do with economics than with employer generosity. For example, to help mitigate health costs, larger organizations are more likely to self-insure their health plan(s), which allows for greater flexibility with plan design and risk management. About 97 percent of employers in Iowa employ less than 50 employees, and many such employers do not have the luxuries afforded to the very large organizations.

Therein lies the rub – that fine line between ‘lies’ and ‘statistics!’

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Number$ in Iowa

Lindex StatisticsPeriodically, I like to share some interesting results from previous Iowa Employer Benefits Studies© that may possibly reflect trends on what Iowa employers are doing regarding various benefit offerings.

The first chart relates to the prevalence of vision coverage offered by employer size. As is the case with most benefits monitored, the larger organizations are more likely to offer benefits – and, vision coverage is certainly no exception. Urban organizations are more likely to offer vision coverage in 2012 (49 percent) when compared to their rural counterparts (28 percent).

David P. Lind Benchmark

Most of the large employers tend to offer pre-tax premium plans for their employees, with about 70 percent of all Iowa employers offering such a ‘benefit.’ Considerably fewer employers offer medical spending and dependent care spending accounts (53 percent overall). This particular chart reflects results from the 2012 Study.

David P. Lind Benchmark

This last chart shows the percentage of organizations offering dental plans during 2009, 2010 and 2012. Interestingly, the largest of employers (1000+) reported a decrease in dental coverage offerings. Our 2013 Study (to be released this Fall) will either confirm this as a trend or an anomaly. One great thing about performing studies, is having the ability to detect (or not) emerging trends over time. However, prematurely announcing new trends can be dangerous, unless new data can conclusively confirm emerging changes that ultimately become trends.

David P. Lind Benchmark

“The common facts of today are the products of yesterday’s research.” – Duncan MacDonald.

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New Era in Iowa Healthcare (Needed)

Value in Health Care DeliveryI’ve recently been visiting with healthcare providers around Iowa discussing how employers view health insurance and the value of healthcare delivered to their employees and family members. The discussion has been both open and honest. In fact, Iowa hospitals and physicians appear to be both interested and concerned with what they are learning.

My presentations evolve around four key observations that I have made over the past 29 years, both as a benefits consultant (my past life) and as a researcher. The intent of sharing these observations with the provider community is to convey the ‘pain points’ experienced by Iowa organizations regarding exorbitant health care costs and to begin a new dialogue of collaborating resources to find meaningful solutions in our health care world. After all, we are all in this mammoth problem together, right?

Here are my four observations:

  • Observation #1 – Health insurance premiums for Iowa employers have increased by 164 percent from 1999 to 2012. A great deal of uncertainty exists about the future of the health care ‘system.’

Year-after-year, employers continue to pay a handsome portion of the insurance premium. We know that take-home pay continues to erode for employees, as cost-sharing continues upward through increased payroll deductions and benefit plan alterations that include both higher deductibles and out-of-pocket maximums. This is clearly unsustainable for ALL of us. For communities to remain healthy and vibrant, employers must find solutions to this escalating problem.

  • Observation #2 – Iowa employers continue to embrace wellness initiatives, as they desire to have a healthier and more productive workforce.

Gradually we are morphing into a new social conscience of embracing healthier lifestyles – as more Iowa employers continue to assess and implement wellness efforts. We also have the Healthiest State Initiative and Blue Zones Projects™ in the news. The statewide Capital Crossroads Community Wellness Study reported that Iowa employers are open to partnering with community-wide wellness programs. For those employers currently without wellness programs in place, only three percent feel that wellness programs don’t work! This is encouraging.

  • Observation #3 – Lack of transparency in health care is a major concern and frustration to Iowa employers and their employees. Health insurance has become a major distraction to employers.

There is a growing belief that the ‘market’ approach does not work for ‘buyers’ of health care. In the next few years, will we see a gradual shift by employers to a more defined contribution approach by limiting financial support for employee premiums? Will value-based benefits begin to take hold that will nudge employees to use ‘higher value’ health providers and utilize approved medical procedures requiring less out-of-pocket exposure? Transparency of costs and outcomes are essential for the private market(s) to exist as health providers WILL definitely be held more accountable in the future.

The Accountable Care Act (ACA) will not solve the cost issue for employers and their employees. In fact, the ACA adds greater complexity in the insurance markets, forcing employers to search for opportunities that will relieve tensions and uncertainties. A ‘Provider Renaissance’ is sorely needed to deliver great value for the insurance premium being paid.

So what does all of this mean to the healthcare provider community?

Employers want to TRUST that hospitals and physicians will:

  1. UNDERSTAND the employer perspective, which is the need to be competitive by having a healthy workforce. Health providers must have the employers’ best interest in mind.
  2. CONSISTENTLY provide quality outcomes at reasonable costs – i.e. receive greater value for the dollar paid.
  3. COMMIT to do these critical things on an on-going basis – long term.

As mentioned in a prior blog, our fragmented delivery system is really not a “system,” but rather a concoction of multiple temporary or expedient remedies that attempt to solve our problems as we confront our health care needs. No one is at fault, yet we ALL are.

Now is the time for employers and the healthcare provider community to work together – starting with a meaningful and trusting dialogue that will result in concrete solutions.

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