Whether it is a morning jog or perhaps a bike ride, I find great pleasure in determining the measureable progress I have made both in distance and time.
The same can be said about reviewing data from our past studies that cover a longer period of time. Doing so helps gauge a better understanding of trends occurring within benefits, specifically as it relates to health insurance components. As we are keenly aware, what we pay for our health insurance and the healthcare we receive continues to nip at take-home pay and the ability to afford other necessities, such as food, clothing, housing, etc.
A recent study commissioned by 25 local Iowa United Way associations indicated that for almost a third of Iowans (31 percent), the income they receive does not allow them to cover the basic costs of living. In fact, two parents working full-time in this state would need to collectively earn $23.34 per hour over a 40-hour week to cover basic household costs. With cities, counties and states debating what specific minimum wage amount should be acceptable (and affordable), this topic will not go away anytime soon.
Knowing that components of health insurance plans, such as premiums, deductibles and out-of-pocket maximums continue to push northward, this also impacts family budgets and whether they have adequate health coverage. By ‘adequate,’ I am referring to cost-sharing responsibilities that may overwhelm lower-earning Iowans. According to the Kaiser Family Foundation, Iowa happens to have a lower-than-average rate of uninsured (six percent). Nonetheless, even those who do have coverage continue to experience higher cost-sharing arrangements that may cause people to seek less care – which is a plausible reason we see moderation in the growth of health cost spending.
With this in mind, I want to take a quick look ‘back’ on trends for a few health insurance cost components confronted by Iowans with employer coverage. Covering a six-year period (2009 – 2015) from our annual ‘Iowa Employer Benefits Study©,’ we learn that the average weekly wage from the Iowa Workforce Development (IWD) rose annually by 2.6 percent, while premiums increased during that same period by 9.2 percent prior to any plan designs changes made to lower the increase. Altering plan designs typically result in higher cost-sharing for employees, something that employers are reluctant to do. After alterations, the average annual premium increase was 5.5 percent, still over twice the weekly wage increase.
In addition to premium inflation, Iowan’s with employee-only coverage have experienced increasing deductibles by eight percent annually, from $1,061 to $1,662. The total cost-sharing exposure Iowan’s pay for medical costs (e.g. out-of-pocket maximums) increased by 6.1 percent annually from $2,210 to $3,151. Finally, employees with single coverage have contributed 6.2 percent more annually through payroll deduction for their cost of the employer-sponsored coverage.
Here is a summary of the six-year history.
As payment responsibility for medical costs continues to shift from employers to employees, a new dynamic of patients becoming the ‘new payer’ profoundly impacts the receivables for the provider community, specifically hospitals. Though not new information, this fact can and will change how financing options may evolve from providers to help patients navigate their financial obligations and ensure that patients are well educated about the cost of their care. Insurance companies, for their part, may also explore innovative financial solutions to help their insureds assume payment responsibilities – possibly a foray into a new market of opportunities.
Trends found in this six-year period will most likely continue well into the future, and the evolution of how we pay for our healthcare will require off-the-beaten-path solutions to establish new funding mechanisms for an increasing number of patients.
Over time, the compounding of these trends will affect more Iowans, revealing that many will no longer be faceless and nameless, rather, they may become us.
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