Study says Iowa could see 'cost avoidance' of $116 million on employee benefits

Savings would come if state workers paid 20 percent of health insurance premiums

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State officials said Monday that a consultant’s review of the state government’s employee benefits program indicates a potential “cost avoidance” of $116 million if all state workers would pay 20 percent of their health insurance premiums.

Mike Carroll, director of the state Department of Administrative Services, said the review conducted by Aon Hewitt -- a subsidiary of Aon Corp., which specializes in human resource solutions – compared of Iowa’s state-provided benefits and time-off programs to other states and private-sector employers revealed trends indicating an opportunity for Iowa to increase the health and well-being of the state employee population.

According to the review, hospital admission rates for state employees are 30 percent  higher than Wellmark’s customer average medical claims, with hospital care for cardiovascular disease recorded as nearly double the Wellmark customer average. State officials said the claims data reinforced the need to evaluate the design of the state’s medical benefits as well as established a business case for a strong wellness program identified in the benefit review.

“The data gathered through the study revealed that 88 percent of state employees pay no monthly premium for their health insurance and a number of key changes are needed to align The State of Iowa’s benefit offerings with the market,” said Carroll.  “We are pleased to share that if these key changes are made, state employees can enjoy an improved quality of life, while also prompting net cost avoidance for the State of Iowa and taxpayers of more than $116 million.”

Based upon the review, the consultant recommended multiple changes to the state of Iowa’s medical plans -- including the addition of a 20 percent employee premium contribution for medical insurance and plan design changes. Also, the addition of a wellness program -- including a wellness premium differential of up to $360 a year -- to encourage participation in wellness activities and behavior change, in order to mitigate the cost of State’s medical plan, decrease absenteeism and improve the productivity and health of its employees.

Michelle Minnehan Golightly, chief operating officer of the DAS human resources enterprise, said the agency also planned to release separate reviews on state employee compensation packages but the data probably would not use the same private-sector companies or states for comparisons – which may not provide parallel comparisons of employee wages with the benefits review issued on Monday.

Carroll said the review of 29,000 state employees in the executive branch and Board of Regents workers covered by the contract with the American Federation of State, County and Municipal Employees (AFSCME) was to provide information to the public and was not intended to influence upcoming negotiations on a new two-year collective bargaining agreement with state unionized employees that will begin in November.

Representatives of AFSCME Council 61 were not immediately available to comment on results of the review.

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