ARTICLE

7% Iowa health insurance premium rise smallest in 14 years

Affordable Care Act may be cause for slowdown

The runaway cost of health insurance for employers slowed in Iowa to a 7 percent average increase, according to a major survey.

The increase was the smallest since David P. Lind Benchmark of Clive began conducting its Iowa Employer Benefits Study 14 years ago in 1998. The average annual premium for all Iowa employers rose to $5,456 for employee-only coverage and $13,557 for full family coverage.

The 2012 increase compared to an increase of 10.1 percent in 2011. Company President David Lind said that while the increase is more manageable for employers, much of the news still isn't good.

"Despite it being a decelerating decrease, we continue to see employers making changes so that health plan deductibles are higher and co-payments are more," Lind said "We continue to see cost shifts happening (to employees) but not to the extent we have in the past few years."

Of the two primary reasons cited for the deceleration in health premium increases, only one could be seen as good news.

Lind credited the slowdown in cost escalation to a slowdown in the rate of increase for prescription drugs and medical care, and to a slowdown in utilization of medical service by insured employees and their families.

Lind attributed to utilization slowdown to the weak economy.

"People tend to delay or avoid seeking health care services when their income is suppressed," Lind said.

The effect of more stagnant wages on health care consumption decisions may be amplified by the increasing amount of health care costs the employees are required to pay.

The amount employees contribute to their health insurance since the survey began has vastly outpaced the increase in average worker wages over the 14-year period the survey has been conducted.

Employee contributions for health insurance in Iowa have risen by 128 percent for single coverage and 116 percent for family coverages over the 14-year period. The average weekly wage in Iowa increased just 34.5 percent from 2001 to 2011.

A veteran observer of health care cost trends in Iowa said he doubts the slowdown in premium increases indicates the start of a new trend.

"There's usually a three to six year cycle on health care costs and utilization," said Paul Pietzsch, president of the Health Care Policy Corp. of Iowa, a coalition of employers and health care purchasers based in Johnston.

"He (Lind) is right at least there's been a temporary stabilizing of the cot, but there's no reason to believe it's long term."

Lind said employers in Iowa now pay roughly 80 percent of the cost of a single health insurance premium and 66 percent of family coverage on average. That leaves employees to pay 20 percent on single plans and 34 percent on family plans.

While some suspected the slowdown in costs may be due to the Affordable Care Act, Lind discounted the possibility. He said most of the Act's major provisions don't take effect until 2014.

Pietzsch was not so sure that the Affordable Care Act might not be a factor. During the first Bill Clinton administration the health care reform push that ultimately yielded no reforms did seem to yield a slowdown in medical costs for a while.

Health care providers and drug companies may be "getting ready and positioning themselves for the new world," Pietzsch said, even though the Affordable Care Act doesn't fully take effect for about 14 months.

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