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Fewer Iowa companies offer health insurance coverage to their employees than in previous years, and those that do are increasingly forced to choose between shouldering higher costs or passing them along to their employees, say benefits experts.

According to “The State of Working Iowa 2008,” released earlier this month by the Iowa Policy Project (IPP), fewer than 58 percent of jobs in Iowa offer health insurance as a benefit, down from nearly 73 percent 10 years ago.

“My view is that we’ve passed the tipping point with employer-provided care,” said Colin Gordon, a University of Iowa professor who co-authored the IPP report, “and that we should no longer be looking at the kind of public policies to shore up that system (and instead look at non-employer-based alternatives).”

By comparison, 62.2 percent of U.S. adults under the age of 65 had employment-based health benefits last year, the same percentage as in 2006, according to figures released last week by the Employee Benefits Research Institute.

Health insurance premiums in Iowa continued their upward surge, though not at the double-digit rates common during the past several years. Premiums paid by Iowa companies increased an average of 8.8 percent in 2008 over 2007, according to the 2008 Employer Benefits Study, an annual statewide survey conducted by David P. Lind & Associates LC in Clive. The average monthly premium for family coverage among Iowa employers surveyed is now $960, a 73 percent increase from 10 years ago.

“We are continuing to see the escalation of health insurance rates,” Lind said. However, despite the annual premium increases, fewer than 1 percent of respondents each year indicate they planned to drop coverage because of higher rates, he said. More than 2,700 Iowa employers with 10 or more employees were randomly selected for the survey, of which 954 responded. About 91 percent of those respondents said they offer health insurance, a figure Lind said would be much lower if companies with as few as two or more employees were included.

According to Lind’s survey, more Iowa employers are embracing wellness as a cost-reduction tool. Nearly two-thirds (64 percent) of respondents said they offer some type of wellness information to their employees through newsletters, Web sites or other media, compared with 57 percent in 2007. More than one-third (37 percent) indicated they offer health screening programs, up from 31 percent last year.

“Hopefully with those (benefits), employees will be more cognizant of living a healthy lifestyle,” he said, though smaller companies are able to provide far less of these benefits than larger companies. “Depending on what information you look at, lifestyle can account for 50 to 75 percent of health-care costs.”

More insurers are offering programs aimed squarely at employees’ lifestyles. Holmes Murphy & Associates in West Des Moines last month launched a wellness program called the Metabolic Syndrome Risk Clustering Program, which it’s offering nationwide in conjunction with Principal Wellness Co., a subsidiary of Principal Financial Group Inc.

“The biggest trend today isn’t in co-pays or employee contributions,” said Steve Flood, senior vice president for employee benefits with Holmes Murphy. “It’s about holding employees accountable for their health. … What we want to do is help companies have clinical results that are measurable year over year, and then have programs that can improve those measurements year over year.”

Holmes Murphy instituted a similar wellness incentive program for its employees, which has allowed the insurance brokerage company to keep its own premiums flat for the past five years with no decreases in coverage. Flood estimates that Holmes Murphy saved $4 million during that period, based on what it would have paid with average rate increases.

The company found that more than 50 percent of health insurance claims can be linked to employees’ lifestyle choices, “so people are choosing through their behavior to have these claims,” Flood said. “By focusing on lifestyle changes, we could reduce those costs by 50 percent or more.”

Less coverage

According to “The State of Working Iowa 2008,” the Iowa economy has added about 110,000 jobs since 1997, but during the past 10 years has actually lost more than 150,000 jobs that had provided health coverage.

“Working Iowans have taken a double hit,” Gordon wrote. “As job growth drifts away from high-wage sectors like manufacturing, so too does it drift away from the stable provision of job-based health coverage. Low-wage sectors also tend to be low-benefit sectors, and not surprisingly, job growth has been concentrated in those parts of the economy where health coverage is less commonly offered.”

Gordon said the rates of declining insurance coverage understate the extent of the problem, because they don’t look at “under-insurance,” plans that are expensive or don’t provide adequate coverage.

Employer-based coverage “made sense in an economy dominated by large employers with large benefits programs, but we don’t live in that world anymore,” Gordon said. “It’s become not only a serious social issue; it’s also become a serious competitive issue in the U.S. economy. Even those businesses that don’t provide health insurance, it costs them because they’re less competitive in attracting employment.”

Grassroots efforts such as the Health Care for America Now coalition are pushing for lawmakers to address the cost and availability of health insurance. The group, which is conducting events in 45 states through the November presidential election, held a forum last week in Ames.

Making programs work

For those employers that offer coverage, deciding how much to provide in wellness incentives can be difficult.

Debby Hudson, club manager at Prairie Life Fitness in West Des Moines, said “quite a few companies” are providing their employees some monetary incentive to work out (Lind’s survey indicates 34 percent), though in many cases it’s a nominal amount, perhaps a $20 annual reimbursement.

“It’s something,” she said. “It may be the final push; they may have been considering it anyway and they say, ‘If my employer is going to pay something, I’ll do it.'”

When companies consider providing annual premium discounts to employees as an incentive to participate in a wellness program, Holmes Murphy has found $500 is the minimum effective amount, Flood said.

“We’ve done hundreds of these programs, and we’ve found what makes the difference is a $500 premium differential,” he said. “We tell them up front that if they expect any rate of return from the program, they need to have that incentive.” Generally, federal rules allow employers to offer up to a 20 percent premium incentive for participating in a wellness program, he said.

Additionally, a company must have at least 80 percent of its employees participate in a wellness program for it to produce savings, Flood said. Overall, these types of programs appear to be gaining traction, he said.

“Three or four years ago, if you talked to employers about wellness program incentives, you’d have about 5 percent that would say they were willing to do that,” he said. “Now, I think that has flipped. Really, it’s all employee money. If I don’t do everything possible for my health, I’m just shifting the cost to other employees. So employers are really starting to hold employees accountable.”