Iowa manufacturers’ single largest fear, according to a CIRAS survey, is the looming cost of employee health care. And the worry appears to be well placed.
“If you are a private employer in Iowa, you have reason to be concerned,” said Mark Becker, a Johnston-based employer benefits consultant. “There are far more questions than answers right now. On large insurance, there’s really no place to run.”
Becker and other Iowa experts paint a scary picture of the next few years for employers. The last remaining sections of the U.S. Patient Protection and Affordable Care Act—the law that brought us the term “Obamacare”—take effect in 2017, requiring every business with 50 or more employees to offer them health insurance or face penalties.
A recent CIRAS survey of 256 manufacturers identified employee health insurance costs as the single largest unknown facing their businesses—by far outstripping concerns tied to technology, competition, or the future availability of a skilled workforce.
“I think the biggest thing is the lack of good information,” said Ruth Litchfield, a professor in Iowa State University’s Department of Food Science and Human Nutrition and an expert in wellness programs. “I think the unknown of it all has them in a panic.”
David P. Lind, who produces an annual survey of Iowa employee benefit trends, said Iowa health care costs for employers have grown at 7 to 8 percent in recent years—roughly half the size of increases in the early 2000s, but still more than twice the rate of inflation. Increases come with a lack of control, because the Affordable Care Act requires insurance companies to set rates based on health care costs connected to a particular community. Even major cost-cutting moves by employers may leave rates unchanged, experts say, if a small company is part of a larger population.
“Wellness programs work in that they make you healthier, but they’re not necessarily making you less expensive,” said Becker. “Employers are really stuck, because there’s only so much you can do.”
“There are some good options out there,” [see box] countered Mike Teachout, co-owner of Focus OneSource, a West Des Moines-based business that handles payroll, insurance, and administrative tasks for companies. “But it’s going to take a new way of thinking by some of these employer groups.”
> For more information, contact CIRAS program director Mike O’Donnell at modonnll@iastate.edu or 515-294-1588.
A version of this article was published in the Fall 2016 edition of CIRAS News. To read more of that edition or others, please explore elsewhere on our website.