DES MOINES — Members of Iowa’s largest state employees’ union will not get an overall wage increase for the next two years, but some will get individual pay boosts and most will not have to pay health insurance premiums as a result of a ruling Thursday.

Arbitrator Marvin Hill Jr. rejected Gov. Terry Branstad’s insistence that all AFSCME members pay 20 percent of their health insurance costs.

Hill maintained current contract language that allows many covered workers to continue paying no monthly insurance premium in exchange for taking a base wage freeze under the contract that runs from July 1 through June 30, 2015.

Members of the roughly 20,000-worker union who are not at the top of their pay grades will receive automatic “step” increases of 4.5 percent annually under the arbitration award that also modified contract language dealing with layoff and attendance policy language, Homan said.

Branstad called the outcome of contract talks “fair results” and pledged to “live with today’s result.”

“I am disappointed that Iowa will continue to be one of only six states where the overwhelming majority of state employees will continue to pay nothing toward their health insurance,” Branstad said in a statement.

“This is simply unfair to the vast majority of Iowans who pay some, if not all, of their own health insurance cost and whose tax dollars continue to fund this expensive benefit for most state employees.”

The Republican governor noted that members of the State Police Officers Council bargaining unit agreed to pay 20 percent of their health insurance premiums with incentives to lower their costs by participating in a wellness program and he hoped other state workers would follow that example.

“It is right, it is fair, and it will make our state worker population healthier,” added Branstad, who estimated the state would have avoided $45 million in costs over the two-year contract had the arbitrator ruled in favor of the state’s offer regarding health benefits.

The state Department of Management issued estimates indicating the new American Federation of State, County and Municipal Employees (AFSCME) contract would cost the state’s general fund $56 million over the next two fiscal years.

Danny Homan, AFSCME Council 61 president, said he was “ecstatic” at the arbitrator’s decision, and described the just-completed bargaining session as “an all-out attack” on the employee rights and benefits covered by the agreement.

He said he hopes his union and the Branstad administration can begin building an improved working relationship now that the battle is over.

Homan said the negotiations were a continuation of Branstad’s gubernatorial campaign and the governor “would not back off an issue that was going to be as earth-shaking as it was” so it required a binding arbitrator to decide the health insurance issue.

“We were able to defend our members’ rights, we were able to defend our contract and we were able to defend their benefits,” Homan told reporters at an afternoon news conference.

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