Troy — McGraw Wentworth, Michigan’s largest employee group benefit brokerage/consulting firm, released the results of its 2011 Southeast Michigan Mid-Market Group Benefits Survey. The annual survey, now in its eighth year, tracks health benefits and cost trends for the current year – including decision-making around health reform – among 470 southeast Michigan-based organizations with 100-10,000 employees.
“Organizations that manage cost increases to the lowest levels are putting decision-making regarding personal health and health care purchasing in the hands of the consumer,” says Rebecca McLaughlan, managing director, McGraw Wentworth. “Employers can hold health care benefit costs in check by engaging employees. For example, a leading consumer strategy is three-tier prescription drug co-pay programs, where employees choose from either a generic, formulary brand or non-formulary brand drug,”
Highlights of the survey results show that:
- Employer health care costs after plan changes increased by an average of 8% for employers in the survey.
- TrendBenders™ – high-performing organizations with the lowest average annual increases over two years – are aggressively focused on Consumer Driven Health Plans (CDHP) and wellness and less on cost-shifting. Their health benefit plan cost increases averaged 4% or lower over two years after plan design changes.
- Significantly fewer Michigan employers offer “free” coverage, with only 10% (down from 15% in 2010) offering family coverage at no cost to employees.
- CDHPs are increasingly prevalent. A CDHP typically combines a high deductible plan with lower monthly contributions; employees assume greater financial and health care purchasing responsibility. In 2011, 27% of employers — compared to 19% in 2009 — offer CDHPs, with more employers, 5%, offering a CDHP as the only plan option.
- HMOs remain a good cost competitive option due to innovative, wellness-centered plan designs.
When asked about the impact of health reform…
- Employers attribute one to three percent of this year’s average 8% increase in health benefit costs to health care reform mandates, e.g., extending coverage for dependents to age 26.
- Only 7% of mid-size employers anticipate discontinuing their health plans due to availability of insurance exchanges in 2014. 49% plan to offer health coverage despite availability and similar costs of the exchanges.
“Mid-sized employers are considering the impact of health reform but few indicate they will move to eliminate group health plan coverage,” says Julie Truskowski, account director with McGraw Wentworth and survey leader. “Employers are looking closely at the “play or pay” aspects of health reform and the status of their health plans. Two things are certain: Change is underway and employers will need to make some strategic decisions before 2014 to accommodate health care reform mandates.”
The survey cites 112 top-performing organizations, both union and non-union, as TrendBenders™ that have been successful in keeping their average benefit cost increases at or below 4% over two consecutive years. As early adopters of consumer-driven health plans and wellness options, TrendBender™ organizations are more proactive in steering participants to most cost-effective options, and report higher enrollment in these plan offerings.
The survey analysis also includes a Total Cost Ratio comparing what Michigan employers and employees are paying in total for PPO, HMO or CDHP coverage in 2011. The Total Cost Ratio in 2011 for a median PPO Plan for an individual was $606 per month of which the employer paid 56% or $339 in premiums and the employee paid 44% or $267, a combination of payroll deduction $105, deductibles and co-pays $162. In 2010, the Total Cost Ratio was $580 per month (employer paid 57%/$329; employee paid 43%/$251).
The McGraw Wentworth Mid-Market Group Benefits Survey is the largest of its kind with 614 mid-sized employers participating including 470 southeast Michigan organizations. Results for municipalities and school districts will be released separately. Respondents represent diverse industries with 25% considered auto suppliers and 30% having some unionized employees. The survey has a 3.8% margin of error.
“In today’s economy and with health reform underway, the survey analysis provides Michigan employers with an objective, statistically valid tool for benchmarking plan designs and evaluating cost sharing strategies for 2011 and beyond,” says Truskowski.
Survey results are being shared with participants during June. The survey is sponsored by McGraw Wentworth. For information, contact Ryan Bowers at (248) 822-6231 or visit mcgrawwentworth.com.