McGraw Wentworth, Michigan's largest employee group benefit brokerage/consulting firm, released the results of its 2010 Southeast Michigan Mid-Market Group Benefits Survey. The annual survey, now in its seventh year, tracks health benefits and trends for 2010 among 414 southeast Michigan organizations with 100-10,000 employees. The survey shows Michigan employers moving from traditionally rich benefit levels to levels on par with national benchmarks.
Highlights of the survey results show that:
-- Michigan employers are making dramatic changes in plan design
including more cost-shifting to employees in the form of increased
payroll contributions, deductibles, and copays;
-- Increased availability of/enrollment in consumer-driven health plans
(CDHP) where employees assume greater financial and health care
purchasing responsibility. In 2010, 23% of employers--compared to
19% in 2009--are offering CDHPs; 4% make CDHPs the sole offering.
Employee contributions to CDHPs nearly doubled from $41 to $75 per
month from 2009 to 2010 for a single enrollee.
-- Median PPO deductibles increased significantly. The deductible for
single in-network coverage increased to $500 from $300 in 2009 and the
family deductible increased to $1000 from $600.
-- HMO plans are shifting from 100% coverage and fixed copays to
co-insurance.
-- Use of spousal eligibility restrictions continues to increase.
-- Despite the economy, employers continue to invest in wellness programs
with more employers tying achievement of health goals to incentives,
as well as offering programs to spouses and dependents.
-- Health care benefits costs for Michigan employers after plan design
changes are increasing in 2010 at an average rate of 7%.
"For the first time since the survey's launch in 2004 we are seeing benefit levels and cost strategies that are on par with national trends," said Rebecca McLaughlan, managing director, McGraw Wentworth. "Consumer-driven health plans are here to stay with more employers encouraging enrollment in the plans. Interestingly, after payroll deductions, CDHP net employer costs in Michigan are now slightly higher than PPO costs making Michigan an anomaly in this respect. Nationally, CDHPs are the lowest cost plans; the higher the enrollment, the lower the cost."
The survey cites 102 top-performing organizations, both union and non-union, called TrendBenders that have been successful in keeping their average benefit cost increases at or below 3% over two consecutive years. TrendBender strategies include: auditing enrolled dependents; aggressively implementing CDHPs including funding a portion of employee health savings accounts; increasing deductibles; introducing a three-tier prescription copay system (generic, brand formulary, brand non-formulary); applying smoker surcharges; and emphasizing wellness in their benefit plan design.
"Historically, TrendBenders have led the market in strategic plan design, wellness, and consumerism. In 2010, the survey base is starting to follow their lead and 'close the gap'," explained McLaughlan. "Yet TrendBenders still have lower costs as fewer offer opt-out bonuses. They have wellness-driven plan designs, smoker and spousal surcharge strategies."
The survey analysis includes a total cost ratio comparing what Michigan employers and employees are paying in total for PPO, HMO, or CDHP coverage in 2010. The 2010 total cost ratio for a median PPO plan for an individual was $580 per month of which the employer paid 57% or $329 in premiums and the employee paid 43% or $251, a combination of payroll deduction ($103), deductibles, and copays ($148). In 2009, the total cost ratio was $532 per month (employer paid 59%; employee paid 41%). In contrast, the 2004 total cost ratio was $382 per month (employer paid 67%; employee paid 33%).
According to McLaughlan, employers and employees are seeing higher dollar costs, and, while employee cost sharing is increasing, employers also are building in substantial incentives to encourage appropriate care choices such as increasing copays for ER visits to $100 versus $25 for urgent care. Increasingly PPO enrollees are paying a percentage of the charge for an office visit versus flat copay that serves as an incentive for employees to make cost-effective choices, starting with knowing the cost of the care.
The McGraw Wentworth Mid-Market Group Benefits Survey is the largest of its kind with 640 mid-sized employers participating including, 414 southeast Michigan organizations. Respondents represent diverse industries, with 25% considered auto suppliers and 29% having some unionized employees. The survey has a 4.1% error rate.
The survey is sponsored by McGraw Wentworth with offices in Troy and Grand Rapids. For information, contact Ryan Bowers at 248-822-6231 or visit mcgrawwentworth.com.