Average health care costs in Michigan for midsized employers are projected to increase by 5 percent in 2018 after benefit plan changes, the same rate as last year but higher than the 4 percent increase in 2016, Troy-based Marsh & McLennan Agency LLC said in a new report.
Those companies that make no changes in their employee benefit health plans this year face an average 8 percent increase in health care costs, according to 357 employers that participated in Marsh & McLennan’s 15th annual Southeast Michigan Mid-Market Group Benefits Survey.
Nationally, employer health care costs are expected to increase 6.5 percent before benefit changes, which is lower than Michigan and much lower than the 9.8 percent increase in 2011, a year after the Affordable Care Act was approved.
Over the past several years, employee share of cost increases have averaged under 3 percent, according to the Mercer National Survey of Employer-Sponsored Health Plans.
Employer-sponsored health plans are historically less expensive than individual plans because risk is spread out over more people and employers have more bargaining clout.
More than 80 percent of Michigan residents with health insurance receive it through employer-sponsored plans.
Individual premium rates have risen the past two years beyond normal medical trends because the Trump administration has made a number of policy decisions that are shifting more costs to policyholders. Changes include eliminating the individual mandate and removing cost-sharing and risk-adjustment payments to health insurers.
Many employer-sponsored plans in Michigan have kept premium increases in check by implementing pharmacy cost-cutting strategies and lowering employee payroll contributions to encourage participating in high-deductible insurance plans that they believe lower overall health care costs, the survey found.
Some 25 percent of Marsh & McLennan’s survey participants, some 96 employers, have taken even more aggressive steps to address rising costs over the years. These so-called “TrendBenders” cut costs by 3 percent last year and project to cut health care costs an average of 3 percent this year.