Study: Few Michigan Employers to Discontinue Employee Health Benefits Under Reform

Work in progress signWith a major tenet of health care reform looming, there’s been plenty of talk about the future of employer-sponsored coverage. But a recent survey finds that few Southeast Michigan employers plan to discontinue offering insurance to employees when insurance exchanges and an employer mandate come online in 2014.

The 7 percent of respondents to the McGraw Wentworth poll who anticipate discontinuing their health plans as a result of the changes stands in contrast to a recent McKinsey & Co. survey. That poll found that 30 percent of employers “definitely or probably” would stop offering employees coverage, a figure that increased to 50 percent among employers with a high awareness of the health reform law.

The Affordable Care Act creates statewide insurance exchanges starting in 2014. It also requires all but the smallest employers to offer affordable, quality coverage to employees or face penalties. As a result, many observers have wondered whether some employers would decide it’s cheaper to let workers seek coverage from the exchanges and pay the fines than to continue offering group health benefits.

The annual Southeast Michigan Mid-Market Group Benefits Survey from McGraw Wentworth, a benefit brokerage and consulting firm, was based on results from 470 Southeast Michigan-based organizations with 100 to 10,000 employees. It had a 3.8-percent margin of error.

In addition to finding that few employers are considering discontinuing coverage, the study found steady momentum toward health care consumerism as a way for employers to contain costs. Employer respondents saw their health care costs increase by an average of 8 percent and attributed anywhere between 1 and 3 percent of that increase to health reform provisions already in place.

“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,” said Rebecca McLaughlin, a managing director at McGraw Wentworth.

The survey shows that consumer-directed health plans, which typically combine high deductibles with lower monthly contributions and greater financial responsibility from the member, were offered by 27 percent of employers in 2011, up from 19 percent in 2009. The ranks of employers who offered “free” family coverage at no cost to employees fell to 10 percent, from 15 percent a year ago.

The survey also identified 112 organizations, known as the TrendBenders, that have had success in keeping their average benefit cost increases at or below 4 percent.

Regardless of what insurance options employers choose, change is inevitable. According to Julie Truskowski, account director with McGraw Wentworth, “employers will need to make some strategic decisions before 2014 to accommodate health reform mandates.”

The statistics pain some interesting pictures. What do you think of the way health care is going? What do you think it will it mean for you and your family?

Photo credit: koalazymonkey

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