Published in Health Care

High-deductible health plans slower to gain traction in Michigan

BY Sunday, November 13, 2016 01:31pm

Michigan employers have not transitioned to lower-cost, high-deductible health plans as quickly as the rest of the nation.

That’s one of the findings in the annual survey of employee-sponsored health benefits by Mercer. The survey by the health benefits firm shows 22 percent of covered workers at responding Michigan companies are enrolled in a high-deductible plan, which compares to 29 percent nationwide.

“In Michigan, that shift hasn’t happened as fast as elsewhere,” said Mick Young, business leader at Mercer’s Grand Rapids office. “So there are still opportunities in Michigan on the high-deductible options.”

For smaller employers who have adopted high-deductible plans at a slower rate than mid-sized and large employers, “there’s definitely room,” Young said.

The allure of high-deductible plans comes from an average cost that’s at least 20 percent less than a traditional PPO plan, according to Mercer.

Despite the lower costs, high-deductible plans are not for everybody, Young said. Employees enrolled in a high-deductible plan pay more in out-of-pocket costs for their medical care, which creates a burden for some people, particularly those with chronic medical conditions.

“For some people, it doesn’t fit the bill for them,” Young said.

A recent analysis by Commonwealth Fund, a health care research foundation, shows the growth over time in what people pay annually in deductibles. U.S. families paid an average of $1,541 in deductibles in 2015, which compares to $1,025 in 2010 and $714 in 2006.

The average deductibles paid in Michigan for a family plan were $1,431 in 2015, $983 in 2010 and $571 a decade ago, according to the Commonwealth Fund.

Most employers generally offer a high-deductible plan as an option alongside traditional benefits and allow employees to choose the coverage that works best for them, Young said.

Across the country, 52 percent of the more than 2,500 employers answering Mercer’s survey reported that they offer a high-deductible plan as an option, and 9 percent offer it as a full replacement for traditional health plans.

The steady migration over the past several years to high-deductible plans has contributed to trimming annual cost increases for employee health coverage.

Employers nationally told Mercer they paid an average 2.4 percent more per employee in 2016 for health benefits, the lowest cost increase in nearly two decades. Employers expect per-employee costs to grow 4.1 percent in 2017 after making benefits adjustments. Minus any benefits changes, they expect to pay 6.3 percent more.

In Michigan, the 82 employers responding to this year’s Mercer survey reported paying 3.2 percent more for employee health coverage in 2016, pushing per-employee costs to $12,688. Nationally, the average per-employee cost was $11,920.

After making changes to their benefits plans or changing carriers, Michigan employers still expect to pay 3.6 percent more next year. Those who forego making changes anticipate a 6.3-percent increase.

Despite the moderation in annual cost increases, “I wouldn’t say costs are in check,” Young said.

“There are still a lot of things to focus on.”

One is the escalating cost of prescription drugs, particularly specialty medications that treat complex diseases. Large employers report the cost of their prescription drug benefits increased an average of 7.4 percent at their last policy renewal. Those employers expect another 7.9-percent increase at their next renewal.

One cost-control strategy that employers have embraced is telemedicine, which is fast becoming a normal part of health benefits. The adoption rate of telemedicine nearly doubled this year to 59 percent of the large employers responding to the Mercer survey.

The benefits firm said accessing a doctor via a virtual visit on a computer, smartphone or tablet for a minor medical condition costs $40 on average. That compares to $125 for a visit to a physician’s office.

“It’s all about convenience and all about lower costs and access,” said Young, who notes that some Mercer clients fashioned their health benefits to have no copays for telemedicine sessions.

“It’s definitely something that’s valued by employees and members,” he said. “For those things that can be handled on an iPad, it certainly fits the bill.”

Employers are also increasingly offering benefits that cover visits to retail medical clinics and are contracting with vendors for an online “transparency tool” so employees can shop and compare prices for medical care, particularly amid the shift to high-deductible plans. 

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