The recession is forcing employers to pick health coverage based on the bottom line, while consumers are expecting service and features as they shoulder more of the bill.
The Employers’ Association recently surveyed 147 West Michigan companies and found that 85 percent of them ask employees to pay for part of the premium costs, said Maggie McPhee, director of information services. Typically employees are paying between 20 percent and 30 percent of the cost, she said.
The survey showed that the average monthly cost for all health plans, regardless of type, was $320 for one person; $694 for two; and $846 for family coverage.
“Everybody is mixing and matching different parts for cost containment purposes,” McPhee added.
She said that locally, HMOs have been strong this year, which bucks the trend of recent years. PPOs were the second-most popular type of coverage, followed by self-funded and point-of-service plans.
Jim Kenyon, a principal at Pinnacle Insurance Partners in Grand Rapids, agreed that premium price is trumping everything as businesses struggle to survive through the recession. That has led to mixing and matching in benefit packages and bigger deductibles to keep the lid on premium prices.
“The landscape has blended quite a bit … primarily in response to consumer demand,” Kenyon said. “They’re paying more and more of the share and they want to have some say in where they get their care and treatment.”
Ease of use is a big issue for people who can be overwhelmed by the rules, regulations and choices.
“Whether it’s in an HMO wrapper or a POS wrapper … people start to get glassy-eyed when you start talking about those kinds of acronyms. They just want to know, ‘How do I use it?’”
High-deductible plans, health reimbursement accounts and health savings plans are coming to the forefront as a way to keep premium costs down, added Laura Miller, an agent with Innovative Benefits.
“Smaller businesses are utilizing the reimbursement arrangements where they self-fund a small portion of the deductible. We’re seeing more people consider the HSA compatible plans,” Miller said.
But more out-of-pocket costs bring a learning curve for employees, she added. “If the education is not going along with the consumerism that’s needed to work in those types of plan, then it becomes frustrating,” Miller said. “If people aren’t armed with the education going into it, then they become very frustrated.”
Some employers are dropping health coverage altogether, while others are asking employees to take over premium payments for insurance such as life and dental and using the savings to fund health coverage, she added.
Meanwhile, the industry is closely watching developments as politicians in Washington, D.C., and Lansing wrangle over health care reform, Kenyon said.