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Benefits Vary Between West, SE Employers
GRAND RAPIDS — A new survey of West Michigan companies shows that employers are using employee cost sharing, eligibility audits, and spousal and smoker surcharges to keep health care cost increases in check.
McGraw Wentworth, the largest employee group benefit brokerage and consulting firm in the state, released the results of its first West Michigan Mid-Market Group Benefits Survey, which reveals that health care costs for West Michigan employers are rising 6 percent on average this year, the same rate of increase being seen nationally.
Each employer has to determine the best balance between benefits and salary, and the balance has to be competitive for recruiting and retention purposes. According to the survey, West Michigan employers are struggling to determine what constitutes the “right” balance.
Roger Edgren, account director for McGraw Wentworth’s West Michigan office, said West Michigan employers appear to have adopted more aggressive strategies in managing health plans compared with their counterparts in Southeast Michigan: They’re more apt to implement employee wellness programs; they give more prevalence to point-of-service plans; they’re more likely to put limitations on spousal enrollment in the plan; and they’ve adapted more readily to consumer-driven health plans. In fact, 28 of the plans offered are consumer-driven while only 16 percent of plans in Southeast Michigan offer consumer-driven plans.
“What that shows is that companies here have been more willing to adopt new strategies,” said Roger Edgren, account director for McGraw Wentworth’s West Michigan office. “I think some of that is because there’s a little less union representation here, so employers have a little more ability to make changes to their plans compared with companies that have more union representation.”
Wellness programs are the second most popular cost control strategy among West Michigan employers, and wellness strategies have been very heavily promoted and well received in this region, Edgren said.
Edgren thinks West Michigan employers may have gotten ahead of the curve in terms of employee health plans because they went through the downturn in the furniture industry several years before Detroit started experiencing troubles in its auto industry. While jobs in the West Michigan furniture industry were being cut, the Detroit automotive industry was still going very strong, he recalled. He thinks the furniture industry downturn may have prompted West Michigan employers, who were trying to do whatever they could to save money, to start looking at different employee health plan options sooner than Southeast Michigan employers.
PPOs are the dominant health plan among employers in both the west and southeast regions of the state: Some 84 percent of West Michigan employers offer PPOs and 95 percent of Southeast Michigan employers offer PPOs. Survey results show that 25 percent of West Michigan employers offer one health care plan, 27 percent offer two plans, 22 percent offer three plans, and 25 percent offer four or more plans.
Health plan costs, as well as cost increases, are lower in West Michigan than in Southeast Michigan. The survey analysis gives a total cost ratio comparison of what West Michigan employers and employees are paying for benefits this year.
Edgren said the survey provides mid-sized companies and organizations with a statistically valid tool and benchmark to evaluate competitive plan designs and cost sharing at the local level.
“Everybody loves benchmarking. They like to know how they stack up against others in their industry,” Edgren observed. “What do our benefit levels and costs look like in comparison with other companies? They want to know that as a sort of baseline starting point.”
Edgren said studies over the last several years indicate employees appreciate the value of their benefit plans more when plans are communicated effectively. He said information about health benefit plans can be communicated and explained through quality written materials, at open enrollment and annual enrollment meetings, through letters from senior management, and information via Intranets and health care carriers Web sites.
When benefit plans are well communicated, employees will better understand their plans, Edgren said.
“If done properly, it will help employees understand the true cost and total cost of health benefits, which most employees underestimate. It may help them understand health care strategies and help them become better consumers of health care.”