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McGraw Wentworth survey shows cost of providing health care growing at 4%, lowest rate in ten years

Troy, Michigan, May 20, 2013 … According to the findings of McGraw Wentworth’s 2013 Southeast Michigan Mid-Market Group Benefits Survey released today, midsize employers are making moderate health plan changes, keeping cost increases to 4%, the lowest rate in ten years. The tenth annual survey benchmarks health benefits and cost trends for the current year – including key decisions pertaining to health reform – among 440 Southeast Michigan-based organizations with 100-10,000 employees.

“In line with national trend, Michigan employer health care costs are rising at an average of 4% after plan changes, down from 6% in 2012,” says Rebecca McLaughlan, managing director, McGraw Wentworth. “Employers are using strategies such as wellness, consumer driven health plans, spousal and tobacco use surcharges, and prescription cost management to control their costs. Talent management is top of mind for employers, with 91% of the survey participants indicating they plan to continue offering health benefits to full time employees under health reform.”

Survey analysis highlights:

  • Michigan employer health care costs are rising at an average of 4% after plan changes, down from 6% in 2012 and on par with national trend of 4.1%. This is also the lowest increase recorded by survey since its introduction in 2004. For the second consecutive year, 25% of participants report no cost increase at all.
  • More local employers are using spousal eligibility limitations to manage costs. 59% of employees elect dependent coverage for spouse and/or children. Compared to 12% of employers nationally, 30% of Michigan employers require a surcharge or exclude spouses who are eligible for coverage from other sources.
  • Wellness plans continue to evolve with 36% of employers tying incentives to achievement of a health goal, known as “outcomes based” wellness plans. Additionally, 60% of employers indicated they are planning to move in this direction in 12 to 24 months.
  • When employers offer wellness plans, an increasing number – 45%, up from 41% in 2012 — are including both employees and spouses, and in many cases children.
  • Tobacco use remains a target for cost management. 11% of southeast Michigan employers charge a tobacco surcharge at an average of $46 per month.

The survey cites 96 top-performing organizations, both union and non-union, as TrendBenders™ that successfully kept their two-year average benefit cost increases at or below zero. TrendBender™ organizations are keeping costs flat using more aggressive plan designs – higher emergency room copays, tiered prescription cost sharing, CDHPs as the only plan option — and proactive wellness tactics such as biometric screening.

Tracking trends pertaining to health reform, the survey shows:

  • 91% of Michigan employers plan to offer health care coverage to full time employees in 2014 and 2015, rather than pay the penalties entailed in discontinuing coverage. This is an increase from 85% in 2012.
  • 41% of survey participants do not currently offer coverage to employees working 30 hours or more per week. In 2014, 57% of these organizations intend to extend coverage to all qualified employees while 34% plan to reduce work hours.
  • The primary reason given for continuing to offer employer-sponsored insurance is retention and recruiting. Discontinuing benefits would also be contrary to most employers’ corporate culture.

“As employers examine both the talent management and cost impact of discontinuing benefits, many are finding other strategies and tactics for managing health care cost trend. This survey provides HR and financial professionals with objective, local market insight to help them evaluate their options for 2014,” says Katy O’Brien, account director with McGraw Wentworth and survey leader.

The McGraw Wentworth Mid-Market Group Benefits Survey is the largest of its kind with 537 mid-sized employers participating including 440 southeast Michigan organizations. Results for municipalities and school districts are analyzed separately. 81% of respondents are returning year-over-year participants. Respondents represent diverse industries with 26% self-identified as auto suppliers and 30% with union employees. The survey has a 4% margin of error.

Sponsored by McGraw Wentworth, survey results are shared with participants in May and June. For information, contact Ryan Bowers at (248) 822-6231 or visit


McGraw Wentworth, a Marsh & McLennan Agency LLC company, is an award-winning group benefits consulting and brokerage firm based in Troy, Michigan. The company counsels clients on how to structure their group benefit programs and provides strategic planning, utilization review, benefit design, employee communications, compliance assistance and related services. The firm is supported by Marsh & McLennan, the premier global provider of advice and solutions in risk, strategy and human capital.