Mich. health costs rise, but firms pick up some cost

Karen Bouffard
The Detroit News

Michigan employers and workers are paying more for health benefits under the federal Affordable Care Act, but businesses are picking up a bigger share of premium costs for some employees, according a Commonwealth Fund report released Wednesday.

Workers still are paying more for health insurance in both Michigan and across the country, the report found, because wages haven’t kept pace with health care cost increases.

The cost of insuring an individual employee in Michigan rose an annual average of 4.1 percent from $4,713 in 2010 to $5,963 in 2015, according to the Commonwealth Fund, an independent nonprofit foundation that focuses on health care. Family plans rose from an average $13,871 to $15,628, an annual average hike of 3.5 percent.

Michigan employees’ share of individual premium costs grew 8.7 percent annually before the federal health care law from 2006 through 2009. By comparison, workers’ share of premiums increased a yearly average of 2.8 percent after implementation of health reform from 2010 through 2015.

The annual rate of increase for family plans rose from 4.5 percent before the federal law to 4.8 percent annually after health reform.

“It is undeniable that from an employer’s point of view their contribution continues to go up, and it goes up higher than the rate of inflation, and probably faster than their (cost of wages),” said Richard Murdock, executive director of the Michigan Association of Health Plans.

“I don’t think I go to a meeting where you don’t hear a complaint or at least a concern about the contribution from employers. We have to do something about that.”

Murdock said skyrocketing pharmaceutical costs are contributing to the spike in health insurance rates, along with the costs of providing essential health services, such as annual physicals, required under federal law.

“The Commonwealth Report is highlighting across the country that the annual employee and employer contributions are increasing,” he said. “They’re all going up, some are just going up more than others.

“Part of that is utilization, some of it is mandates, and some is the inability to manage some of the pharmaceutical costs.”

The report found employees’ contributions to health insurance premiums rose more slowly between 2010 and 2015 in 30 states and Washington, D.C., and their deductibles grew more slowly in 27 states.

In Michigan, deductibles increased 4.2 percent, the same as the national average. With median wages at $58,729, Michigan workers potentially pay 8.9 percent of their income for health care, a little less than the national average of 10.1 percent.

Many families are spending, on average, a bigger share of their income on health care than they were prior to 2010, said Sara Collins, a vice president of the Commonwealth Fund. She said that is because median incomes, despite their recent surge, have not kept pace with health care costs.