Employers in Southeast Michigan have projected an increase in health care costs this year — a 7% spike, up from 4% last year — as taxes and fees from the ACA add to typical annual inflationary increases in health costs.

The increase may vary by region and the Michigan increase is slightly higher than the national average, Rebecca McLaughlan, managing director at McGraw Wentworth, tells EBN. She points to Mercer’s 2013 survey which projected employer health care costs to increase by 5.2% nationally in 2014.

Still, to retain talent, McLaughlan says businesses say they intend to continue offering health benefits to full-time employees, despite price increases resulting from the ACA. “To manage the rising cost trend, organizations are increasingly using strategies such as consumer driven health plans, spousal surcharges, wellness and newer avenues like telemedicine and health advocacy,” she notes

The ACA fees, which began in small doses last year, were imposed on health insurers and employers to pay for subsidies for expanded coverage and create a special fund to protect insurers from losses for covering sicker patients with higher costs in the individual market. Insurance companies passed on these costs to their insured clients, and self-insured employers paid the pass-through costs.

Also see: An inside look at wellness program strategies

The 7% increase included the health care reform taxes and fees assessed on employers — the amount of the taxes varies by employers, but the range comes in between 1% to 5%, McLaughlan, adds. Most employers are building the taxes into their overall costs this year, and in many cases passed on additional cost sharing to employees to offset this increased cost, she added.

“Unfortunately the 7% isn't surprising,” says Barbara Gniewek, a principal in the PricewaterhouseCoopers Human Resource Services health care practice. “And while health care trends differ by region, we are seeing increases in costs in that range and even slightly more, often softened by plan design changes.”

Some companies are taking a different approach to managing their health care plans. With the introduction of the public exchanges, 46% of employers in Michigan are considering moving their plan design closer to the plans offered on the exchanges, something employers in other states may do as well with their respective health care exchanges.

“Employers made their best effort to adapt to and comply with the shifting regulatory   environment while developing their health plan strategy for 2014,” says Katy O’Brien, account director with McGraw Wentworth. “With more changes anticipated in the future, executive leadership will need to closely examine the compensation, cost and culture impact of their decisions. There is no one simple answer.” 

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