Informatics Can Help Employers Win Against Michigan’s Escalating Healthcare Plan Costs
By Gabe Vanderjagt
Effective management of health plan costs may be one of the more daunting of tasks with which employers grapple annually, an increasingly difficult challenge as rising medical and prescription drug costs exert unremitting pressure on the marketplace.
That’s as true in Michigan as anyplace else, where the highest rate increases in years of 11.2% for small group policies have been approved for 2025 by the Michigan Department of Insurance and Financial Services. The American Society of Employers (ASE) in Troy found its Michigan members overall anticipate median plan rate increases of 7%.
Various tried-and-true strategies to manage the costs are in the offing. One of the top options, the ASE found, is upping employees’ cost share through increasing employee contributions, increasing deductibles, or a combination of both. That’s a bad move, given the likely negative health and cost consequences that would result from greater barriers to seeking timely health care. Additionally, it can negatively impact employee morale and culture.
The state’s small and mid-sized employers – and their workers – would be better served with a smarter, more sustainable approach that can lead to lower costs and healthier employees.
It involves applying both data analytics and clinical informatics to their health claims data to understand the fundamentals of plan utilization, but, more importantly, to gain insights into conditions behind their claim trends and how specific provider utilization patterns (or sites of care) may be leading them to spend more.
Clinical informatics supplements traditional data analytics’ “snapshot” of diseases and dollars. Harmonizing the application of both strategies enables employers to uncover the root causes of risks to the health plan, leading to smarter clinical and administrative decision-making.
Clinical informatics might suggest alternative patient care regimens. Or identify outdated or unnecessarily expensive treatments. It has also illuminated billing errors, saving firms considerable money and giving them better control against waste and fraud. With other uses, like assisting in navigating stop-loss lasers applied to high-risk plan members, clinical informatics improves control over plan management.
Predictive modeling and generative artificial intelligence can further boost informatics’ power by identifying issues early on that grow into a costly health plan drain spend. This was how one company identified why its mental health claims were out of control – a gap between the provision of medications and therapy follow ups. The employee assistance plan’s three annual visits per member were not utilized as in-network mental health professionals were overbooked and unavailable. In response, the employer added resources, improving access, employee well-being and reducing medical claims.
It wasn’t until the last several years that small and mid-sized, fully insured employers were entitled by law to the same access to their benefits data as their large counterparts. With this improved transparency over plan performance and cost drivers, their best bet for fulfilling their fiduciary responsibility is to find smart ways to use the tools available to them. A holistic strategy applying data analytics and clinical informatics can be invaluable.
What Michigan employers should keep in mind is that a “cheap” healthcare plan doesn’t equate to a cost-effective one. A plan that doesn’t cover an expensive but effective medical procedure in favor of less-aggressive treatment might save money up front. But that may just postpone the inevitable, and cost more in the long run.
There are better, more sustainable solutions beyond just applying the carving knife to benefits plans in grappling with relentless cost escalations. This can include improving your current benefit design(s) through site of care, narrow networks, or direct provider contracting which provide large financial incentives for plan members to use high-quality, low-cost providers. “Large” does not mean a $150 debit card reward sent through the mail. Instead, we discuss eliminating deductible and/or coinsurance responsibilities which can save Michigan families thousands of dollars annually. Innovation applies to more than just product design and service offerings. It’s the kind of thinking, fueled by data-driven strategies, that can be applied to health plans to improve costs and care.
About the author
Gabe VanderJagt is an employee benefits strategist at leading global insurance brokerage Hub International in Michigan. His efforts are primarily invested in working with clients who are interested in level funding, self-funding, and captive options.
Through a thorough review of claims data, risk and trend analysis, Gabe assists with developing strategic benefit plan recommendations that are based at the individual client level. He also ensures that clients are made fully aware of the advantages and disadvantages of large carrier ASO products versus independent TPA options that are available in the market. Gabe’s primary goal is to assist clients with developing strategies to help control cost while also positively impacting their employees.
