Health Care Costs and Deductibles Rising in Midwest U.S.

Average increase in deductibles across health plans was 18 percent

By SHRM Online staff Aug 22, 2011

Health care costs continue to rise, and at a greater rate than in previous years, for employers in the Midwest United States, according to a new regional survey.

More than 75 percent of employers in the U.S. Midwest experienced an increase in their health care costs in 2011, according to the Health and Welfare Benefits Survey conducted during April and May 2011 by Employers Resource Association (ERA), a Cincinnati-based HR research, training and consulting firm. The survey contains data from 201 ERA member companies, ranging from fewer than 50 employees to more than 1,000, with data on over 245 health plans.

Among Midwest employers, the survey found that:

22 percent had increased health care costs of more than 12 percent.

21 percent had increased costs of 10 to 12 percent.

19 percent had increased costs of 7 to 9 percent.

13 percent had increased costs of 4 to 6 percent.

Nationally, in 2011, health care costs for large U.S. employers rose 7.4 percent, according to the nonprofit National Business Group on Health.

Higher Deductibles

The ERA survey found that much of the higher costs were passed along to employees, whose deductibles rose, on average, 18 percent from 2010 to 2011. Compared to the 2010 survey, deductibles in 2011 rose across all plans by:

21 percent for single coverage ($1,011).

21.5 percent for employee-plus-1 coverage ($2,184).

13 percent for employee and children ($2,308).

17 percent for family coverage ($2,395).

Deductibles for high-deductible health plans in the Midwest continued to rise to an all-time high of:

$2,606 for single coverage.

$4,996 for employee-plus-one coverage.

$5,063 for employee plus children.

$5,381 for family coverage.

Plan Types

“Many HR professionals in the Midwest are now reviewing policy proposals from health insurers for the 2012 calendar year,” said Doug Matthews, survey manager for ERA. “With the political uncertainty surrounding health care reform and the Patient Protection and Affordable Care Act (PPACA), companies are reluctant to make major changes in their policies, despite dramatic increases in costs.”

The most popular health plans offered by employers in the Midwest include:

Preferred provider organizations (PPOs)—67 percent of respondents.

High-deductible health plans (HDHPs)—40 percent.

Point of sale (POS) plans—9 percent.

Health maintenance organizations (HMOs)—3 percent.

Of the survey respondents, 53 percent indicated that they had implemented an HDHP or other consumer-driven health plan, while 10 percent plan to do so.

Of the companies that have adopted an HDHP, the top reasons they gave for doing so include:

Contain costs (76 percent of respondents).

Encourage consumer-driven health care (64 percent).

Provide more cost-effective alternatives for healthy employees (44 percent).

Other reasons (4 percent).


A range of companies participated in the survey: 11 percent had more than 500 employees, 24 percent had less than 50 employees, 22 percent had between 50 and 100 employees and 43 percent had 100 to 500 employees.

The health plans included in the survey data represent a spectrum of industries including manufacturing (31 percent), nonprofits (14 percent), service/financial (14 percent), wholesale/distribution/retail (12 percent), health (5 percent), construction (5 percent) and others (17 percent).

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