You’ll be shocked at the price of health care for a family of four
Health care costs have been increasing at the lowest rate in the past two decades.
The total costs for a typical family of four insured by the most common health plan offered by employers will average $28,166 this year, according to the annual Milliman Medical Index.
The estimate includes the average cost of health insurance paid by employers and employees, as well as deductibles and out-of-pocket expenses.
Despite the significant expenses for many households and employers, the slower rate of growth is good news, said Scott Weltz, a principal and consulting actuary in the Brookfield office of Milliman.
“But every month, a family of four’s health care costs are going up $100 a month,” Weltz said.
The costs have been going up by that amount — on average — for more than a decade.
The Milliman Medical Index topped $20,000 in 2010. And two years ago it topped $25,000.
This year, the cost for a family of four is estimated at $28,166.
“The Milliman Medical Index is great because it gives you a snapshot of what people covered by employer-sponsored insurance get and what that coverage costs,” said Melinda Beeuwkes Buntin, a professor and chair of the Department of Health Policy at Vanderbilt University Medical Center.
The index also estimates deductibles and other out-of-pocket expenses.
The largest share of the total cost is the health insurance premium paid by employers.
Last year, the premium for the most popular health plan offered by employers — what is known as a preferred provider organization — for family coverage was $19,481, according to the annual survey done by the Kaiser Family Foundation and the Health Research & Educational Trust.
Employers paid $13,430 and employees paid $6,050 of the premium on average.
Those costs will be higher this year.
Most people give little thought to their employer’s share of the cost.
“They only see the portion of these costs that gets listed on their pay stubs,” Buntin said.
Yet the cost of providing health benefits is part of their total compensation — and, to an employer, no different than wages, payroll taxes and other costs of employing someone.
“That gets lost on most people,” Buntin said. “It’s one of the things that I work on when I teach economics to students.”
One of the reasons that workers have seen smaller raises is a larger share of their total compensation goes toward providing health benefits.
For employers, the cost of providing health benefits is a dilemma. They want to control costs. But they also want to offer attractive benefits.
“It’s push-pull,” Weltz of Milliman said.
The trend of smaller increases — albeit off of a much higher base — is encouraging.
This year, the Milliman Medical Index increased 4.5%. That was only slightly higher than the 4.3% increase last year, the lowest increase in the 18 years that Milliman has compiled the index.