On May 22, Milliman Medical Inc. released their 2013 Milliman Medical Index (MMI). The study provides a unique snapshot of health care costs for an average family of four covered under employer-sponsored health insurance. Instead of just looking at the employer's cost of health insurance or the family's medical expenses, the 2013 MMI takes into account the combined cost of employer-sponsored health care including:
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Premiums the employer pays to cover the family,
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Premiums the employee pays for the coverage, and
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Out-of-pocket expenses the employee pays for medical care.
With health care reform right around the corner, this study provides a benchmark of the combined cost of employer-sponsored health care for employers and employees.
Cost of health care increases 6.3%
According to the 2013 MMI, the total annual cost of health care to cover a typical family of four through an employer-sponsored preferred provider plan (PPO) is $22,030. Again, this amount includes the employer-sponsored insurance premiums, and the employee's out-of-pocket family medical expenses.
According to the 2013 MMI, the overall cost of health care for a family of four increased 6.3%, from $20,728 in 2012 to $22,030 in 2013. However, the rate of cost increase has slowed down over the last three years. The highest annual cost increase was 7.8% from 2009 to 2010. The average annual cost increase from 2008 to 2013 was 7.1%.
Costs of health care shifts to employees
According to the 2013 MMI, of the $22,030 health care cost for a family of four, the employer pays on average 12,886 (59%) toward the family's health care costs, while the employee pays the remaining $9,144 (42%). This represents a cost increase of 6.5% for employees, compared with the 2012 total employee cost of $8,584.
On average, the employee's costs are split between premium-sharing ($5,544) and out-of-pocket expenses such as co-pays, deductible expenses, pharmacy, etc. ($3,600).
How do these health care costs compare to other family expenditures? The employee's average annual contribution ($9,144) now exceeds the cost of groceries for a family of four ($8,388 on average). And to put it in perspective, the 2013 MMI notes the total cost of health care exceeds the average cost of attending an in-state public college ($22,261).
What about health care reform?
Will health care reform curb increasing health care costs? According to the 2013 MMI, health care reform will have very little impact on the health care costs for the average family of four who is covered under employer-sponsored health insurance.
As stated in the report, "The emerging reforms required by the Patient Protection and Affordable Care Act (ACA) will have little impact on the cost of care for our family of four in 2013 because this family tends to be insured through a large group health plan."
Here is the 2013 MMI's interpretation of how health care reform will impact various areas of the cost of health care:
