A typical family of four in the USA incurs an average of $19,393 annually today on healthcare costs, 7.3% more than last year, and over twice as much as the 2002 cost of $9,235, according to the Milliman Medical Index published today.

The authors explain that even though the increase rate is losing some of its steam, it took less than nine years for the cost to double.

The Milliman Medical Index (MMI) includes the amounts paid in by both employee and employer, the burden of which has been tilting towards the employee over the last few years. Employees pay in today $8,808, over twice as much as they used to in 2002 ($3,634).

Below are some more of the highlighted findings from the report:

  • The MMI rose by $1,319 from 2010 to 2011
  • Employees’ share of total costs rose from 36.8% in 2005 to 39.7% today
  • The yearly MMI increase rate has slowed down by 0.5%, but still outpaces spending increases in other parts of the economy
  • Facility spending increases (inpatient plus outpatient) make up 60% of this year’s total increase in healthcare costs

Over the last four years, annual healthcare cost increases have remained within 7% to 8%. The authors stress that this does not in any way represent a stable environment. The increases far outpace rises in other goods and services.

Spending on health care benefits are progressively taking up a larger share of employee and employer budgets, the authors wrote.

With the arrival of federal healthcare reform, the focus is very much on getting the most out of every dollar spent on healthcare.

Deductions on payrolls to pay for insurance coverage increased 9.3% this year, this is more than the previous year. While employers’ share of employee health care costs dropped 6% in 2010 and 8% in 2009.

The authors say that the healthcare reforms have not had much of an effect on bringing down these burdens. The new provisions included in the reform, such as doing away with lifetime benefit limits and eliminating copays on preventative care may have changed the rules somewhat, but as far as the total cost of care is concerned they have made no difference.

33% of a family’s overall health cost goes on paying physicians, 31% on hospital inpatient costs, 17% on outpatient costs, and 15% on pharmacy costs.

Family health care costs vary considerably, depending where you live in the USA. In New York City, Chicago, Boston and Miami they are more than double the national average for a family of four. In Seattle, Atlanta and Phoenix they are below the national average.

“2011 Milliman Medical Index” (PDF)

Written by Christian Nordqvist