Healthcare Costs for Insured American Family Top $20K in 2012: Milliman

The average cost of healthcare for a typical American family of four in an employer- sponsored health plan in 2012 is $20,728.

That is a 6.9 percent increase over the 2011 total but the lowest rate of increase in the 10 years that actuarial firm Milliman Inc. has been doing its study.

It is also the first time that the total dollar amount has gone above $20,000, according to Milliman’s index.

The $1,335 increase for this year surpasses last year’s record of $1,319.

“The average rate of increase this year dips below 7 percent for the first time since we began analyzing these costs, but the total dollar increase is still the highest we have seen,” said Lorraine Mayne, principal and consulting actuary with the Salt Lake City office of Milliman. “This helps illustrate the challenge of controlling healthcare costs. When the total cost is already so high, even a slower rate of growth has a serious impact on family budgets.”

The 2012 Milliman Medical Index (MMI) measures the average healthcare costs for a typical American family of four receiving healthcare through an employer-sponsored preferred provider organization (PPO) plan.

“Some families may be surprised to hear their total average healthcare costs are exceeding $20,000 this year,” said Scott Weltz, consulting actuary with the Milwaukee office of Milliman. “While everyone knows the cost of healthcare is increasing, most people who receive health insurance through their employer are insulated from the true costs associated with the care they receive.”

According to the MMI, this year employers will on average contribute $12,144 of the $20,728 total cost while employees— through payroll deductions (an average of $5,114) and out-of-pocket expenditures ($3,470) — will pay the remaining $8,584.

This year the 6.7 percent increase in the employer’s portion of costs was 6.7 percent, which was slightly less than the overall trend of 6.9 percent, while the employee’s share of costs rose 7.2 percent. This latter number includes an 8.2 percent cost increase in payroll deductions and a 5.8 percent increase in out-of-pocket costs.

The MMI’s release date falls during an uncertain time for American healthcare, with the nation awaiting the outcome of the U.S. Supreme Court’s decision on the future of the Patient Protection and Affordable Care Act (PPACA). To date, according to Milliman, PPACA has had only a limited effect on healthcare costs for families covered by an employer-sponsored PPO plan; longer term, the implications may be more pronounced and will depend on a number of factors.

The MMI includes analysis of healthcare costs in 14 cities, highlighting the role that geography plays in healthcare costs. This year, the average cost of care for the typical family in all but three of these cities exceeds $20,000. Of the 14 cities analyzed, Miami is the most expensive, at $24,965, while Phoenix is the least expensive at $18,365.

The complete MMI can be viewed here.