Today, $18,074 could cover…

Or, you could cover health insurance for a typical family of four in America.

In the past year, the average cost of health care for a family of four in the U.S. has increased by $1,303, the large single dollar increase seen in the past 10 years since the start of the Milliman Medical Index (MMI).

The total medical cost for a family of four is $18,074 in 2010. Employers will pay, on average, 59% of the total, and employees bear 41% – a shared personal health expense of $7,330. This is the first year that employer contributions exceed $10,000.

As the chart shows on the bottom tier, health care costs continue to escalate well above general price inflation (the CPI). In 2010, the medical cost increase was 7.8%. Milliman calculates that the effective annual trend rate between 2005 and 2010 is 8.2%.

The MMI aggregates health benefit costs for employers and employees including the cost of services paid by employer health benefit programs plus the costs spent by employees including payroll contributions for medical coverage, and at the point-of-service, deductibles, coinsurance, and copayments. The number accounts for all payments to health providers, excluding administrative costs of health plan premiums. Providers include hospitals, physicians, and pharmacies, and include the copayments borne by employees for these services.

Health Populi’s Hot Points: How will health reform impact the MMI? Milliman anticipates that required benefit changes under the health plan will shift costs from employees to employers. Depending on their profit margins, this could motivate some employers to erode benefits in order to continue to cover health for employees. But employees could feel the pinch, too, as more of their dependents up to age 26 receive access to coverage; the Washington Post’s analysis explains that employee premiums could increase as a result.

This should also be a driver for innovation in how health plans are designed and delivered. In 2014, the Federal government takes on a greater role in providing coverage to the uninsured through Medicaid expansion and the creation of health insurance exchanges. At the same time, employers will take on the expansion of coverage for dependents up to age 26. This will require re-imagining the health benefit.

Under this reality, the status quo of health plan benefit design is not fiscally sustainable. There is ample opportunity for a new-new kind of health plan in and beyond 2014. I’m aware of several of these in start-up mode. Stay tuned for the disruption of Health Plans As We Know Them.

2 Comments on $18,074 is the medical cost for a typical family four in the U.S. in 2010

Andrew Naugle said : Guest Report 11 years ago

What's more, there was a recent article in Fortune magazine (http://money.cnn.com/2010/05/05/news/companies/dropping_benefits.fortune/index.htm) that exposed studies by four major employers where they found that paying penalties for not providing employee coverage would actually cost them less than providing coverage for their employees (for AT&T: $600M vs. $2.4B). While these four companies ultimately decided not to drop their group health insurance for employees this year, we can't be certain that every employer will make that same decision or that these four won't eventually succumb to shareholder pressure to rethink that decision. This could ultimately decimate the group insurance market. Add that to the "disruption of Health Plans As We Know Them."

Tweets that mention $18,074 is the medical cost for a typical family four in the U.S. in 2010 - Health Populi -- Topsy.com said : Guest Report 11 years ago

[...] This post was mentioned on Twitter by healthythinker and Michael Blaiss, MD, fpizarro. fpizarro said: RT @healthythinker: $18,074 is the cost of health care for typical family of 4 in the US based on new 2010 Milliman Medical Index | http://bit.ly/98p1rg [...]

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