Healthcare Costs Hit Record High, But Growth Rate Slows

Margaret Dick Tocknell, May 24, 2013

The 2013 Milliman Medical Index pegs the annual cost of PPO coverage at 6.3% higher than last year. Physician and other professional services account for one third of annual healthcare spending.

The annual cost of healthcare for the average American family of four set another record in 2012 although the pace of that growth is the lowest it has been in more than a decade

The 2013 Milliman Medical Index pegged the annual cost of PPO coverage at $22,030, a 6.3% or $1,304 increase from the previous year. The family picked up about 42% of the total cost while the employer accounted for 58%, which is comparable to their 2012 cost sharing.

That's the third time the rate of growth has declined since the Patient Protection and Affordable Care Act was enacted in 2010. While the decline in the rate of growth is welcome, families will likely still despair at these cost comparisons provided by Milliman:

  • The annual cost ($22,030) is almost as much as the cost of attending an in-state public college for a year.
  • The employee payroll deduction ($9,144) now exceeds the cost of the family groceries.
  • Out-of-pocket cost ($3,600) for co-pays, coinsurance, and other cost sharing is more than the average U.S. household spends on gasoline each year.

Scott Weltz, principal and consulting actuary in Milliman's Milwaukee office, cites the economic downturn, improved efficiency in the delivery of healthcare, lower drug costs, and the absence of a blockbuster, brand-name drug as contributing to the growth rate decline.

Can the decline be sustained? "It's difficult to say what the future holds with regard to these trends," says Weltz. While Department of Health and Human Services Secretary Kathleen Sebelius would probably like everyone to give credit to the ACA, Weltz notes that the prototypical family of four used for the report is in an employer-sponsored, large group policy with gold standard coverage. The effects of the ACA will more likely be felt in the individual and small group market where access to insurance and the quality of the coverage is more of an issue.

Margaret Dick Tocknell Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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