Milliman Puts It in Perspective: 2013 Health Care Costs for the Average Family of Four Exceed the Cost of a Midsize Sedan

The average health care cost for a family of four in 2013 is as much an average midsize sedan, or nearly the cost of the average in-state public college tuition for the current year, according to the “2013 Milliman Medical Index” (MMI). While this cost is shared between the family and employers, $22,030 is even greater than last year, when the cost exceeded $20,000 for the first time. MMI’s typical family of four is comprised of a 47-year-old male, and 37-year-old female, and two children, one age four and the other under one, to demonstrate the services utilized by different age groups and genders.

Of that $22,030, $9,144 is the family’s share, and of that, $3,600 are out-of-pocket costs (co-pays, coinsurance, and other cost sharing), amounting to the family’s average cost of groceries for the year and the amount spent on gas in a year, respectively. The remaining $5,544 is made up of payroll deductions. The increase of the employees’ share was 6.5 percent over last year’s $8,584 cost.

Reasons for the Change

The annual rate of increase in MMI has been decreasing for the past four years, and was down to 6.3 percent over 2012 from the prior year’s 6.9 percent. Milliman provided a couple of hypotheses for the slowing rates of increase, such as: (1) the economic downturn and an increase in cost-sharing has reduced the demand for less urgent spending; (2) greater efficiency has been realized in the delivery or healthcare through the use of electronic health records and provider integration like accountable care organizations; and (3) the shift to lower-cost generic drugs has overtaken the use of new “blockbuster” drugs.

PPACA Impacts

Little help has been seen with regard to health care costs from the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), at least with regard to the average family receiving coverage through an employer utilizing a large group health plan. Most of the reforms do not go into effect until 2014, and even then are centered on individuals and small employers. Over the long-term, however, there might be a decrease in the cost of care since fewer people will be uninsured, which should lead to less cost shifting where providers pass on the cost of providing uncompensated care to the insured.