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Health insurance costs have been increasing at the lowest rate in the past two decades.
The total costs for a typical family of four insured by the most common health plan offered by employers will average $28,166 this year, according to the annual Milliman Medical Index.
That’s up from 2010, when the cost crossed $20,000. Just two years ago, it topped $25,000.
The estimate includes the average cost of health insurance paid by employers and employees, as well as deductibles and out-of-pocket expenses.
Despite the significant expenses for many households and employers, the slower rate of growth is good news, said Scott Weltz, a principal and consulting actuary in the Brookfield office of Milliman.
â€śBut every month, a family of fourâ€™s health care costs are going up $100 a month,â€ť Weltz said.
The costs have been rising by that amount â€” on average â€” for more than a decade.
â€śThe Milliman Medical Index is great because it gives you a snapshot of what people covered by employer-sponsored insurance get and what that coverage costs,â€ť said Melinda Beeuwkes Buntin, a professor and chair of the Department of Health Policy at Vanderbilt University Medical Center.
The index also estimates deductibles and other out-of-pocket expenses.
The largest share of the total cost is the health insurance premium paid by employers.
Last year, the premium for the most popular health plan offered by employers â€” what is known as a preferred provider organization Â â€” for family coverage was $19,481, according to the annual survey done by the Kaiser Family Foundation and the Health Research & Educational Trust.
Employers paid $13,430 and employees paid $6,050 of the premium on average.
Most people give little thought to their employerâ€™s share of the cost.
â€śThey only see the portion of these costs that gets listed on their pay stubs,â€ť Buntin said.
Yet the cost of providing health benefits is part of their total compensation â€” and, to an employer, no different than wages, payroll taxes and other costs of employing someone.
â€śThat gets lost on most people,â€ť Buntin said. â€śItâ€™s one of the things that I work on when I teach economics to students.â€ť
One of the reasons that workers have seen smaller raises is a larger share of their total compensation goes toward providing health benefits.
For employers, the cost of providing health benefits is a dilemma. They want to control costs. But they also want to offer attractive benefits.
â€śItâ€™s push-pull,â€ť Weltz of Milliman said.
The trend of smaller increases â€” albeit off of a much higher base â€” is encouraging.
This year, the Milliman Medical Index increased 4.5%. That was only slightly higher than the 4.3% increase last year, the lowest increase in the 18 years that Milliman has compiled the index.
â€śWe are moving in the right direction relative to where we were,â€ť Weltz said.
But new ways of paying for health care â€” such as those that enable health systems and physicians to share in the savings when they provide quality care at a lower cost â€” are slowly taking hold.
And for the third consecutive year, prescription drug costs have increased at a slower rate.
The incentives that reward health systems and physicians for providing more care â€” even when it may not improve a patientâ€™s health â€” still prevail.
But Weltz said that there has been progress in the past five years.
Susan Giaimo, an adjunct professor of political science and biomedical science at Marquette University, agreed.
â€śThis seems to be a major change going on in the American health care system,â€ť she said.
When will the Milliman Medical Index top $30,000?
â€śGive it a few years,â€ť Weltz said.
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